GST off fruit and Vegies – a vote winner, but maybe not so healthy

I was John Pagani’s “blog” on stuff – specifically, this post.

Funny how people who say they want lower taxes suddenly start sweating and spluttering when you say “yes, less tax on food”.

This week, some people presented a petition to Parliament calling for no GST on food.

No party is going to remove GST from all food, but Labour has promised to take the GST off fresh fruit and vegetables.

In the comments there was this gem:

“The arguments against taking GST off food are thin.”

The arguments for taking GST off food are even thinner. From the first study you quoted: “Price discounts were found to be effective at increasing purchasing of healthy food, but did not have a statistically significant impact on nutritional outcome measures”

From the second study you quoted: “Professors Tony Blakely of the University of Otago, and Cliona Ni Mhuchu of the University of Auckland, give this proposal cautious support”

Get that? Pagani didn’t even read his own link.

I thought I’d do some more investigating into this. I searched for GST on No Right Turn. Idiot has been ever so insistent that Labour’s “GST off fruit and veg” policy was a good thing. The question is, who’s research is he taking that from?

Well, I found this post.

Interest seems to be growing in Rahui Katene’s bill to remove GST from healthy food. There’s a strong empirical case for the move, and it looks like it would work far better than the current government programme of education. But the government hates the idea. The latest excuse, from Peter Dunne, is that scrapping GST on food is “not viable” as it would cost too much money – about $330 million a year.

Wow, “strong empirical case”. That sounds formidable. Wait, it’s not a study, it’s a TVNZ news story.

Professor Tony Blakely from Otago University’s public health department has been looking into whether price discounts change people’s eating habits by conducting one of the largest studies of its type.

The study took 1,100 shoppers and randomised them to either receive highly personalised health and nutrition information or price discounts of 12.5% off food.

Blakely said, to their surprise, the nutritional information did not work, but a 12.5% drop in price increased people’s consumption of healthy food by 11%.

Well, that does sound strong. It also appears to contradict the outcome of the study itself which John also quoted. (Emphasis mine)

The SHOP study was a randomised trial of 1,100 supermarket shoppers, half receiving price discounts on healthy food and half not, and half receiving tailored nutritional education and half not. Price discounts were found to be effective at increasing purchasing of healthy food, but did not have a statistically significant impact on nutritional outcome measures (e.g. percent saturated fat). Nutritional education was ineffective. The SHOP study has now been completed.

Also here:

The researchers were disappointed that the clear impact of price discounts on the types of food purchased did not translate to significant changes in nutrients such as saturated fat, sugar, or sodium. The modest increase in purchases of healthier foods, combined with the relatively small proportion of food that fell within this category (35% of all products), may account for this.
“Reducing the price of healthy foods would undoubtedly lead to an improvement in population dietary health, but our study reminds us that a single effective intervention is not a panacea to improving our diets,” says Professor Tony Blakely, one of the researchers from the University of Otago

In short, there is basicially no evidence that this policy will do a heck of a lot – and that’s an admission from people who really really wish it did. Bear in mind that the people in the study knew they were being monitored (which always changes behaviour anyway), were monitored for a short time (will a reduction still be effective in 5 years?), and volunteered – meaning that they were probably looking for a way to get more healthy anyway.

I don’t have a lot of time for Labour’s policy. We do not and have never restricted our purchases of veggies or fruit because of price. We do chose which veggies we might purchase on any given day by what is least expensive, but generally we recognise that fresh produce is a good thing, and if we need to cut back we’ll do it on luxuries. To me it’s a decision about how you treat your families health. If you don’t want to purchase veggies, you won’t – simple as that.


  1. Of course, the SHOP study was a consistent 12.5% discount off the price of healthy food. Removing GST from fruit and vegetables will be nothing like that. While there may be some initial discounting of price, the price of fruit and vegetables will quickly return to similar GST included levels. This is standard economics. The increase in demand will simply push the price up until the demand drops. How anyone can think otherwise is a mystery to me.

    It is also a mystery why the authors were surprised that nutritional education was ineffective. Frozen vegetables and fruit in season are both relatively cheap. People do not avoid fruit and vegetables because they are expensive but because cookies and chips taste better. There is nothing surprising here.

    The study also artificially ignores price variation between vendors and seasonal price volatility, both of which render any conclusion utterly meaningless. Within 6 months of removing GST from fruits and vegetables, eating habits will all be back to where they were, the government will be several hundred million dollars poorer and retailers will spit on the floor every time they hear Phil Goff’s name, because of the unbridled mess GST receipts will have become.

    1. I personally think you’re being too generous. I don’t think eating habits will change for even 6 months, if at all.

      It’s a joke policy really. Scary thing is it’s actually likely that one day it’ll be law.

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