Ideas for politicians # 1.
How to remove GST from Fresh Food in a targeted way, with existing systems and without decimating treasury coffers
My Mum taught me at an early age; you are what you eat. One key to longevity and a healthy life is the consumption of fresh, unprocessed foods. If we want a healthier population and shorter hospital waiting lists, one of the best things we could do is look at our diet and ensure people have access to fresh, affordable food.
You may not think food has that much of an impact on our lives, but if a Vitamin C deficiency can cause something as nasty as Scurvy; then think about what else can happen if we are not receiving the proper nutrients.
What I propose is dangling a fresh carrot in front of New Zealand individuals and families by taking GST off Fresh Food and rewarding them for eating well. Doing this would promote healthier diets and help ease financial stress.
So, how do we do this in a targeted way, with no tax system overhaul and a minimum of red tape for suppliers and retail outlets? Simple.
Use MyIR to enable individual Fresh Food Rebates
We all have a personal IRD number. Inland Revenue’s online MyIR system is very user friendly and enables easy and efficient communications with the Inland Revenue.
We use the existing MyIR platform (myir.ird.govt.nz) to process a 15% tax rebate for Fresh Food purchases for all NZ citizens and permanent residents. (Companies, Tourists, Charities, Groups and Trusts would not be eligible for the rebate — it would be business as usual for them.)
We treat individuals similarly to sole-traders, with rebates only applying to purchases of fresh foods, fruit and vegetables.
Just like GST-registered sole-traders, people would use the record of their purchases to apply for a Fresh Food Rebate (FFR) via MyIR.
An IRD number attached to a New Zealand bank account would be required to apply for Fresh Food GST rebates, and those applying must also keep their receipts for 7 years.
What would constitute Fresh Food?
Fresh Food would be any food that has come from source in its original form — unless there is an additional process or ingredient necessary for human consumption and/or sale; plant based proteins are an example of that.
The rule of thumb would be: No flavourings, refined sugar, colouring or additives. And perhaps no unnecessary packaging either ( shrink-wrapped vegetables, I’m looking at you).
Foods that would be eligible for the FFR:
1. Fresh fruit and vegetables in their original form.
2. Meat, fish, eggs, tofu, beans and poultry sold fresh, with no additives, flavourings or colouring. Frozen in an original state would also be acceptable.
3. Fresh milk, cheese, butter, cream with no additional flavourings or processing other than what is necessary to sell the product in a store. Included would be plant-derived foods such as oat, soya and almond milks.
4. Fresh bread. This category would need to be fleshed out to include specialty breads to cater for various diets and also to keep the complication out of our daily bread.
5. Cooking supplies including flour, dried fruits, herbs, rice, plain noodles and pasta, yeast, nuts, grains, etc.
6. Water rates*
There will be other staples that need to be added, but overall, the idea is to keep it simple.
Rebates paid from regular FFR returns
With receipts collected, you would download a simple report template with instructions from MyIR. Standard stuff — a simple ledger that you can either complete by hand or on the computer, detailing:
1. each product purchased
2. the amount paid
3. where it was purchased
Then you would tally up the total, multiply the purchase amount by 3, and divide by 23. That is the amount of the Fresh Food rebate you’re entitled to.
You would then upload this simple report to make your claim. The upload could be a photo, scan or pdf, or the IRD might have an ‘input section’ somewhere on their site.
Rebates would then be paid into the bank account attached to the IRD number of the person making the claim.
Sure, there may be some who attempt to game the system, but the person making the return will be advised of the legal implications if there is fraudulent activity.
Easier than it sounds, really!
When you are GST registered, you learn pretty quickly what you can and can’t claim for; there is no reason a pensioner, retail assistant, or solo mum couldn’t get their head around a 10 minute FFR Return every month. Especially given the financial upside.
Still doubting that the average person would understand this concept? My experience as a music publisher working with musicians is that when it means income, even if it’s not a huge amount, they always have time to understand music royalties — which are super-complicated compared to this scheme.
Everyone is interested in where their next dollar is coming from; it’s more than likely the average person will take the time to learn how to manage a simple Fresh Food Rebate return.
And some will take a special interest.
Imagine being a young person trying to drum up some money for a sports trip; you could ask your parents to apply for rebates from the family’s shopping receipts. Wouldn’t that encourage caregivers to buy fresh food, and cook it from scratch? Or ensure they pick up a few apples instead of a bag of crisps. It would be a bit like a modern day bottle drive, but this time it’s cash back for eating well, not boozing.
Encouraging people to engage with the FFR claim process would also have the benefit of increasing financial literacy and sense of independence for many. Not a bad side-effect, as side-affects go.
We spend billions of dollars on health each year. We have an obesity epidemic and our hospital waiting lists are ridiculously long. A healthy diet is the panacea for many illnesses and rewarding people for eating well is a great way to get our country thinking about their health up front. It’s time to think about prevention, rather than cure.
Fruit and Vege
About the author: Jan Hellriegel has worked in small business accounts and finance for over 30 years in order to supplement an artistic career. Her passion is music, philosophy and writing, and trying not to moan. She is the owner-operator of a few music businesses and enjoys making something from nothing. She is a pragmatic optimist who is solution driven and really likes people and wants the best for them. To find out more about Jan Hellriegel, here is a link to her online profiles and work.
About the author: Jan Hellriegel has worked in small business accounts and finance for over 30 years in order to supplement an artistic career. Her passion is music, philosophy and writing, and trying not to moan. She is the owner-operator of a few music businesses and enjoys making something from nothing. She is a pragmatic optimist who is solution driven and really likes people and wants the best for them. To find out more about Jan Hellriegel, here is a link to her online profiles and work.