Allan Bullot: GST expert is unsure whether removing GST from fruit and veges is a good idea - The Mike Hosking Breakfast

A GST expert says it is possible to remove the tax from fruit and veges, but whether it's good policy is another question.

National's Nicola Willis claims it's part of Labour's election tax policy, that's been leaked to her.

Labour won't confirm or deny it.

Deloitte GST specialist Allan Bullot told Mike Hosking we can make rules to do just about anything, but it might not be the best use of resources.

He says the tax working group looked at a number of studies, including from overseas, and found only 30 percent of savings end up in consumers' hands.

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'Not a bad idea': Is GST off fruit and veges Labour's new tax policy?

-Thomas Coughlan, NZ Herald

Labour is planning to resuscitate a policy from its disastrous 2011 election campaign to revive its ailing electoral hopes: taking GST off fresh fruit and vegetables.

That is according to National Party Finance spokeswoman Nicola Willis who said she had been handed details of the plan.

Willis has form in this area, claiming earlier this year that Labour was in the advanced stages of implementing a wealth tax, which turned out to be true.

The Herald has confirmed Labour has looked at changes to GST as part of its tax policy - although the final details have not been announced. It is the second major leak from Labour in as many days.

Willis warned the tax would hand millions to some of the country’s largest and most profitable companies who would absorb the cut, and fatten their margins.

A Labour Party battered and bruised from losing its fourth minister in seven months, and beset by a major leak from caucus this week, did not deny the tax rumours, with at least one MP saying the policy sounded like a good idea.

Prime Minister Chris Hipkins, speaking from Christchurch, did not deny the rumours.

“I’m not going to announce a tax policy today and Nicola Willis should be focused on making her own policies add up,” Hipkins said.

Police Minister Ginny Andersen, a Hipkins loyalist, noted it was an idea that had been “considered before - it’s a nice idea”.

“Yeah it’s not a bad idea,” she said.

National's finance spokeswoman Nicola Willis said she had been leaked the policy immediately before Question Time on Thursday. Photo / Mark Mitchell

Asked whether the plan was actually Labour policy, Andersen said it would be “pre-announcing the Labour Party tax policy”.

The Government’s new Revenue Minister Barbara Edmonds also did not deny Labour would be taking GST off fresh fruit and vegetables.

“Every party will have the ability to release their tax policies and ours is coming out in the coming weeks,” Edmonds said.

“I’m not going to release our tax policy without the Prime Minister,” she said.

Edmonds took over the role just this week after her predecessor David Parker asked to be reshuffled out of the job saying it was “untenable” for him to continue.

Parker did not stop to take questions on his way to the House on Thursday - the fifth time he has walked away from waiting media since Hipkins revealed he had killed Parker’s beloved wealth tax.

Illustration / Rod Emmerson

The policy, if correct, puts the party at odds with economists, at odds with its own Tax Working Group, at odds with coalition partners the Greens - and even at odds with Finance Minister Grant Robertson who rubbished the idea as recently as May.

“GST is a comprehensive tax which makes it very easy to administer and people in the room who’ve been in other countries with more exemptions will know it becomes an absolute boondoggle to get through,” Robertson told Newshub in March last year.

“If you do it off fresh fruit and vegetables, or even staple products, then you get into an argument of what’s the difference between beetroot and canned beetroot, and if you want to make a real impact on the lowest income people you wouldn’t cut the tax off fresh beetroot - that’s not what people on low incomes buy,” he said.

Green Party co-leader James Shaw said his party thought a GST cut was the wrong way to go, arguing that other countries had issues in deciding what counted as “fresh” and what did not.

In the United Kingdom, for example, chickens were taxed at different rates in the same establishment depending on whether they were cooked or not.

“We think it’s better to focus on people’s incomes,” Shaw said.

Shaw cited his own party’s policy which was to implement a wealth and trust tax to pay for tax cuts for 95 per cent of income taxpayers.

New Revenue Minister Barbara Edmonds. Photo / Angus Dreaver, RNZ

Of all the parties in Parliament, only Te Pāti Māori backed the GST policy, but it wants to go further, taking GST