Video: Removing GST from fruit and vegetables will make life difficult for small businesses, says local financial advisor
Removing GST from fruit and vegetables will make life difficult for small businesses, says Nick Stewart, CEO of Stewart Group.
Recently, the National Party said it understood that the Labour Government was proposing removing GST from fruit and vegetables. However, the Government has refused to confirm this, saying it has yet to release its tax policy.
Stewart says New Zealand’s GST system is the envy of other jurisdictions.
“We have a very clean and elegant GST system, or effective sales tax. The fact that it's so clean and simple, because it's on every good and service; irrespective of what it is, if it's fruit and veg, or if it's medical supplies, or kids' clothing, it's on everything.”
“On that basis it's very, very simple to administer, and very, very clean. Once you start removing certain items that are exempt, you open it up for a lobbying, for litigation as to what's the definition of this and that? “
Stewart says the clean system allows small to medium sized business in New Zealand, of which most companies are, to complete GST at present.
“Once you start to have carve-outs and distortions, it's much more difficult for smaller enterprises to run those calculations, versus the larger end of town that has specific staff that handle those issues, and tax and compliance.”
Recently councils have been sending ratepayers ratable property values, which Stewart has been different from previous years.
“You will notice, at the moment, that your latest government valuation, for local rating purposes, has come out, and it's actually, on most cases, for most people, it's a lot higher than the current market value. This doesn't happen very often.”
“For the most part, the government valuation is less than market value, and I think it was the last time this occurred, where it flipped, was that kind of 2010 through 2012 period. So a lot of people are sitting there saying, ‘Hang on a minute, I'm paying rates on a value that's higher than the market value of my property today,’ and that'll have a few people asking a few questions.”
“I'm sure there'll be a few people who object to the evaluation as a result of that, but it's just something that, it's like a lunar eclipse, you don't see it very often.”
In the interview with Hawke’s Bay App, which was recorded before the five Hawke’s Bay Councils accepted a co-funding agreement from Government, Stewart discussed the financial impact of the Cyclone damage on Hawke’s Bay.
Watch the full interview with Nick Stewart in the accompanying video.