26OIA2099 Signed response Hayden.pdf

[IN CONFIDENCE RELEASE EXTERNAL]

26OIA2099

10 April 2026

Hayden
[FYI request #33883 email]

Dear Hayden

Thank you for your request made under the Official Information Act 1982 (OIA), transferred to
Inland Revenue by the Treasury on 19 March 2026. You requested the following:
Any analysis or briefing held by Treasury on the use of the tax system to address food
affordability  in  New  Zealand  —  including  any  consideration  of  GST  exemptions,  zero-
rating, or targeted tax relief for food.
Information being released
One Inland Revenue report is in scope of your request and is attached as Appendix A. Some
information has been withheld under section 9(2)(a) of the OIA, to protect the privacy of natural
persons, including deceased people. As required by section 9(1) of the OIA, I have considered
whether  the  grounds  for  withholding  the  information  requested  is  outweighed  by  the  public
interest. In this instance, I do not consider that to be the case.
Information publicly available
The documents in the below table are refused under section 18(d) of the OIA, as information
requested is publicly available.
Document
Link
GST: Background Paper for Session 2
https://taxworkinggroup.govt.nz/sites/default/files
of the Tax Working Group
/2018-09/twg-bg-gst.pdf
https://taxworkinggroup.govt.nz/sites/default/files
Note on effect of decreasing the rate of  /2018-09/twg-bg-3996822-note-on-effect-of-
GST: Background Note
decreasing-the-rate-of-gst.pdf
Future of Tax: Interim Report –
https://taxworkinggroup.govt.nz/sites/default/files
Chapter 12, pages 87-89
/2018-09/twg-interim-report-sep18.pdf
Right of review
If you disagree with my decision on your OIA request, you have the right to ask the Ombudsman
to investigate and review my decision under section 28(3) of the OIA. You can contact the office
of the Ombudsman by email at: [email address].

Page 1 of 2

[IN CONFIDENCE RELEASE EXTERNAL]

26OIA2099

Publishing of OIA response
We intend to publish our response to your request on Inland Revenue’s website (ird.govt.nz) as
this information may be of interest to other members of the public. This letter, with your personal
details removed, may be published in its entirety. Publishing responses increases the availability
of information to the public and is consistent with the OIA's purpose of enabling more effective
participation in the making and administration of laws and policies and promoting the
accountability of officials.
Thank you again for your request.

Yours sincerely

Graeme Morrison
Policy Lead

Page 2 of 2

Appendix A
POLICY ADVICE DIVISION
PAD report:
Response to petitions of Edith McIndoe and Grant
Morgan
Date:
5 August 2009
Priority:
Ministerial Deadline
Security Level:
In Confidence
Report No:
PAD2009/
Action sought
Action Sought
Deadline
Minister of Revenue
Contact for telephone discussion (if required)
Name
Position
Telephone
Marie Pallot
Policy Manager
s 9(2)(a)
s 9(2)(a)

Sarah Allerby
Policy Analyst
s 9(2)(a)

s 9(2)(a)

National Office

Level 4

7 Waterloo Quay

POLICY ADVICE DIVISION
PO Box 2198
Wellington 6140

Wāhanga Tohutohu Kaupapahere

New Zealand

Telephone 04-8901 500

Facsimile 04-978 1623

5 August 2009

Minister of Revenue
Response to petitions of Edith McIndoe and Grant Morgan
Executive summary
Attached  is  a  letter  providing  a  reply  from  Inland  Revenue  to  the  Finance  and  Expenditure
Committee in response to two petitions received from Edith McIndoe and Grant Morgan. The
petition from Edith McIndoe calls “on the Government to withdraw GST from essential foods
and services.” and the petition of Grant Morgan requests “that GST be removed from all food
since this tax cut would be of most benefit to people struggling to pay the bills”.

On  29  July  2009,  the  Finance  and  Expenditure  Committee  wrote  to  the  Commissioner  of
Inland Revenue seeking a written submission from Inland Revenue on the matters raised by
the petitions.

Recommended action
We recommend that you note the contents of the letter.  We propose to refer the response to
the Chair of the Finance and Expenditure Committee on Wednesday 12 August 2009.

Marie Pallot
Policy Manager
Indirect Taxes and Tax Administration

2

Hon Peter Dunne
Minister of Revenue

3

13 August 2009

Mr Craig Foss
Chair
Finance and Expenditure Committee
Parliament Buildings
WELLINGTON

Dear Mr Foss

Petitions of Edith McIndoe and Grant Morgan

On 29 July  2009 the Finance  and Expenditure  Committee requested  a submission outlining
Inland Revenue’s position on the matters raised in the petitions of Edith McIndoe and Grant
Morgan to the Committee (refer 2005/183 and 2005/190).

Background information

New Zealand’s GST is a broad-based, low rate tax on consumption.  The Red Paper on the
enactment  of  the  Goods  and  Services  Tax  Act  1985,  outlines  the  considerations  had  at  the
time towards including most goods and services within the net of GST.
‘
Economic and revenue implications

There is a view that a comprehensive indirect tax such as New Zealand’s GST would have a
heavier impact on people with low incomes which stems from a perception that high-income
households  consume  a  smaller  fraction  of  their  income  than  a  low-income  household.
Therefore, tax on a low-income household would comprise a greater fraction of their income.

However, a comprehensive indirect tax, as GST is currently, will collect much more from a
high-income household than a low-income household.  It is also less readily avoided by high-
income households than is income tax.  Exempting  items such as food from GST would be
worth more in dollar terms to a high-income household and thus is not an efficient means of
assisting those on low incomes.

At an economic level it is possible that retailers or producers would perceive that people are
willing to pay for products at the current level and, after GST is removed from some items,
prices may increase back to their GST inclusive levels.  This leaves the individual consumer
no  better  off  but  increases  profits  to  retailers  and  food  producers  at  a  fiscal  cost  to
government.

Furthermore, every individual has differing views as to what constitutes a necessity and what
constitutes a luxury item.  As well as income levels health, religious or cultural considerations
may determine preferences.

4

Excluding  food  from  the  GST  base  would  reduce  the  taxable  base  to  eighty  percent  of  its
potential.  This  means that the rate  of tax on other goods and services  would need to  be  at
least 25 percent higher for the tax to yield the same result.  We note that lowering the current
rate of GST by one percentage point would decrease the total expected GST received in a year
(using this year’s estimates) by $935 million

Implementation issues

Information held by Inland Revenue indicates that there are about 9,000 registered
businesses in the food industry out of a total of around 18,000 businesses.

Removing GST from food would give rise to significant compliance and administration costs.
Businesses would be required to develop new accounting processes to incorporate the split
between taxable and non-taxable products. Existing software would need to be changed and
adapted. There would also be significant transitional and on-going concerns depending on
where the exemption boundaries fell.

For Inland Revenue making changes to the on-line and paper-based returns to provide
assistance to businesses, the provision of guidance more generally and the need to review
registration processes, would incur significant costs.

Overseas GST/VAT systems

Australia has a wide variety of exempted goods and services which include
GST on basic food for human consumption.. In order to assist business owners and food
producers in the classification of ‘basic food for human consumption’ the Australian Taxation
Office has provided a list to assist the classification of whether items are GST-free or subject
to full-GST using criteria such as where the item lies in the supply chain, how the item is
processed or treated, what the item is similar to, what ingredients are used in the product, and
how it is marketed. Food that is not GST-free includes prepared food, confectionary, savoury
snacks, bakery products, ice-cream food, and biscuits. Beverages that are GST-free include
milk, soy or rice milk, tea and coffee, juices, infants beverages, and water.  Confusion has led
to a number of rulings applications on the potential application of GST to foods and
beverages.

The  United  Kingdom  zero-rates  VAT  on  all  unprocessed  foodstuffs  that  are  fit  for  human
consumption.  There is no discrimination between items sold as ingredients or directly to the
public.  Factors taken into consideration in deciding whether an item classifies as zero-rated
include the measurable nutritional content of the item when used in home cooking, whether
items are supplied in the course of catering, and whether the product is designed to be eaten
while frozen.

Conclusion

We trust that the above comments are of assistance.  Inland Revenue is happy to provide the
committee with any further information needed.

Yours sincerely

5

Marie Pallot
Policy Manager