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New Zealand Labour will take the GST off fruit and vegetables if re-elected — its most significant election campaign policy announcement to date.
- A poll last year showed 77 per cent of Kiwis were in favour of the tax cut
- Labour also promises a weekly tax credit increase of $NZ25 to benefit 160,000 families
- Finance Minister Grant Robertson has ruled out income tax changes under Labour
Prime Minister Chris Hipkins made the pledge on Sunday on a campaign stop in Lower Hutt, in Wellington's north.
Tax battlelines are now drawn ahead of the October 14 election, with Labour offering the GST cut and the National Party pledging tax cuts — including income tax relief.
The GST policy is immensely popular with Kiwis — a Newshub poll last year had 77 per cent in favour of the tax cut — but it comes with fishhooks.
Economists and tax experts have cautioned against a move as it adds complexity to New Zealand's otherwise across-the-board 15 per cent GST.
The GST exemption also carries political barnacles: Labour lost the 2011 election promising something similar under then- leader Phil Goff.
Finance Minister Grant Robertson has also previously argued against the policy, saying it would be an "absolute boondoggle" to administer.
However, Mr Hipkins is forging ahead, saying cost of living difficulties caused by high inflation made the GST cut suitable for the times.
"The cost of living is the biggest issue facing New Zealanders in this election," he said.
"Inflation is tracking downwards, including food price increases, but food is always a big cost for families, so this is a good policy for today and the future.
"Other countries, including Australia, take GST off fruit and vegetables. In fact, most countries that have a form of GST have carve-outs for certain items, and if anything, New Zealand is currently an outlier."
The decision comes after a photo of NZ-grown onions were being sold for $2 less in the UK than in New Zealand.
Labour suggested savings of around $NZ20 ($18) a month to household budgets from the measure, which will make fresh and frozen fruit and vegetables 13 per cent cheaper.
Alongside the GST cut, Labour has also announced a weekly tax credit increase of $NZ25 ($23) to benefit 160,000 families.
Labour's GST policy sits in contrast to the centre-right opposition National party, which has pledged to adjust tax brackets for inflation.
Labour has attacked that policy as inflationary, with Mr Hipkins receiving cheers as he told the Labour faithful "millionaires do not need a tax cut".
Mr Robertson ruled out income tax changes under Labour.
"Now is not the time for new taxes or to promise tens of billions of dollars in unfunded tax cuts which would add to inflation and take money away from health, education and housing to line the pockets of the wealthy," he said.
The National party has pulled slightly ahead in recent polls, with the trend suggesting Opposition Leader Chris Luxon will become prime minister of a National-led coalition.
The same polls pointed to a growing dissatisfaction with the two major parties.
A majority of polls put the total support for Labour and National under 70 per cent, with the left-wing Greens and right-wing ACT parties eyeing a double-digit result.
On Sunday morning, the Greens released a climate policy that will give grants and interest-free loans for solar panels and energy efficiency upgrades.
Housing is a huge issue in New Zealand, with historic underinvestment in housing stock meaning Kiwis pay more for houses than Australians as a share of their income — both for buyers and renters.
The Greens are funding other promises, including universal basic dental care, through a wealth tax, with co-leader Marama Davidson enthusiastically supporting a greater tax take.
"I want to pay more tax so bad, you have no idea," she told enthusiastic Greens supporters.
AAP