GST makes price comparison with OECD onerous

Radio New Zealand
Wellington, 14 October 2024

Grocery Co-Op Foodstuffs is defending grocery price differences between New Zealand and OECD countries, pointing to New Zealand’s 15% Goods and Services Tax (GST).

While Stats NZ’s food price index rose 1.2% year-on-year last month, Foodstuff said its co-ops – New World, Pak N Save and Four Square stores – saw no increase for in your basket of comparable products.

global factors

“As two external reports recently highlighted, global factors play an important role in New Zealand food prices,” Foodstuffs CEO Chris Quin said.

“What others comparing prices here to overseas tend to overlook is that most OECD countries have a lower or no GST on some or all grocery foods. For example, Australia does not levies GST on meat, fish, food products, cheese and eggs, milk and natural cream, bread and spreads, bottled water, tea and coffee, ingredients and oils kitchen or infant formula. Similarly, in the UK and Ireland, they don’t have GST on most grocery foods,” he said.

Quin said the inclusion of GST in prices made a difference at the box office.

“If the GST exemptions from these three countries had been applied to New Zealand in a recent study by Australian researchers, who compared a basket of more than 40 products in each country’s two major supermarket brands, the price total Pak N Save basket would have been less than Australia and less than Ireland, and less than 10% more than the UK,” he said.

Quin said it was important to consider all costs when making comparisons.

“To be clear, this is not a call to remove GST from food in New Zealand, as we believe our simple low-cost tax system makes sense. But it is important to be aware of all the factors at play when comparing prices here with those abroad,” he said.

He said about 13 cents on the dollar spent at co-ops was GST, less than four cents on the dollar was net profit after tax and about two-thirds was the cost of buying the product from suppliers, which rose 3% annually. average in September.

He said Foodstuffs would monitor prices charged in comparable overseas markets over the coming months.

Greater Efficiency

“Because any valid comparison needs robust methodology that carefully considers the basket of goods included, their unit weights and measures, different sales taxes and fluctuating exchange rates, and should be conducted over an extended period.

“At the same time, our co-operatives will continue to challenge us to do what we can as two regional New Zealand companies to find greater efficiency, which was the main driver of our merger proposal and one of the best things that we can do. to offer our customers savings at the box office,” he said.

The Commerce Commission recently rejected a proposed merger of Northern and Southern Cooperative Foods, ruling that it would have harmed competition and that it was irrelevant whether it would have made the operator more efficient.

The above report and images have been published under special arrangement with www.rnz.co.nz.