Food Expenditure and GST in New Zealand
This paper has two main aims. First, the poor targeting of a policy of zero-rating food in a goods and services tax (GST) is illustrated in a simple model where the revenue lost from zero-rating food is instead devoted to a universal transfer payment, with a larger effect on progressivity. Second, the paper investigates the welfare effects on New Zealand households of zero-rating food. The detailed effects, for a range of household types, are then investigated using Household Economic Survey data. Demand responses to consumer price changes are estimated and welfare changes, in terms of equivalent variations, are obtained. Comparisons are made across ‘clusters’, consisting of groups of households with similar characteristics. The reform is seen to produce a very small amount of progressivity in the GST, with redistribution from richer households without children to poorer households with children, and older households.
|Date of creation:||Apr 2014|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +64-4-472 2733
Fax: +64-4-473 0982
Web page: http://www.treasury.govt.nz
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John Creedy & Norman Gemmell, 2003.
"The Built-in Flexibility of Income and Consumption Taxes in New Zealand,"
Treasury Working Paper Series
03/05, New Zealand Treasury.
- John Creedy & Norman Gemmell, 2004. "The Built-In Flexibility Of Income And Consumption Taxes In New Zealand," Australian Economic Papers, Wiley Blackwell, vol. 43(4), pages 459-474, December.
- Creedy, John, 1998.
"Measuring the Welfare Effects of Price Changes: A Convenient Parametric Approach,"
Australian Economic Papers,
Wiley Blackwell, vol. 37(2), pages 137-51, June.
- Creedy, J., 1996. "Measuring the Welfare Effects of Price Changes: A Convenient Parametric Approach," Department of Economics - Working Papers Series 536, The University of Melbourne.
- John Creedy, 2002.
"The GST and Vertical, Horizontal and Reranking Effects of Indirect Taxation in Australia,"
Australian Economic Review,
The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(4), pages 380-390.
- Creedy, J., 2001. "The GST and Vertical, Horizontal and Reranking Effects of Indirect Taxation in Australia," Department of Economics - Working Papers Series 784, The University of Melbourne.
- John Creedy, 2001. "Indirect tax reform and the role of exemptions," Fiscal Studies, Institute for Fiscal Studies, vol. 22(4), pages 457-486., December.
- Nicholas Stern, 1990. "Uniformity Versus Selectivity In Indirect Taxation," Economics and Politics, Wiley Blackwell, vol. 2(1), pages 83-108, 03.
- repec:imf:imfwpa:13/111 is not listed on IDEAS
- John Creedy, 1998. "Are Consumption Taxes Regressive?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 31(2), pages 107-116.
When requesting a correction, please mention this item's handle: RePEc:nzt:nztwps:14/07. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Web and Publishing Team, The Treasury)
If references are entirely missing, you can add them using this form.