Complicating GST

Homepaddock points out that

Labour leader Phil Goff reckons removing GST is simple.

He says it will be taken off a lettuce, it will also be taken off a salad at the supermarket and the mayonnaise that is packed with it but it won’t be taken off either if they’re in a hamburger.

One of the things the overseas advisers told the government at the time when GST was introduced was to keep it simple. One important way of doing this was to (basically) put it on everything, at a constant rate. Any change to such a policy is just asking for trouble. Once different rates are charged sellers have an incentive to get their goods and services into the lowest GST grouping and trying to workout who is cheating the system increases compliance costs hugely.

Simple is best.