Labour ditches GST plan for fruit and veges

Labour ditches GST plan for fruit and veges. Photo / BPT, Thinkstock

Labour has officially dropped its policies of having the first $5000 of earnings tax free and of removing GST from fresh fruit and vegetables Leader David Cunliffe said this morning.

The policies were adopted in the run up to the 2011 election under then-Leader Phil Goff but Mr Cunliffe's immediate predecessor David Shearer in his first major speech as leader almost two years ago indicated that the policies would be dumped.

Labour estimated the policies would cost the Government about $1.5 billion a year in lost revenue.

"While these were worthwhile policies , we believe there are better ways to help struggling Kiwi families'', Mr Cunliffe said.

"Labour has game-changing plans that will help New Zealanders who are being squeezed by the National Government's lopsided and unfair policies.''

Mr Cunliffe said he would be outlining "Labour's vision for a better, fairer, more innovative New Zealand'' in his state of the nation speech on Monday.

Mr Cunliffe said there was new evidence that items such as fresh fruit and vegetables were mainly consumed by people who could afford more and there were better ways to give relief to families were less well off.

He said the tax free zone, while simple, would have delivered the same relief to top income earners as well as those struggling to make ends meet and Labour wanted better targeted measures.

Mr Cunliffe said flagship policies of introducing a capital gains tax and a staged raising the NZ Super age of eligibility from 65 to 67 would remain, but would be tweaked.

The Super age policy was being reviewed to address issues of social and gender equality.

He said the media and public would have to "wait and see" whether he would announce on Monday that Labour would extend Working for Families to beneficiaries.