The most famous MacGuffin is the biblical apple. Eve’s reckless defiance contains a morality tale. God was clear; you can taste everything else in the Garden of Eden, but do not eat them apples.
And what did the first humans do? You know what we did. We ate them apples. Of course we did. And God knew we would, which makes the prohibition a self-defeating act of malice by a deity who demands to be loved whilst tormenting his creations.
God has us locked in a toxic and abusive relationship where humanity is being gaslit into believing that original sin was due to our moral failings when that this was His plan all along.
However, let’s get back to apples; for that is today’s MacGuffin. As part of my extensive research I went to Countdown’s website. It is still called Countdown and still has a peeled apple as its logo. Yummy Apples are being sold for $5.99 a kilogram.
$5.99. Many things sell for some dollars and 99c because there is more to price setting than the cost of the underlying product. The demand for an item, choosing a price point to attract the consumer’s attention, how elastic the demand for a particular product and what the competition is up to all feature into the pricing decision.
A retailer will set their price to maximise revenue. Let’s stay with apples.
If I own an orchard I will do a tally up at the end of the month; all of my revenue that I must pay GST on, and all the expenses that I can claim against. My rent, power bill, petrol, distribution costs and subscription to The Post count as expenses that will have GST on them. My sales, which will include the apples I sell to my wholesaler, count as revenue that I pay GST on.
If my expenses are two million, and my revenue is three million, I will only pay GST on the difference. The rate of GST in this simple scenario is not 15%; it is 5%. This occurs all the way up the food-chain, as it were, until my apples are sitting on the supermarket shelf waiting for sticky fingers to prod, test, and hopefully purchase the juicy glistening flesh of my sweet plump ripe apples.
If a supermarket buys apples for $5 a kg, and sells them for $5.99 a kg, they will only have to pay the GST on the 99c. GST is due on the $5.99, but you claim a credit on the $5. Even better they can credit all of the non-produce costs such as rent, tax accountants and paper-bag wholesalers.
To comprehend this through a wider lens; Treasury estimates the Crown will collect $22 billion in GST, while our GDP is currently $385b. That is 6%; and GDP represents the sum total of all spending in the economy.
When Te Pati Māori claim that the policy of removing GST on all food will cost $3.4b they are looking at the total retail cost of food and taking 15% off that, assuming the policy will be applied via zero-rating. Possibly. They, wisely, didn’t release their workings.
However, whatever that number is; it will not go to lowering food prices for those on the margins. GST is not a cost placed on consumers; it is a cost on business. I know. I run a business and each month my accountant tells me how much I have to pay Grant Robertson. Certainly, those running the supermarkets are a little more sophisticated, but the principle is the same.
We set prices to get as much top-line revenue as we can. The accountants do the rest and give management the bill. It is an illusion that GST is a cost consumers pay.
If you can sell apples for $5.99 a kg what would induce a company to reduce its price? According to those seeking to reduce GST on food, the supermarket duopoly is a price-fixing cartel anyway so lowering GST would, by this logic, have no impact?
Competition would, in truth, have downward pressure on prices at the margins, but it would be trivial and, in case we forget, wealthy pay more for food. Foie gras costs more than chuck steak. Those who frequent Farro Fresh would benefit more than those who wheel their trolly around the specials at Pak'nSave.
The accounting treatment of GST isn’t well understood; which is why we have been seeing stories that this policy will reduce the cost of apples and similar produce by 15%. It won’t and the failure to explain this to the public, or challenge politicians who make this dishonest claim, are part of the problem.
Removing GST from food will not help the poor. It will not significantly lower food prices. It will increase costs and lead to a diversion of resources to debating if Protein Shakes and Tim Tams are really food. It is, in the Garden of Godzone, forbidden fruit.
Hipkins will be looking for a MacGuffin to shift focus away from the literal and metaphorical car crashes of recent months. Removing GST from food is a perfect final throw of the dice for this administration.
This has been a regime that governed by instinct and not reason, that prefers the symbolism of a big announcement over the drudgery of effective governance and pursued adulation over achievement......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
God has us locked in a toxic and abusive relationship where humanity is being gaslit into believing that original sin was due to our moral failings when that this was His plan all along.
However, let’s get back to apples; for that is today’s MacGuffin. As part of my extensive research I went to Countdown’s website. It is still called Countdown and still has a peeled apple as its logo. Yummy Apples are being sold for $5.99 a kilogram.
$5.99. Many things sell for some dollars and 99c because there is more to price setting than the cost of the underlying product. The demand for an item, choosing a price point to attract the consumer’s attention, how elastic the demand for a particular product and what the competition is up to all feature into the pricing decision.
A retailer will set their price to maximise revenue. Let’s stay with apples.
If I own an orchard I will do a tally up at the end of the month; all of my revenue that I must pay GST on, and all the expenses that I can claim against. My rent, power bill, petrol, distribution costs and subscription to The Post count as expenses that will have GST on them. My sales, which will include the apples I sell to my wholesaler, count as revenue that I pay GST on.
If my expenses are two million, and my revenue is three million, I will only pay GST on the difference. The rate of GST in this simple scenario is not 15%; it is 5%. This occurs all the way up the food-chain, as it were, until my apples are sitting on the supermarket shelf waiting for sticky fingers to prod, test, and hopefully purchase the juicy glistening flesh of my sweet plump ripe apples.
If a supermarket buys apples for $5 a kg, and sells them for $5.99 a kg, they will only have to pay the GST on the 99c. GST is due on the $5.99, but you claim a credit on the $5. Even better they can credit all of the non-produce costs such as rent, tax accountants and paper-bag wholesalers.
To comprehend this through a wider lens; Treasury estimates the Crown will collect $22 billion in GST, while our GDP is currently $385b. That is 6%; and GDP represents the sum total of all spending in the economy.
When Te Pati Māori claim that the policy of removing GST on all food will cost $3.4b they are looking at the total retail cost of food and taking 15% off that, assuming the policy will be applied via zero-rating. Possibly. They, wisely, didn’t release their workings.
However, whatever that number is; it will not go to lowering food prices for those on the margins. GST is not a cost placed on consumers; it is a cost on business. I know. I run a business and each month my accountant tells me how much I have to pay Grant Robertson. Certainly, those running the supermarkets are a little more sophisticated, but the principle is the same.
We set prices to get as much top-line revenue as we can. The accountants do the rest and give management the bill. It is an illusion that GST is a cost consumers pay.
If you can sell apples for $5.99 a kg what would induce a company to reduce its price? According to those seeking to reduce GST on food, the supermarket duopoly is a price-fixing cartel anyway so lowering GST would, by this logic, have no impact?
Competition would, in truth, have downward pressure on prices at the margins, but it would be trivial and, in case we forget, wealthy pay more for food. Foie gras costs more than chuck steak. Those who frequent Farro Fresh would benefit more than those who wheel their trolly around the specials at Pak'nSave.
The accounting treatment of GST isn’t well understood; which is why we have been seeing stories that this policy will reduce the cost of apples and similar produce by 15%. It won’t and the failure to explain this to the public, or challenge politicians who make this dishonest claim, are part of the problem.
Removing GST from food will not help the poor. It will not significantly lower food prices. It will increase costs and lead to a diversion of resources to debating if Protein Shakes and Tim Tams are really food. It is, in the Garden of Godzone, forbidden fruit.
Hipkins will be looking for a MacGuffin to shift focus away from the literal and metaphorical car crashes of recent months. Removing GST from food is a perfect final throw of the dice for this administration.
This has been a regime that governed by instinct and not reason, that prefers the symbolism of a big announcement over the drudgery of effective governance and pursued adulation over achievement......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
2 comments:
The compelling requirement to understand is that NZ needs an educated upgrade of economic realities across the nation especially for the uneducated and politically illiterate.
Cheap talk by hipkins...
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