"There's no silver bullet that will fix the cost of living," Prime Minister Jacinda Ardern said as she debated in Parliament Te Pāti Māori's proposal to cut GST from kai.
It's not the first time the Māori Party has suggested it. Former Te Pāti Māori MP Rahui Katene had a Members' Bill in 2010 to remove goods and service tax (GST) from healthy food but the National Party didn't support it.
Removing GST on fruit and vegetables was also a key plank of Labour's 2011 election campaign but it was later scrapped and Ardern confirmed in 2017 that her party had no plans to pursue it again.
"When it comes to the policy of the removal of GST on fruit and vegetables, obviously, that was some years ago rather than 2017, [when] that policy was held," Ardern said in Parliament on Wednesday.
Ardern's comments came after Te Pāti Māori co-leader Debbie Ngarewa-Packer questioned her on why Labour in 2017 decided to "ignore their own policy and not remove GST from fruit and veges".
Ngarewa-Packer's concern stems from the whopping 17 percent increase in the cost of fruit and vegetables in February compared to the same time last year, according to Stats NZ.
The Tax Working Group in 2019 calculated that a GST exemption on food would save families in the bottom decile of income roughly $15 a week while families in the highest decile would save $53 a week.
Ardern argued that Labour's increase to the benefit, minimum wage and Family Tax Credits in April, as well as the return of the Winter Energy Payment in May, will do more to help Kiwis struggling with the cost of living.
"When it comes to just the blanket removal across the board of GST on food, you will have heard me reflect that - by just taking it off all food, at a cost of $5 billion per annum - there are targeted ways where we actually can provide greater support for low- and middle-income families," Ardern said.
"That is what we have done as a Government, using the Working for Families tax system to make sure that whānau are receiving more in their pockets during this period, and you would, for instance, see greater benefits to higher-income earners through a blanket removal of GST."
Ngarewa-Packer urged Ardern to regulate retailers and break up the duopoly to prevent unreasonable price hikes on food.
Ardern pointed to the Commerce Commission's report last week that determined the grocery sector was "not working well for New Zealand consumers" with smaller retailers unable to compete effectively against the two main players.
"It has confirmed what we feared as a Government: that the market could be more competitive and that, currently, that is coming at a cost to consumers," Ardern said.
"We have taken seriously the recommendations. We'll be taking those to Cabinet and giving an official response."
Te Pāti Māori co-leader Rawiri Waititi said despite being in power for more than four years, the Government had "not shifted the tax burden from the poor to the wealthy through new taxes on accumulated wealth, such as on capital gains, 'ghost houses', financial services, and pollution".
Ardern, who ruled out introducing a capital gains tax in 2019 after Labour's then coalition partner NZ First rejected the idea, said her Government had evened the paying field in other ways.
"We have focused on trying to ensure that the incomes of our low- and middle-income families have increased. In fact, when you look at the impact of our policies on, for instance, the likes of a low-income earner, someone on the minimum wage, we have increased their wages significantly," Ardern said.
"We've also, at the same time, for instance, put in place an additional top tax rate at those earning $180,000 or more. We have introduced, for instance, an extension to the brightline test. We've removed interest deductibility and removed other tax loopholes, which we believe were weighing the market more in favour of those who are investors in the market, relative to first-home buyers.
"All of those things, we believe, are not only evening up the playing field but making our tax system fairer for all New Zealanders."
National has promised to reverse the removal of interest deductibility and Labour's extension of the bright-line test - the income tax to be paid on any gains from residential property sold within a certain period - from five years to 10.
National would also remove Labour's new top income tax rate of 39 percent on each dollar earned above $180,000.
