Election 2023: Labour's headache continues amid questions of caucus friction over tax

The headache for Labour continues with it being forced to fight off questions of caucus fraction over tax.

The National Party is alleging Labour is about to announce an election policy promise to cut GST off fresh fruit and vegetables.

Prime Minister Chris Hipkins began the day with Australian leader Anthony Albanese, chugging back hot chocolates. 

It's certainly not as healthy as fresh fruit and vege, which Hipkins is not ruling out making cheaper.

Hipkins possibly gave the scoop away during a hot chip chat on Paddy Gower Has Issues on Wednesday night. 

Asked if he would consider removing the GST off potatoes so chips can be more affordable, Hipkins replied: "I think more affordable would be a very good thing."

On Thursday he was again refusing to rule out cutting GST off fresh produce.

"I'm not announcing our tax policy today," he said. 

National's finance spokesperson Nicola Willis said she understood Hipkins would soon announce the idea as a policy.

Asked why National was announcing Labour's tax policy, Hipkins responded: "They are not."

Finance Minister Grant Robertson has previously poured cold water all over taking GST off fresh food. 

"If it's low and middle-income households, you know, there are better ways of us delivering support to them, which is what we've done," he told Newshub Nation in May.

Willis said: "I understand that the Finance Minister has been rolled once again by the Prime Minister."

Economic experts hate it.

"I think it would introduce complexity into our tax system that we don't need and it wouldn't necessarily be effective at achieving what people think it will," said economist Stephen Hickson. 

Hipkins wouldn't comment on a "hypothetical policy I haven't announced". 

Te Pāti Māori's very real policy goes further to cut GST off all kai.

Asked if that includes Coca-cola, co-leader Debbie Ngarewa-Packer said: "I don't know why everyone's so obsessed with Coca-Cola."

"We refuse to get into the debate on how and who's dictating to families on how they should eat." 

Part of its radical wealth distribution pitch includes promising an income tax-free threshold of $30,000, giving every New Zealand worker up to $72 back a week.

"We must redistribute wealth back from our wealthiest to our working people now," said Ngarewa-Packer. "Incremental is a total cop-out."

It would pay for that by increasing tax on earnings over $200,000, increasing corporate taxes, land banking tax, a vacant house tax, and a very, very big promise to end all tax evasion

There's also a wealth tax. 

"A wealth tax won't be introduced by a Government I lead and that the Labour Party is part of," said Hipkins. 

"If parties want to make wealth tax a bottom line for being part of a Government or not being part of a Government then ultimately they would need to find a governing partner that was willing to go along with that."

Ngarewa-Packer said: "Ending poverty has to be a bottom line. It has to be."

Amelia Wade Analysis

This potential Labour policy has the potential to be an election upset.

Policy wonks hate it because it's messy and leads to arguments about what's in, what's out?

Is sweetcorn in the vege aisle in, but frozen corn in the freezer aisle out? This has led to court cases overseas.

The Government's own Tax Working Group in 2018 found it benefited wealthier households more because they spend more on food.

But it's very popular with people. In a Newshub-Reid Research poll last year we asked about taking GST off all food and a whopping 76.6 percent said, yes.

After this frankly shambolic year, Labour is less appealing than Brussels sprouts. It desperately needs a juicy policy and this could see the party as once again ripe for the picking.