How to Zero-Rate the GST on Food: Best and Worst Practice from the United Kingdom, Canada, and Australia

28 Pages Posted: 30 Apr 2012

See all articles by Alida van Klink

Alida van Klink

affiliation not provided to SSRN

Chye-Ching Huang

University of Auckland; Center on Budget and Policy Priorities (CBPP)

Date Written: April 29, 2012


The international norm in countries with consumption taxes is to exclude, by zero-rating, certain food items from taxation. New Zealand has to date been an exception, in part due to its low rate of GST compared to other countries. The recent increase in the GST rate from 12.5 to 15 percent, along with concerns about obesity and rising food prices, has put pressure on New Zealand’s position on taxing food. This article considers what would be the best way to implement zero-rating food were New Zealand to adopt that policy, by distilling lessons from the United Kingdom, Canada and Australia.

This article does not address directly the already well-canvassed question of whether food should be zero-rated. However, by proposing a best practice for zero-rating food in New Zealand, and identifying potential implementation traps, this article may inform debates about the pros and cons of zero-rating.

This article concludes that is possible to craft a simple, principle-based approach to zero-rating certain food items that avoids or mitigates the problems faced in other jurisdictions. Many of the problems faced by other countries when zero-rating food were due to unique political circumstances that New Zealand is unlikely to face. Nevertheless, there are some universal traps in zero-rating food, which some countries have fallen straight into, and others have avoided. New Zealand can learn from those experiences.

Keywords: GST, VAT, food, zero-rating

Suggested Citation

van Klink, Alida and Huang, Chye-Ching, How to Zero-Rate the GST on Food: Best and Worst Practice from the United Kingdom, Canada, and Australia (April 29, 2012). Available at SSRN: or

Alida Van Klink (Contact Author)

affiliation not provided to SSRN ( email )

Chye-Ching Huang

University of Auckland ( email )

12 Grafton Rd
Private Bag 92019
Auckland, 1010
New Zealand

Center on Budget and Policy Priorities (CBPP) ( email )

820 First Street, NE 510
Washington DC, 20002
United States

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