Everyone loves cheese, especially governments. In a democracy like New Zealand, “block-of-cheese-tax-cuts” have become a popular pre-election promise. Even in dictatorships like North Korea, cheese appears to be essential to the political elite. Recent news reports indicate that Kim Jong Un is addicted to Swiss Emmental cheese – eating large amounts of it to gain weight so as to resemble his grandfather, North Korea founder Kim Il-sung.

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Of course cheese must be elemental to the French government, but my own experience has been with an enigmatic orange mass called American Processed Cheese Food Product. “Government cheese” as it was affectionately called, was part of the vocabulary and diet for millions of Americans from the 1960s through the early 1990s. “Government cheese is a processed cheese that was provided to welfare, food stamp recipients and the elderly receiving Social Security.” (Wikipedia)

According to the “Urban Dictionary” (.com), it was “A block of orange-yellow processed “USDA Cheese Food” issued by “Da Gubment” to aid needy families by supplementing their food resources. Used for making grilled cheese sandwiches and macaroni & cheese but also causes severe, bowel obstructing constipation, silent but deadly stinky gas, and/or “the runs” diarrhea in those who are lactose intolerant.”

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In the states, the term “government cheese” has come to refer to any type of government handout. The Rainmakers described the situation in song in 1986:

“They’re turning us all into beggars ‘cause they’re easier to please. They’re feeding our people that Government Cheese.”

“I don’t believe in anything, nothing is free. They’re feeding our people that Government Cheese.”

As suggested above, “government cheese” in a contemporary New Zealand context appears to have come to refer to the offer of inconsequential tax cuts at election time while avoiding meaningful changes like removing GST from fresh fruit and vege and/or taxing capital gains. Even in America these things have been in place for decades, and capital gains are listed as “unearned income” on tax returns.

As a child growing up outside of Detroit in the 1970s I was aware that certain items at the grocery store had tax on them while others did not. It was all very confusing at the time, but now I just go to the Internet to find it clearly explained:

“Retail sales of food and food ingredients for human consumption normally considered as grocery items for home consumption are tax exempt. This would include…cheese products, meat, nuts, popcorn, etc. The exemption does not include prepared food intended for immediate consumption.” (Source: fundraisetaxlaw.org)

Somehow, many decades ago and before “smart phones” existed, the state of Michigan figured out a way to differentiate between prepared foods and raw ingredients. Yet if you listen to Talk Radio in New Zealand in 2014 you hear arguments about how onerous and complicated it would be to replicate that process. Really? With barcodes and computer networks? I would suggest a pair of teenagers, an Iphone, and a long weekend would be all that is required to come up with a free app to do just that.

What’s the point? Holistic-thinking economists identify GST on food as a regressive tax on low-income families that serves to widen income inequality, exacerbate social problems and slow economic activity. A regressive tax “imposes a greater burden (relative to resources) on the poor than on the rich” (Wikipedia).

Food, energy and rates make up a larger proportion of the household budget for low-income families than high-income families. As such, the government plays a role in widening income and wealth inequality. To repeat, both central and local governments play roles in increasing wealth and income inequality.

Research worldwide has shown a direct relationship between wealth and income inequality and social problems such as crime, drug abuse, domestic violence, and teen pregnancy (Wilkinson & Pickett, The Spirit Level, 2009).

Additionally, certain economists-who-must-not-be-named might suggest that regressive taxes act as a drag on the economy. In other words, when people have fewer dollars in their pockets they spend fewer dollars in local shops. (I admit it is a radical concept.)

For a struggling provincial economy such as Whanganui, I would suggest some of the “new ways of thinking” that local business and government engage in would include moving away from regressive taxes and an inequitable rates structure that stifle economic activity and stimulate anti-social behaviour.

To quote the Big Cheese, Winston Peters, “It’s just common sense.”

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