Tuesday, February 09, 2010

Taxing believability

Today Prime Minister John Key delivered his annual speech to Parliament outlining what his government plans to do in the coming year. Critics on the right are saying he’s still a “do nothing” Prime Minister, apparently because he isn’t embracing the two recent reports from the neo-conservative “working groups” on taxation and competitiveness.

The left, predictably, is suspicious of the National Party’s tax plans, especially raising GST to fifteen percent. This will, as I’ve written repeatedly, hit ordinary working New Zealanders hard. Also, as yet we have no reason to believe the Prime Minister when he claimed that income tax cuts will be “across the board”. National’s past history is that it always rewards the upper income brackets and ignores the lower brackets. We’ll see.

However, this is what I find weird: National campaigned against Labour and its “Working for Families” programme in particular. They said it made no sense to take people’s money in taxes, only to give it back in benefits—yet this is exactly what National is proposing to do: National is planning to raise superannuation, the benefit and the Working for Families benefit to offset the increase in GST. Put another way, they’ll take money from people in taxes to give it back as benefits—what they said was a bad thing when Labour did it.

Also, the supposed benefits from income tax cuts are largely illusory. TV One estimated that those on $100,000 will get more that $5,000 a year, but someone on $70,000 would get less than a thousand. That could be—and likely would be—wiped out by the increase in GST. Folks on the average wage or less will almost certainly be worse off, even with the hikes in benefits.

Of course, all this could change between now and the release of the budget the end of May. National didn’t campaign on this, especially raising GST by 20%. Maybe if enough people object to it they’ll pull back. Maybe.

It should be an interesting—and taxing—few months in New Zealand politics.


Anonymous said...
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liminalD said...

Campbell Live on TV3 spoke to John Key asking for assurances that the rise in GST would be offset by overall higher personal incomes(presumably through across-the-board tax cuts), to which JK replied that he was sure that would be the case, but nothing had been set in stone yet.

Campbell then showed the PM's announcement to a small group made up of people from across the socio-economic spectrum, and the people from the lowest income bracket were understandably upset about the way they will be more adversely affected by increased GST than those in higher brackets, and all were extremely sceptical that tax cuts would in fact be fairly distributed across-the-board. i think we're seeing exactly what we always see from National government, an almost complete disregard for the lived experience of poorer families in NZ.

Personally I'm still dumbfounded that NZers voted them in at all in these tough times... why would you entrust your welfare to the people who most strongly advocate the sort of policies that got us into this mess in the first place? Why would you vote for the political party that has a track record of pandering to the rich when you and your family are facing greater financial hardship?

I was SO angry after the last election - more because so many people I know DIDN'T vote or simply didn't think that much about it - students and beneficiaries voting against their own interests just because "it's time for a change" without being able to give a decent answer why, or even knowing what change would entail. And Labour under Goff has done an appalling job in Opposition thus far - people just aren't aware of the changes National is making or what they will mean for ordinary everyday citizens.

It makes me go GRRR!!!!

Arthur (AmeriNZ) said...

I completely agree with you. One of the facts of the last election is that National didn't win as much as Labour lost: Labour's vote collapsed as voters—as you suggested—simply stayed home. Add to that the others, like the "time for a change" crowd you mentioned, and Labour's loss was sealed.

John Key specifically said in the last election that he would not raise GST, and now he is—breaking his own campaign promise. What other promises is he going to break, and should any of us really be surprised?

I also agree about Labour under Goff. While he was passionate in response yesterday, he's still not giving ordinary New Zealanders a reason to consider Labour as an alternative, let alone rallying public opinion to stop National's excesses.

We deserve so much better than what we're getting—on all sides.