GST rise: Needs more thought

Friday, 05 March 2010 12:42 |

National's election manifesto did not put forward a hike in GST, so there is no public mandate for the proposed increase. Clearly the government needs to raise revenue and in a recession (or even emerging from a recession) income tax revenues will have fallen as benefit expenditure has risen.

Perhaps there would be a case for increasing GST if the necessities of life were exempt as they are in many other countries - for example; fruit and vegetables, meat, children's clothes and children's books.

This is a simple change that costs little to implement retaining the cost effective user pays tax for luxury items.

Families’ main expenditures are food and power, meaning that the issue of GST on power would need to be looked at carefully too. New Zealanders would then not be penalised for spending on things they need just to get by, as they will be under National's planned GST increase.

Compensation of 2% for superannuatants for a 2.5% hike in GST is clearly not going to enable people to have the same spending power as they do now, and people are struggling already. Labour wants fair tax changes that benefit everyone and are currently working on their tax policy to ensure that they get it right rather than rush into unfair taxation.

Perhaps there would be a case for increasing GST if the necessities of life were exempt as they are in many other countries - for example; fruit and vegetables, meat, children's clothes and children's books.

This is a simple change that costs little to implement retaining the cost effective user pays tax for luxury items.

Families’ main expenditures are food and power, meaning that the issue of GST on power would need to be looked at carefully too. New Zealanders would then not be penalised for spending on things they need just to get by, as they will be under National's planned GST increase.

Compensation of 2% for superannuants for a 2.5% hike in GST is clearly not going to enable people to have the same spending power as they do now, and people are struggling already. Labour wants fair tax changes that benefit everyone and are currently working on their tax policy to ensure that they get it right rather than rush into unfair taxation.