Northern Courier on GST

An interesting article in the Northern Courier by outgoing editor Frank Neill. This paper circulates in the Mana and Ohariu electorates. I saw it when it came out last week and have been meaning to post it.

GST is becoming more and more of an issue for more and more people. At least that’s what I hear when I’m out newsgathering.
Maybe one reason it is a focus now is that GST went up to 15% on October 1. Many people remember National leader John Key promising, before the last general election, that it would not rise.
My impression is that people seriously don’t like broken promises. A great many people take the view that it’s better not to make a promise you can’t keep.
Around six years ago, I remember seeing billboards up around the Ohariu electorate. They featured the picture of electorate MP Peter Dunne and the words “No GST on rates”.
Mr Dunne was not the only one saying “no GST on rates” back then.
Three years later, though, I wasn’t really hearing that any more. Not very much anyway.
Today it is different. I am hearing more and more people questioning why we are paying GST on rates. Many of these people say they think it is wrong for the government to charge a tax on this tax.
I have heard words such as “immoral” and “iniquitous” used to describe the fact that GST is collected on rates.
There is merit in the argument that government is morally wrong to tax rates. In our democracies, we citizens have decided to divide the public provision of services between central government agencies (paid for by taxes collected by Inland Revenue) and local government (paid for by rates collected by local authorities).
Why, then, should we have to pay extra to central government for this division of public service?
The argument that rates provide goods and services and should attract a goods and services tax is spurious. So do taxes. Taking this argument, government could then charge GST on our income tax.

The other issue discussed is GST on food.

Labour leader Phil Goff has announced that his party now has a policy of removing the GST on fresh fruit and vegetables.
He made the announcement is Porirua and it immediately drew a response from Ohariu MP Peter Dunne and Ohariu-based list MP Katrina Shanks.
Mr Dunne slammed the proposal. In fact, he labeled it “irresponsible”.
After years of arguing for the simple GST system we have, Labour’s about-face is more about the main opposition party polling at 30% than the health of New Zealanders, Mr Dunne said.
"This isn't a conversion on the road to Damascus. It is principle-free panic on the road to electoral defeat.
"There is no other explanation for a total reversal of a long-held policy that makes sense. We have a GST system that works well and is simple.

The whole article is here

Will we be better off with an increase in GST or not, Mr Key?

Earlier this year John Key said he would cancel plans to raise GST if evidence shows people will be worse off.

Then he said that he wanted to make sure that low and middle income New Zealanders aren't worse off. Peter Dunne has echoed this in saying he'd want to make sure that low and middle income families are not hurt buy the GST rise - and that is a "key part of the policy." So does Dunne think it is ok if people are detrimentally affected, as long as they are not hurt?

Now Key is saying that it is his expectation that " the vast majority of (people) will be better off". This means that his expectation is that some either will be worse off - or will be neither better or worse off. If raising GST is fiscally neutral, why do it? The latest poll said that 63 per cent did not believe they would be better off from the resulting tax cuts. And given that half of all taxpayers are taxed about half of their income at the 12.5% rate, that's no surprise..For most people, it is other people who will be better off.

Labour thinks it can exercise some leverage on this . They are doing another tour. The wheels on the bus go round and round and we`ll see if people think Phil Goff is sincere -after all he did vote to increase GST from 10-12.5% - without adjustment to benefits.

If Key wants to make sure that low and middle income New Zealanders won't be worse off with a GST rise, he's not telling us how that will happen. Yet. And isn't it about time for Goff to state that Labour would repeal any GST increase, if indeed he is sincere in saying that an increase is A Bad Thing.

Or will the wheels on his bus stop going round and round - and fall off.

The PM and GST

post has been updated

Radio NZ reports that Prime Min­is­ter John Key says he will can­cel plans to raise GST if evi­dence shows peo­ple will be worse off.He says that should reas­sure the Maori Party, who oppose an increase in GST.

Isn't that a bit like saying that he will overturn the smacking legislation if someone gets prosecuted, which will reassure parents that they will not be prosecuted for breaking the law?

Answer: a little bit, but its going to be very difficult to provide evidence that people will be worse off when GST is raised before GST is actually raised, isn't it?

This, particularly for those on low incomes families, as Key has not declared how much (or even if) Working for Families will rise to compensate for the rise in GST, or how he will compensate low income earners who are not eligible for WFF. [update: he has sort of]. For beneficiaries to be no worse off after a GST increase, benefits will have to go up at least 5 percent, with an increase in WFF on top of that.

Personally, I think some people will be worse off as a direct result of an increase in GST, but because they won't be able to directly attribute that to a GST increase, John Key will stick to his line.

National is not going to raise GST- is it?

Before the election

National is not going to be raising GST. National wants to cut taxes, not raise taxes

After the election

The coded call for an increase to GST... was rejected by Mr English.

" We won't be doing that... it is not our policy," he said.

( Hattip Gobsmacked @ The standard

Yesterday

The Government is also carefully considering a modest increase in the rate of GST, to no more than 15 percent.

We are acutely aware of the effect that a rise in GST could have on lower income families.

update: Today

I said I wouldn't raise GST to cover deficits.

[video]

Problem was, that was not what he said.
Rooiigghhtt...