The Smiling Assassin's tax changes
Get on the treadmill and run harder.
This is the message to low and middle-income New Zealanders from our newest political hypocrite, Prime Minister John Key, with his proposed tax changes.
Caught out lying is the best way to describe the Prime Minister intending to break his pre-election promise not to raise GST. The 2008 video where Key repeatedly denies he would lift GST is damning. The "smiling assassin" is living up to his moniker.
Key’s excuse is pathetic. He said the early 2008 video comment about GST was in answer to a specific question about whether he’d raise GST to reduce the government deficit whereas now he wants to raise GST for a different reason.
Give us a break. Even his diehard supporters know it’s indefensible. He’d have been better to front up immediately and apologise for deceiving voters. And it’s not a minor matter. Those on low incomes will be hammered by this iniquitous tax.
Remember back to the 1980s when GST was first introduced by Roger Douglas. The then Minister of Finance was at pains to explain how low-income New Zealanders wouldn’t be disadvantaged by a 10 percent GST.
I remember him producing all sorts of graphs and tables to convince the public it was a good move. Convincing the Labour caucus at the time was easy because it was dominated by the wild-eyed enthusiasm of religious converts to the free market, such as Phil Goff, but the public was rightly sceptical. The poor were pounded by the tax but Labour raised it to 12.5 percent for good measure before being tossed out in 1990.
It’s a case of déjà vu in the last few days as Key and Finance Minister Bill English have been at pains to reassure low income families they will be compensated for the GST rise. But like Douglas’s charts and tables this will be a smoke and mirrors exercise.
GST hits those who pay the greatest proportion of their income on day-to-day living. With the exception of rent, the entire income of the poorest New Zealanders attracts GST.
How could an average income family get ahead on Key’s proposed taxes? Any cut in income tax will be more than wiped out hiking GST to 15 percent. Many will be forced to work longer hours but New Zealand workers already work among the longest hours in the OECD. It’s back to the daily struggle to survive.
Meanwhile it’s not a fair comment from Reserve Bank Governor Alan Bollard to say Australia is ahead of New Zealand because Australia has mineral wealth we don’t have. Bollard’s other comment that Australia has a more interventionist government is much closer to the truth. Look where we are after 26 years of Labour and National and their free market reforms.
Australia has 30 percent higher incomes than New Zealand with lower GST (just 10 percent). It does this partly with higher top personal tax rates and a capital gains tax. On every point New Zealand is going in the opposite direction and getting further behind.
We will continue to see escalating social problems as the wealth gap widens. Our prison population will swell while the shrill cries of populist politicians look for scapegoats. At least we beat Australia in that statistic.
The only group to welcome Key’s prescription is the corporate sector and why wouldn’t they? Businesses can look forward to drops in company, trust and top personal tax rates while getting more government money for research and development and easier access to the resources of Crown Research Institutes.
It’s the same old pattern of socialism for the rich and capitalism for the poor.
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Nicely done John - ignore the question that was asked, change the context to fit the mesage you want people to hear, and presto - you could have a career writing press releases justifying Tienanmin and Tibet too.......
It's the same old JM pattern - ignore what doesn't suit you, preach your message regardless of context, and never mind the truth if it gets in your way.
Alan Wilkinson #1.
I think John's first comment says it all really. "Get on the treadmill and run harder - to low and middle income earners".
High income earners never got off the treadmill. They have always been running harder. John is just upset that his primary constituents might have to get onto a treadmill and do some exercise.
"Those on low incomes will be hammered by this iniquitous tax."
How so John?, GST is a consumption tax....so if they go out and spend, say, $3,000 on the newest LCD TV they will pay an extra $75!! or do you mean by 'hammered' you are refering to ,say, $100 on groceries a week then they will pay an extra $2.50, $5.00 if they spend $200 a week etc etc, that's only a cpl of pints down the Local John ($5), and only half a pack of ciggies. National are also looking at changing tax, so even on low wages, some of the 2.5% (all?) will be returned by way of a tax refund....or does that fact not sit well with your typical 'woe is the poor' rant you normally dribble on about?
Again John, unfortunately your version of a 'poor' family, that we all see/know/read about....why do they always seem to smoke/drink John? I know they will be many families that don't drink/smoke, but they are in the minority and you know that, I guess the smoking and drinking is others fault too John and not theirs?...probably why they are poor?, all spare(?) cash goes on tobacco and booze, then they/you shout about how they have nothing....sheesh
Perhaps you overlooked the fact that New Zealand has a serious savings deficit. The way to improve that is to make consumption less appealing - so hence the approach of cutting personal taxes and increasing GST. I also would have thought you would be pleased that by increasing national savings and wealth, we reduce our reliance on the big horrible foreign corporates that you seem to dislike so much.
Not to mention the fact that with the overspending of the previous Labour government, the government was left with a massive hole in the books that it had to fill somehow.
Also the only person I have ever heard described as the 'smiling assassin' was former Silver Fern Vili Davu. Not a lot of similarities between her and John Key, I don't think.
What about a GST increase that essentials such as food etc are exempt from? Naive? Maybe..
morpheus, the name smiling assasin comes from John Key's nickname when he was a hatchet man for merril lynch
The tax system of Johns "Socialist Utopia" of Norway:
http://www.kpmg.no/arch/_img/9484126.pdf
25% GST (14% on food). Flat tax rate of 28% up to approx NZD$110,000, 37% from $110,000 - $180,000, 40% above $180,000 and most importantly there is no tax free amount at the bottom of the scale like there is here. Corporate tax is also a flat rate of 28%.
Rather amusing how so many of the "rich" people John dislikes here paying 39% would be paying 28% in Norway and how Johns "poor" people that he champions would be increased up to a flat tax of 28% on all their income. Along with higher GST...
Makes you wonder who really has the "socialist" tax system...
I do realise I've regurgitated this message in several threads but meh.
Australia 10% GST NZ 15% how is this catching up to Oz? Your right again John at least the majority of NZers arent convinced by the explanations of this government.
Moki
MOrph3us, You mention NZ's serious savings deficit...recent headlines state that people who have in the past put money in kiwisaver are now withdrawing it because of the recession. Where I live, nearly a hundred people are applying for a single job; even basic jobs.
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"Businesses can look forward to drops in company, trust and top personal tax rates while getting more government money for research and development and easier access to the resources of Crown Research Institutes."
Anyone except John and his ilk can see that will mean more jobs and better wages for New Zealanders who are willing and able to work.