Govt should 'get rid of Working for Families'

Getting rid of Working for Families would have been "the really bold" move but the Government is not been prepared to grapple with that, says Christchurch tax specialist Geordie Hooft at Grant Thornton.

Hooft said Working for Families had turned many families into beneficiaries.

"Just about everybody gets Working for Families. If you know the means and position of particular people it will be quite surprising to learn they qualify for Working for Families."

The Tax Working Group had pointed out problems with that scheme."The really bold thing to do would have been to get rid of Working for Families or restrict it."

If the objective of changes to tax rates was to make the country more productive and work hard then canning Working for Families and dropping the tax rate would achieve that.

But it was gutsy of Prime Minister John Key to signal a rise in GST to 15 per cent which would be accompanied by a fall in tax rates across the board, though by how much would not be revealed till the May 23 Budget.

It was low in comparison to the 17 per cent to 20 per cent in European countries, Hooft said. However, Australia's is only 10 per cent.

Hooft said the Tax Working Group had pointed out that raising GST to 15 per cent would gather up to another $1.9 billion in tax and that the cost of aligning the top personal tax rate, the corporate rate and the trust rate at 30 per cent would cost less, $1.6b.

Asked if Key's programme would achieve his aim of "a step change" in economic performance, Hooft said it was a step in the right direction.

- © Fairfax NZ News