I recently read an opinion that National could put GST up to 17.5 per cent.
It seems that nothing was learnt from the last increase and the experience of other countries.
There is a limit to the revenue from GST and it appears to be 10 per cent to 12 per cent.
When Finance Minister Bill English put GST up to 15 per cent, he found the revenue gathered was less than that when it was 12.5 per cent.
If the per cent goes up, the take will be even less, for a 17.5 per cent discount on cash sales becomes an incentive for mates' rates.
GST is a tax aimed at the low-income groups. They are forced to use most of their income on day-to-day expenses. Thus the amount of tax paid on their low income is about 39 per cent.
On the other hand, the high-income, wealthy folk have money left over to invest and grow, avoiding tax wherever possible.
The New Right philosophy claims that this will provide growth and employment. So increasing GST is not to realise a bigger tax take, but to promote recovery by helping the rich.
PETER H WOOD
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