Time to give flat tax concept a decent burial

Published: Mon 7 Dec 2009 09:57 AM
Time to give flat tax concept a decent burial
Alliance Party media release FOR IMMEDIATE RELEASE Sunday 6 December 2009
Alliance Party co leader Kay Murray says it is time for National and ACT to get over their fixation with flat tax and return to reality.
"Flat tax is an outdated idea of the 1980's. All flat tax does is give the already wealthy a license to print money while destroying the living standards of low to middle income earners, the majority of the population. The flat tax theory is about as credible as the flat earth theory."
Ms Murray says the introduction of flat tax would spell the demise of the welfare state.
"Something all New Zealanders should resist, especially since we have been credited with being the first country in the world enlightened enough to introduce a welfare state that includes public health, education and social security for all citizens."
She says there is no real possibility of the introduction of flat tax, as it would create an enormous political backlash, but its ongoing promotion was to provide political space to a Government who wanted to give tax breaks to the already wealthy at the expense of the majority of New Zealanders.
"There is no good economic reason why the top tax rate needs to be lowered to 30% as Bill English suggests and even less reason why it should be lowered to 20% as the 2025 Task Force recommends."
Ms Murray says in either case there will be a large deficit in government income that will need to be made up by some other form of tax or cuts to essential social services.
"We are already borrowing heavily to balance the books. Any further tax cuts would be financially and socially irresponsible."
Ms Murray says there is a much more compelling reason to raise the top tax rate through a progressive tax system and broaden the tax base through a capital gains tax on investment property and a financial transactions tax.
"That way more of the burden falls on New Zealanders who can actually afford to pay the extra, rather than increase regressive taxes like GST which affects everyone, whether they can afford to pay or not."
She says it is urgent to lower tax on those struggling on low wages as there was real hardship in New Zealand and that had to be the priority for tax reform, not more disposable income for the already wealthy.
The Alliance Party has a full costed alternative budget and progressive tax scale, see

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