GST Increase: Wrong Tax and Wrong Time

The National Distribution Union has joined family budget advisors, retailers and several political parties in growing opposition to GST being raised by 20% to 15 cents in the dollar in next week’s budget.

“Increasing GST is the wrong thing to do in principle, and increasing it now is the worst possible timing,” said Robert Reid, General Secretary of the National Distribution Union (NDU).

“GST is bad for workers as it places a larger tax burden on the lower paid, who have to spend all their weekly income on the basics, just to survive.”

“The New Zealand economy remains in a fragile state. There is still a need for more consumer spending to bring the economy completely out of recession, but a GST hike will actually reduce consumer spending, especially for those on low incomes.”

“The combination of increases in GST, higher bank interest rates and a rising dollar are likely to send the New Zealand economy back into recession,” Robert Reid said.

“While the government may wish to transfer consumption to savings in the medium term, there are other ways to do this, including an increase in employer contributions to KiwiSaver.”

Robert Reid said that Labour should be looking to reduce then eliminate GST altogether, not just focus on fresh food, and that all parties should seriously consider other ideas like a Financial Transactions Tax that could raise the same revenue as GST, but also help reduce currency speculation and therefore the volatility of the dollar.

“From the day it was announced, the NDU has described the proposal to increase GST as a con. There is no way that a cut in income tax for low waged workers can compensate for the increase in GST if the rich are going to receive hundreds of dollars a week in tax cuts.”

“The money to give the rich more has to come from somewhere. It will be New Zealand’s working poor who pay for it,” said Robert Reid.

ENDS

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