CTU supports a fairer tax system

The Council of Trade Unions supports the tax policy announced today by the New Zealand Labour Party.

Peter Conway CTU Secretary, who participated in the Tax Working Group, says "this is a carefully considered and responsible policy framework. It will be good for the Government accounts but also good for the economy. But above all it is fairer than our current tax system."

"It is interesting to compare this tax framework with the tax switch pushed through by the National Government. Their tax switch did not help the economy, it pushed up the cost of living for those who could least afford it, created an inflation spike, and was not fiscally neutral. It also hugely increased income inequality - when combined with National's 2009 package, the tax switch increased the take home pay gap between someone on $30,000 a year and someone on $150,000 a year by a massive $135 per week."

A comprehensive capital gains tax is based on the principle that it is fairer to have a tax framework where every dollar of income earned, from whatever source, is taxed.

"Our economy has been disadvantaged by the absence of a capital gains tax. This has impacted on house prices, flowed through to interest rates and the exchange rate, and damaged productive investment, jobs and export performance."

Peter Conway said that the higher income tax rate affects those earning more than three times the average wage so is a very modest change.

"Many New Zealanders, especially those on low incomes, will welcome the confirmation that GST will be removed on fruit and vegetables and the first $5,000 of earnings are tax-free. Those measures, along with a lift in the minimum wage to $15 an hour would assist those struggling to cope with the cost of living."

ENDS

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