Blow-out on Tax Cuts for Wealthy Results in Tax Increase on Graduates
Reports that Prime Minister John Key wishes to increase the repayment rate on student loan borrowers has been slammed by
the New Zealand Union of Students’ Associations as a tax increase on graduates to pay for a blow-out in the tax-cuts
that the government gave to the wealthy.
“Increasing the repayment rate is a tax increase for the 500,000 New Zealanders who have student loans. Student loan
repayments are a tax, since they are collected by IRD, straight out of your pay, just the same as PAYE. It’s outrageous
that graduates should have to pay higher taxes to pay for a budget short-fall which has been caused by the tax-cuts that
the National government gave to high income earners,” said Pete Hodkinson, president of the New Zealand Union of
Students’ Associations.
“Many of those with loans are struggling to make their minimum repayments already, since obligations start at such a low
level ($19,084 compared with $48,000 in Australia).”
NZUSA points to Inland Revenue Department figures that show that loans are currently being repaid as expected, except
for by some people who are overseas. The “cost” that Government claims of the loans scheme is that it takes time to pay
them back, and an account is made for the time cost of the money.
“Higher income earners pay back faster, so higher wages improve repayment times. Slower payers ‘cost’ more because they
take longer. Therefore, the way to increase repayments is to increase wages and to get graduates into jobs. Better paid
graduates pay their loans back faster. More jobs and better pay in New Zealand will reduce the incentive for people to
stay overseas, where repayment rates are poor, and encourage New Zealanders who live overseas to come home and
contribute to their country,” said Hodkinson.
“The National Government has got themselves into this situation because they gave tax-cuts to the richest New
Zealanders. That is what has blown-out the Budget. The implications of a generation of former students carrying onerous
huge debt repayment burdens because those who came before them, and had free education, want lower taxes is not fair. It
is not sustainable, and will lead to intergenerational frustration and anger.”
NZUSA is the national representative body for tertiary students and has been advocating on student issues since 1929.
ENDS