CTU media release
Any increase in GST, as being floated by the Tax Working Group, would hit low income families and workers hard, said Council of Trade Unions Economist Bill Rosenberg. The CTU would oppose any increase.
“The rise is being proposed in order to lower income tax rates, apparently on the rationale that higher income tax rates cause people to leave New Zealand,” said Rosenberg. “We do not accept that people move that readily simply because of tax rates.”
“It is much more likely that low wages and salaries in New Zealand are the biggest driver for emigration.”
New Zealand’s ‘tax wedge’ – the difference between employers’ labour costs and what employees actually have available to spend – was one of the lowest in the OECD in 2008.
“GST is regressive: it hits low income people harder. New Zealand needs to maintain a progressive tax system – one that has higher proportional rates for those more able to pay. This is particularly important given the steep rise in inequality and poverty in New Zealand as a result of policies reducing social protections and increasing reliance on the market during the late 1980s and 1990s.”
“That rise in inequality was reversed by Working For Families for those in paid work, but recent income tax reductions will have again begun a rise in inequality. Inequality has demonstrated social and health ill-effects. Families reliant on benefits still await relief from very low incomes, often resulting in poverty, and the numbers affected will only increase with rising levels of unemployment.”
“We would support a capital gains tax to raise revenue, tax more fairly, and encourage investment in productive assets other than property, as long as the first home is excluded,” concluded Rosenberg.