11 April 2009

Tax cuts neither a priority nor effective

Today's ShapeNZ survey of New Zealander's attitudes towards tax cuts confirms the obvious: There's no wisdom in borrowing to fund tax cuts. Neither are tax cuts the right measure to provide an economic stimulus to an economy slipping deeper into recession, said Green Party Co-leader, Dr Russel Norman.

"Tax cuts in general don't stack up versus spending on home insulation projects, public transport services, and other green infrastructure investments."

Investing in Green New Deal infrastructure projects such as home insulation would create jobs and put New Zealand in a far stronger position than tax cuts designed before the last election, before the global financial crisis, and which don't address the climate crisis.

"We need Green New Deal policies to build the infrastructure we currently lack to create a mature, sustainable economy. Such investment will not only create jobs in the short term, it will leave our economy in a strong position to grow in a world reshaped by climate change and the end of cheap oil."

Dr Norman advocates some of the Green investment strategies adopted by US President Barack Obama, rather than the dinosaur fossil-fuelled approach on which the Government is pinning New Zealand's future. Conservative Leader in the UK, David Cameron, is also reprioritising his party's commitment to tax cuts. Debt reduction is more important than tax cuts.

In a recent letter to the US Congress , Nobel award-winning economist Joseph Stiglitz actually recommended raising the top levels of income tax as part of a suite of measures to stimulate the economy. He argues it's more important to protect state expenditures than continue to give tax relief to people at the higher end of the tax bracket who will spend relatively little of their additional income to assist economic growth.

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