Hon Jim Anderton
Member of Parliament for Wigram
Progressive Leader

21 January 2010 Media Statement

FTT better than increasing GST

A financial transactions tax is a better option for widening the tax base and reducing income tax than increasing GST, MP for Wigram and Progressive Party leader Jim Anderton says.

“GST is a regressive tax,” Jim Anderton says.

“GST falls hardest on people who spend most of their income every week - low and middle income earners. For people on fixed incomes, like superannuitants, it’s almost impossible to make up for the price rises they would pay at the shops.

“Instead of increasing GST, the government should look at paying for personal tax cuts by introducing a low financial transactions tax.

“A financial transaction tax could be set at a rate that for most transactions would be similar to the fee people pay for using an ATM, EFT-POS or electronic banking.

“A financial transaction tax is fairer than increasing GST because the majority of financial transactions are made by people with large sums of money to move around.

“Moving more of the tax burden to people who move very large sums of money around in search of speculative gains means people who actually work for a living have to pay less of the total tax share.

“James Tobin, the economist who invented the modern financial transaction tax, points out that it would reduce speculation and volatility in financial markets. After the global financial crisis exposed the irresponsibility of the finance sector, the time is right to take a fresh look at the idea.”

For more about financial transaction tax, see this Guardian newspaper article from December 2009.
http://www.guardian.co.uk/commentisfree/2009/dec/07/tobin-tax-climate-change-investment
And this November 2009 column by Nobel laureate in economics, Paul Krugman, “a financial transactions tax is an idea whose time has come.”
http://www.nytimes.com/2009/11/27/opinion/27krugman.html?_r=1

ENDS

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