GST increase would be unfair for low and middle income earners

Alliance Party media release FOR IMMEDIATE RELEASE Tuesday 18 August 2009

The Alliance Party says an increase in GST would hurt low and middle income earners.

Alliance Economic Development spokesperson Quentin Findlay says suggestions from the Taxation Review Group to increase GST to subsidize corporate tax cuts would increase the pressure on many New Zealanders.

“The vast majority of New Zealanders spend a lot of their money on food. There has been a major increase in food prices in the past years due to a range of factors. An increase in GST would push food prices even higher and in some cases out of the reach of ordinary people."

A rise in GST would cancel the effect of the recent tax cuts on middle income earners. However, for lower income workers, beneficiaries, students and superannuitants, who didn’t get a tax cut, an increase in GST would mean real hardship as basic living costs rose even more.

“The main focus for this tax review is to push the right wing agenda as far as possible in the shortest time possible. A rise in GST would be another move backwards.”

Mr Findlay says that the Alliance was committed to removing GST and was particularly committed to removing it off food in the first instance. The Alliance advocated a Financial Transaction Tax to replace GST.

“At the moment, lower and middle income earners subsidize the rich and businesses through the tax system. The Alliance’s Financial Transaction Tax would go someway toward correcting that imbalance by being levied at a progressive rate, ensuring that those who could well afford it paid more.”

The Alliance is also opposed to placing more people on the benefit when they did not need to be. The solution to that was obvious, Mr Findlay said.

“What is needed is more jobs at award rates with their conditions guaranteed. People should not have to get a benefit merely to buy bread and the Alliance will ensure that they don’t.”

ENDS

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