Alliance Party agrees with Treasury call for tax reform – but of a different kind

Alliance Party Media Release – FOR IMMEDIATE RELEASE – Tuesday October 13th, 2009

The Alliance Party agrees wholeheartedly with Treasury Chief John Whitehead that “bold tax reforms are needed” but the Alliance believes that a shift in focus is needed in this debate.

Alliance Party co leader Kay Murray notes that so far all of the discussion is focussed on the different ways of raising tax revenue without actually examining the goal of taxation in the first place.

“I can’t help but get the impression from listening to these people that tax is simply play money for parliamentarians. It pays their wages and fairly generous living expenses and gives them money to spend on pet projects and other things that they think will encourage people to vote for them. They are fastidious about making sure that taxes pose no impediment the already wealthy adding to their personal wealth at an incremental rate. We need to go back and ask ourselves what the real purpose of tax is,” said Ms Murray.

“The Alliance believes that the purpose of taxation is to serve the common good and to reduce inequality in society and that is best achieved through a genuinely progressive tax system where the well-off pay more and ordinary working Kiwis less. New Zealand has, as a nation, prided itself on being a country where everyone gets a fair go. And there is a lot of research now that proves when everyone gets a fair go it benefits not just the people at the bottom who get the chance to catch up and have a decent life, but the rest of us as well,” she added.

However, Treasury’s other proposals of introducing a flat tax and raising the rate of GST would not sit well with this goal and while the Alliance welcomes John Key’s pledge not to further flatten company or personal tax rates, any other regressive moves on the taxation front would be unwelcome.

“Having said that, we believe that some other Treasury ideas, like the introduction of a land or estate tax and/or a capital gains tax, would be welcomed by the Alliance but not if they are used to offset any revenue losses that would accrue from giving further tax cuts to the wealthy,” she said.

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