BIG NEWS

Monday, October 18, 2010

Northern Courier on GST

An interesting article in the Northern Courier by outgoing editor Frank Neill. This paper circulates in the Mana and Ohariu electorates. I saw it when it came out last week and have been meaning to post it.
GST is becoming more and more of an issue for more and more people. At least that’s what I hear when I’m out newsgathering.
Maybe one reason it is a focus now is that GST went up to 15% on October 1. Many people remember National leader John Key promising, before the last general election, that it would not rise.
My impression is that people seriously don’t like broken promises. A great many people take the view that it’s better not to make a promise you can’t keep.
Around six years ago, I remember seeing billboards up around the Ohariu electorate. They featured the picture of electorate MP Peter Dunne and the words “No GST on rates”.
Mr Dunne was not the only one saying “no GST on rates” back then.
Three years later, though, I wasn’t really hearing that any more. Not very much anyway.
Today it is different. I am hearing more and more people questioning why we are paying GST on rates. Many of these people say they think it is wrong for the government to charge a tax on this tax.
I have heard words such as “immoral” and “iniquitous” used to describe the fact that GST is collected on rates.
There is merit in the argument that government is morally wrong to tax rates. In our democracies, we citizens have decided to divide the public provision of services between central government agencies (paid for by taxes collected by Inland Revenue) and local government (paid for by rates collected by local authorities).
Why, then, should we have to pay extra to central government for this division of public service?
The argument that rates provide goods and services and should attract a goods and services tax is spurious. So do taxes. Taking this argument, government could then charge GST on our income tax.
The other issue discussed is GST on food.
Labour leader Phil Goff has announced that his party now has a policy of removing the GST on fresh fruit and vegetables.
He made the announcement is Porirua and it immediately drew a response from Ohariu MP Peter Dunne and Ohariu-based list MP Katrina Shanks.
Mr Dunne slammed the proposal. In fact, he labeled it “irresponsible”.
After years of arguing for the simple GST system we have, Labour’s about-face is more about the main opposition party polling at 30% than the health of New Zealanders, Mr Dunne said.
"This isn't a conversion on the road to Damascus. It is principle-free panic on the road to electoral defeat.
"There is no other explanation for a total reversal of a long-held policy that makes sense. We have a GST system that works well and is simple.

The whole article is here

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