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Tax Freedom Day - Richard Prebble Speech

Thursday 3rd May 2001 Richard Prebble Speech -- Other

Today, the 3rd of May, is Tax Freedom Day - the day we stopped working for the government and began working for ourselves.

The government now takes 34% of everything the economy produces. ACT calculated the 3rd of May by using Treasury's tax revenue projection. Put another way, 123 days of the year the nation works for the government and on the 3rd of May we begin working for ourselves.

The government now takes $38 billion dollars a year. It is a sum of money so large we cannot easily conceive it, so let me put it another way. We have just lived through January, February, March and April. Everything every business and every person produced, the government took.

What did the government do with our money? The government spends $100 million a day every day - $700 million a week. Again, incomprehensible.

Rodney Hide has calculated that government spends $200 a week for every person - man, woman and child. Now that's something we can understand.

To work out how much money the government is spending on your household, take the number in it, in my case five, at $200 a week per person, it's a $1,000 a week. That means the government spends more a week than I do!

What does the government do with your $200 a week? $3.35 of the $200 goes on police; $3.18 on courts and jails; $6.05 is the cost of defence. Our roads cost $5.26 - so for $17.84 a week we get law and order, roads and an army, navy and airforce.

The civil service costs $9 a week. We spend $15 a week on paying interest on debt politicians have built up. The cost of Helen Clark's arts and culture is $1.76 a week and Jim Anderton's people's bank and other business welfare is $3.60 a week.

Throw in the cost of Parliament - about 80 cents a week - and it adds up to about $50 a week. So where does the other $150 a week go?

Social welfare costs $76.48 a week for every man, woman and child. In my household of five we are paying $360 a week for beneficiaries. Given the rude things the Unemployed Workers Union say about me, they do not appear to be grateful.

Health costs $34.74 a person. We are paying a lot considering the length of the waiting lists. Education takes another $32.60. Universities take $10.85, or a third of the education dollar. As my son is paying heavy fees and my niece full fees, I doubt if we get value.

No politician has ever asked us whether we think $3.35 a week for police and $76.48 for social welfare is our priority. Frankly, I would happily pay a dollar a week more to ease Auckland's roading congestion and to see Transmission Gully built.

When I see that long term unemployment under this government has increased 19 per cent to 106,000 then I think $76.48 a week on welfare is being wasted. You have to be ready and willing to work to qualify for the dole and some have been on the dole for 20 years!

No political party has ever asked the public how much we want to spend on law and order versus welfare benefits, on pre-school education in contrast with welfare for business. Part of the problem is that the financial figures are telephone numbers and voters feel unqualified to answer.

So ACT has come up with a novel way of asking the electorate what their spending priorities are. We have taken Tax Freedom Day as a way of asking the public how much tax they wish to pay and on what, so we are surveying a number of households asking - how many days should New Zealand families have to work for the government?

We have calculated how many days each individual works for each government activity.

Then we are asking what are your priorities - do you wish to work 26 days a year to pay for welfare benefits? 23 days for health, one day for pre-school, two days for police? We have broken down government expenditure into 18 different categories - everyone works four days for defence, four days for roads, 17 days for National super, 14 days for schools, and one day for courts.

Already, ACT is having a strong response to our survey.

Despite reported claims that people are prepared to pay more tax, ACT's survey shows that while many would like to see more tax on police, on pre-school education, on health, an overwhelming majority of respondents have put together their budgets with very substantial saving. People are shocked at the coalition's priorities.

ACT is going to publish the results of our survey of the public's tax priorities and send it to the government prior to the Budget.

Tax just creeps up. Great granddad fought World War I with the government taking one dollar in ten. Granddad financed the welfare state and World War II with government taking one dollar in four. Helen Clark and Jim Anderton are taking one dollar in three, but can't find the $14 million for a community card for the hardworking poor. The coalition says "go on a benefit and you can have a community card".

In our survey we are asking - do you believe that tax freedom day should be: 40 days: until 9 February [enough to fight WWI]. 80 days: until 21 March [enough to fight WWII and finance a welfare state]. 100 days: until 10 April [about the same as Australia and the level here in the 1970's]. 123 days: until 3 May [Labour Alliance coalition].

Two sobering thoughts. The OECD which surveys its member countries using different techniques, says that the government in New Zealand takes not 34 percent of GDP but a massive 41 percent. The OECD says we should include government charges and rates.

If we use the OECD method, Tax Freedom Day should be May 31. The OECD survey is valuable because it shows how much higher taxes are in New Zealand than in Australia where government expenditure is about 5 percent less.

A second sobering fact is that a third of all adults in New Zealand are state beneficiaries. Many other adults are not in the work force. The real tax burden is being carried by just one adult in three. So for taxpayers, Tax Freedom Day is not May 3. For taxpaying households it must be much later in the year.

With most taxpaying households paying 33 cents in the dollar plus 12.5 percent GST, Tax Freedom Day must be in June. Those in the 39 cents tax bracket are probably working for the government for well over half the year.

ACT is calculating what tax freedom day is for tax paying working households. We intend releasing this later in the year. What ACT has done is show that New Zealanders are not only over-taxed, but we are also taxed for government spending that very few voters support. ACT intends making not only tax, but what it's spent on an election issue.

ENDS


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