Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Paying to rebuild CHCH: A small temporary earthquake levy

Paying to rebuild Christchurch: A small temporary earthquake levy

Published: February 25, 2011
by Russel Norman

While the horror of Christchurch’s second earthquake continues to unfold, those of us not immediately involved in the recovery can begin to plan for the rebuilding of a city and the livelihoods of those who live there.

The question that immediately comes to mind is how are we going to pay for the recovery and reconstruction?

The Earthquake Commission (EQC) and private insurance will cover most of the cost to private property. Everything else—the hospitals, the roads, the rail, the sewage—will likely be borne by central government. More borrowing by central government is being contemplated.

As a practical, principled response to the Christchurch earthquake, the Green Party is putting forward for discussion the idea of a small temporary earthquake levy on all income earners over $48,000.

The levy would work like the one being introduced in Australia to pay the A$7.2 billion fix-it bill after their floods.

To make it fair, the levy would fall on those most able to pay it. Those earning between $48,000 and $70,000 a year could pay up to an additional one per cent income tax, while those earning over $70,000 could pay up to an additional two per cent income tax to help pay for the reconstruction of Christchurch. (People earning less than $48,000 and all those living in the Christchurch region would be exempt from paying the levy.)

A levy at those levels would raise an additional $921 million per year and be directly tagged for disaster relief and reconstruction. The levy could last for a defined time period such as a year, or end with the reconstruction of Christchurch, whatever comes first.

Here are a number of different levy scenarios with estimates of the amounts they raise:

Income band Scenario 1 ($M) Scenario 2 ($M) Scenario 3 ($M)
$48,000-70,000 (@0.5%) $118 (@1.0%) $236 (@1.0%) $236
$70,000+ (@1.0%) $343 (@1.5%) $514 (@2.0%) $685

Total yearly revenue $461 $750 $921
The additional tax to pay for individuals would look like:
Income (pa) Scenario 1 ($/week) Scenario 2 ($/week) Scenario 3 ($/week)

$50,000 $4.80 $9.61 $9.61
$60,000 $5.77 $11.54 S11.54
$70,000 $13.46 $13.46 S13.46
$80,000 $15.38 $23.08 $30.77

There are those who argue against such a levy. Australia’s flood levy has been attacked by the Right who argue that further government cutbacks are the best way to find the necessary funds to pay for their flood damage. And a new, albeit tiny, tax raise for upper-income earners goes against the Key Government’s current pathway towards a flat tax structure. And of course we have already paid into the EQC kitty over many years.

However, we don’t believe these arguments against a small temporary levy are convincing. The public sector is already being cut and further cutbacks won’t help the jobs situation. A tax rise may go against National Party ideology but it is only temporary for a national emergency situation. And the size of the damage bill appears to be greater than current reserves and re-insurance.

With this small temporary earthquake levy we don’t wish to politicise the argument. We don’t wish to re-litigate the argument around National’s tax changes, nor do we think the Right should use the opportunity to promote their agenda of asset sales to pay for the damage. We need a pragmatic response to the situation we’re in. We can return to the arguments about tax rates and privatisation later.

A small temporary earthquake levy does appear to offer a fair way for all of us to do our bit to contribute to Christchurch’s recovery without adding to Government debt. We welcome your feedback.

ENDS


© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Water, Pests, Erosion...: Commissioner Releases Mixed Report Card On Environment

The Parliamentary Commissioner for the Environment has released a mixed report card in her assessment of the state of New Zealand’s environment. “We are lucky to live in an exceptionally beautiful country, but we have some big issues to face up to” said Dr Jan Wright. More>>

ALSO:

Education: Private Schools Beneficiaries Of Extra Cash

“Not only did this year’s Budget freeze operational funding for state schools, but 86 per cent of secondary school principals say they don’t get enough funding, and the demand for school donations from parents is rising at 10 times the rate of inflation... Now we’ve got Hekia Parata proposing more cash for private schools." More>>

ALSO:

Shop Hours Bill Second Reading: Government Blocks Easter Trading Petition

The union representing retail workers is warning that the Government is out of touch with working people after passing the second reading of the Shop Trading Hours Amendment Bill, a law handing local authorities the power to permit trading on Easter Sunday. More>>

ALSO:

Gordon Campbell: On The Shewan Inquiry Into Our Tax Haven Rules

Like the political equivalent of lithium, Prime Minister John Key is routinely administered to dull any politically dangerous mood swings amidst the general public... More>>

ALSO:

Law Commission: Review Of Search And Surveillance Act Begins

“For example, the Act was drafted before cloud-based storage of data was commonplace. In the light of these and other developments, the Commission will be examining whether the investigative powers in the Act are sufficient for law enforcement purposes. We will also consider whether the safeguards that surround those processes are adequate.” More>>

ALSO:

Houses, Campers And Cops: LGNZ Media Briefing

At their quarterly media briefing today Local Government New Zealand addressed areas where local authorities are feeling pressure and outlined their approach for the upcoming local body elections in September-October. More>>

ALSO:

17 Year Sentences In Baby Moko Case: Attorney General On Plea Bargain

“The Crown’s decisions in this case, including the decision to accept the manslaughter pleas, were motivated by the need to secure convictions for this horrendous killing and to avoid the significant risk that either of the defendants could escape such a conviction because of evidential issues.” More>>

ALSO:

As Govt Cuts Lobby Anti-Smoking Group Funds: On The Nation - Plain Packaging Debate

Imperial Tobacco leaves open possibility of law suit against New Zealand government if plain packaging is introduced, as planned. Says it’s a “last resort” but “of course we will defend the right to use our brands”. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news