CPAG calls for urgent rethink of fiscal policy
BUDGET POLICY STATEMENT FEBRUARY 2012
Child Poverty Action Group calls for an urgent rethink of fiscal policy.
CPAG agrees with the CTU that the tax switch policy has been an abject failure. The tax cuts have hugely increased income inequality, with higher GST impacting harshly on low income families.
The changes have been far from fiscally and distributionally neutral as was claimed by National.
“Worse still, since 1996 successive governments have withheld a significant part of the child-based family assistance from very low income families that could help with the costs of their children” says CPAG spokesperson Susan St John
First the Child Tax Credit (from 1996) and then its replacement, the In Work Tax Credit (from 2006) have been denied to those on benefits. Since 1996 this discrimination has saved the government around 5 billion dollars.
Denying these child-based
payments to those who needed them most helped to create the
surpluses of the 2000s which in turn funded the tax cuts to
the rich. Christchurch has since raised new needs and the
recession has deepened. Now the coffers are bare and there
are deficits with calls for cuts to welfare and public
services. This is just not fair to our poorest children.
In the current environment many more families find they don’t qualify for the In Work Tax Credit worth at least $60 a week, while others find it far too difficult to access.
“CPAG says the only fair fiscal policy is
one that raises taxes on the top income earners and wealth
holders and redistributes this money back to the families in
poverty.” This would be beneficial not only for children
but also economic activity and help to support struggling
low income neighborhoods.
Budget Policy Statement 2012: view here