New Zealand must address international and internal trade barriers

ACT strongly supports the government’s initiative in opening up free trade talks with the European Union, said ACT leader Jamie Whyte today.

"More trade allows for greater division of labour and the productivity gains of specialization. Trade barriers – such as quotas, export subsidies and import tariffs (taxes) – reduce trade and hence the economic output of the countries involved," said Mr Whyte.

"This is true not only of trade across national borders but within nations too. Alas, New Zealand is full of internal trade barriers. That’s because most tax in New Zealand is levied only when trade occurs: most obviously, when someone pays for someone’s labour (income tax) or buys some goods or services (GST).

"The higher these taxes, the lower the internal trade in New Zealand and the lower the productivity of labour. That’s one of the many ways taxes don’t just transfer economic output but reduce it.

"Of course, the government must tax us to pay for essential state services. But it is absurd to tax people only to return the money to them in the form of “working for families” and other kinds of middle-class and corporate welfare.

"The money-go-round isn’t merely pointless, it reduces our productivity and output. It makes us poorer.

"A government that understands the importance of eliminating international trade barriers should also understand the importance of eliminating middle-class welfare.

"National should start unwinding the dreadful economic policies of the previous Labour government. With a strong ACT presence in parliament, it will."

ENDS

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