Petrol Taxes A Needless Roundabout
The combination of petrol tax increases and a higher families package is a needless roundabout that will be self cancelling for some households and unnecessarily expensive for many others.
The petrol taxes will have a double whammy effect by also raising the price of food and most other goods as freight companies and shops seek to recover their additional costs.
This will hit low income supporters of the Greens and Labour hardest despite the boost in the families package, and will stoke inflationary pressures.
CEO’s, those in management, property speculation, money market manipulation, and earners of higher incomes, will barely notice a ripple.
Labour should have looked to the lessons of the real Labour Party of 1935, who didn’t impose more taxes, but instead used the country’s Reserve Bank, at virtually no cost, to provide funding for housing and infrastructure projects. (see 1949 Ministry of Works report “State Housing In NZ”)
It could also have taken the $4.5 billion dollars in interest annually - $12 million per day, seven days per week - it pays to banks and financial institutions that create the money it borrows out of thin air, and channelled that into improving the country’s transport networks.
Introducing his Reserve Bank Amendment bill to Parliament in 1936, Labour Finance Minister, Walter Nash said “it is proposed to save a good deal of money in connection with the underwriting of Government loans. It is our work to see that the necessary stimulus of credit is given to the labour and the materials to enable the asset to be produced, and the asset, when produced, is the security given against the loan made by the Reserve Bank to the Government.
That approach was analysed by an International Monetary Fund report in 2012.
The Chicago Plan Revisited said this – “Allowing the Government to issue money directly at zero interest, rather than borrowing that same money from banks at interest, would lead to a reduction in the interest burden on government finances and to a dramatic reduction of (net) government debt…..”
Labour should have looked to its history instead of taxing its most loyal supporters.