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

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