2 December 2009 Media Statement

National’s failure to rule out GST increase alarming

Finance Minister Bill English’s failure to rule out an increase in GST should alarm low-income Kiwis and superannuitants, particularly given Mr English’s warnings of a tough Budget next year, says Labour Revenue spokesperson Stuart Nash.

“It was significant that Mr English didn’t rule out an increase in GST when the Tax Working Group held its last public meeting yesterday,” Stuart Nash said. “It is even more significant because in the past Prime Minister John Key has said the Government would have to be convinced by a good case.

“An increase in GST would impact most severely on those Kiwis who are struggling now to make ends meet.

“Kiwi families on low incomes and superannuitants can least afford to shoulder a bigger tax burden,” Stuart Nash said.

“It would be harshly inequitable if these Kiwis are made to struggle even harder just so better-off Kiwis can get a sweeter tax deal, but I fear that that is looking more and more likely to happen.”

Stuart Nash said the prospect of a GST increase became even more alarming given strong hints from Mr English that cuts in education, health and ACC spending were likely in Budget 2010.

“Even if the Government acts to compensate low-income Kiwis in the wake of an increase in GST, as it would surely have to, we all know that such compensation would not be enough to counter the extra pain they would suffer, especially if essential services are likely to be cut or taken away at the same time.

“To make matters worse most New Zealanders are facing no pay rises. No pay rises and no tax cuts for most Kiwis will simply add even greater inequity to our society.”

ENDS

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