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Prices, GST, inflation hit families hard

18 April 2011

Prices, GST, inflation hit families hard

Rising prices are hurting Kiwi families, and the Government’s tax changes have left thousands worse off, the Green Party said today.

“Petrol, food, and general prices are rising, and coupled with the GST increase, this is bad news for kiwi families,” Green Party Co-leader Metiria Turei said.

Figures released by Statistics New Zealand today showed that the main measure of inflation, the Consumers Price Index (CPI), increased by 4.5 percent in the year to March 2011.

“The fragile household budget is under strain for many New Zealanders,” Mrs Turei said.

“John Key argues that price rises are offset by the so-called ‘tax switch’, but the reality is that thousands of families have been left worse off by the changes.”

A table prepared for the Green Party shows that the increase in the cost of living has outstripped any gain from the Government’s tax cuts for anyone earning less than $80,000 and spending all of their income.

“For those forced to spend their whole income on necessities, there is no escape. What little they save from tax cuts is eaten up immediately by GST and price rises,” Mrs Turei said.

“Not every household will be in this vulnerable position, and Working for Families will help for some, but for those on middle and low-incomes, the impact is clear.

“The only people to benefit from the ‘tax switch’ are the wealthiest households who still have disposable income after paying for the basics.

“By introducing tax changes that disadvantage middle- and low-income families, John Key’s Government is widening the gap between the haves and the have-nots, even though we are already one of the most unequal countries in the OECD,” Mrs Turei said.

Mrs Turei said rising prices called for Government policies aimed at closing this gap, like extending Working for Families support to the children of beneficiaries and raising the minimum wage to $15 an hour.

“Unfortunately, John Key's Government is turning a blind eye to the pain of thousands of Kiwi families, and continuing to trumpet policies that will widen the gap and leave us all worse off,” Mrs Turei said.

Reference:

Table showing the impact of cost of living increases and tax cuts prepared by the Parliamentary Library:


Gross income Tax cut Cost of living increase Change
$ 30,000 $ 840 $ 1,120 -$ 280
$ 40,000 $ 1,190 $ 1,476 -$ 286
$ 54,000 $ 1,720 $ 1,922 -$ 202
$ 70,000 $ 2,200 $ 2,404 -$ 204
$ 120,000 $ 4,700 $ 3,799 $ 901
$ 250,000 $ 11,200 $ 7,426 $ 3,774

ends


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