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Fifteen years of tax changes have failed

Jim Anderton Fifteen years of tax reform has failed, and a new approach to tax is needed, Alliance leader Jim Anderton said today after releasing an Alliance backgrounder on tax issues.

'The Great Tax Robbery' argues that the tax base is too narrow, the gap between rich and poor has widened because of tax changes begun in 1983, and the weight of taxation has been shifted to those sections of the community least able to carry it.

'We actually collect more tax as a proportion of GDP now than we did when the tax changes b egan. But individual taxpayers are paying a greater share through income tax. The very affluent are paying a lower share which means low and middle income earners are paying much more,' Jim Anderton said.

'Of the other claims made by successive Governments about the tax reforms of the last fifteen years, none have been achieved.

'We were told that there would be less tax avoidance. There is more, the black economy appears to be growing and the rate of uncollected tax has outstripped the growth in tax revenues.

'We were told that flatter tax rates would produce more jobs and faster economic growth. In fact, neither economic nor employment growth has kept pace with the average of other developed countries.'

Jim Anderton said it was clear that the tax base needs to be broadened.

'New Zealand is conspicuous among developed countries for the absence of wealth taxes.

'We also raise a much greater proportion of tax revenue from income tax than do most other developed countries.

'If we want to raise the revenue to pay for a better health system, to remove tertiary fees and to invest in jobs and improve income equality, then we can't do it by simply increasing tax on middle New Zealand.

'For example, when jobs are a priority and the balance of payments is in crisis, raising revenue through tariffs seems to be a better source of revenue than steep tax increases on ordinary households.'

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