RBNZ Changes Mean More Inflation And More Tax
The Government's plan to amend the Reserve Bank Act in an effort to "maximise employment" is likely to lead to more taxation by stealth, says the Taxpayers’ Union.
Joe Ascroft, Economic Advisor at the Taxpayers' Union says, “It has been shown internationally that monetary policy is an ineffective tool for lowering unemployment over the long run. The Australian and American central banks both have an employment target, like what is being suggested, but their ‘dual mandates’ are simply relics of a by-gone macroeconomic era. We now know that the only impact of this kind of policy is increased inflationary pressure.”
“Higher inflation hurts householders. It pushes workers into higher tax brackets over time – effectively hiking tax by stealth. The average household has lost nearly $500 a year from bracket creep since 2010. Labour’s proposed changes to the Reserve Bank Act, and likely higher inflation means that bracket creep is likely to be an even bigger burden in the years to come.”
The Union's report, 5 Options for Tax Relief in 2017, is available to access and download at www.taxpayers.org.nz/5_options.