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Increased Tax Revenue Creates Opportunity For Stimulus Tax Cuts

Responding to the release of Treasury’s Half Year Economic and Fiscal Update, New Zealand Taxpayers’ Union spokesman Louis Houlbrooke says:

“Over the next four years, Treasury is now forecasting $16.8 billion more in tax revenue than it predicted in its pre-election forecast.”

“The question is what the Government will do with this revenue, especially as Treasury urges new stimulus measures.”

“The Finance Minister may be tempted to spend this money on social programmes and corporate welfare, justifying it as stimulus while also winning loyalty from the lucky recipients.”

“However, there is a far fairer and more efficient way of using this money for stimulus. A one-year reduction in the rate of GST from 15% to 10% would use up less than half of this extra fiscal wriggle room. The rest could be used to pay down debt.”

“A GST cut – as implemented successfully by the United Kingdom in the wake of the Global Financial Crisis – is preferable to Government spending because it does not disproportionately benefit certain industries, it allows New Zealanders to direct stimulus spending towards sectors of the economy that they actually value, and, because it is temporary, it encourages New Zealanders to bring forward future spending to the present when we need stimulus most.”

The Taxpayers’ Union has released a briefing paper making the case for a temporary GST cut at www.taxpayers.org.nz/gst_cut

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