Labour’s initiative to travel the country by bus to inform ordinary New Zealanders about the destructive impact of an increase in GST is now underway. Led by leader Phil Goff and finance spokesperson David Cunliffe, Labour’s MPs believe strongly that any increase in GST must be fought, as it is simply not fair.
As we know, National plans to increase GST by 20% (from 12.5% to 15%) in order to fund tax cuts to the top 10% of wage and salary earners. We think this proposed increase is wrong for a number of reasons, but primarily because it simply isn’t fair to the vast majority of hard working kiwis: to those 800,000 families struggling on a household income of $60k or less, or the 75% of New Zealanders earning below the average wage.
No one voted for this tax increase, and the Prime Minister actually said that he wouldn’t increase GST. Increasing taxes for those most vulnerable in our society will only widen social and economic dislocation rather than increasing demand and stimulating the economy into recovery.
A recent Economist article noted that countries need to be careful that they don’t increase tax and loosen monetary policy too quickly (as in 1939 and in Japan in 1997) as this could force the global economy back into recession. There is simply no economic logic to this tax policy.
So, if you see the bus on the road, toot in support.
The Axe the Tax bus hits the road
Yee Haa!
Goodluck and bonvoyage 
All well and good to be against this possible GST increase from the tories, Stuart. Great. However, we don’t need reminding what party imposed this regressive tax in the first place.
Why don’t Labour do the decent thing for workers and call for the removal of GST, and follow the lead of more progressive countries and increase the top tax rate. We really need a fairer distribution of wealth in this country.
Great to see labour out there giving their support to tax cuts!
Good to see labour are against tax cuts.
so if we are against GST are we going to call for the abolishement of the 10% tax of ETS?
we stand to make ourselves look very silly going around the country if we don’t.
or, we saying “we want to protect you from 2.5% increases but, we are supporting 10% extra on your power and fuel bills! (ETS)”
So are Labour seriously saying that they will cut GST and so also cut the pensions and benefits and WFF payments that National will have raised? Good luck taking that to the electorate.
National proposing tax increases and Labour opposing them? Hmmm…
And the pro-National commenters here going “Yay for tax increases”
Weird.
Go the Axe the Tax bus!
as point. when GST rose in the UK in the 80’s millions lost jobs. millions.
if you do your research regard numbers of elderly lost their lives because they couldn’t afford heating.
i’m ashamed to say this, we are as guilt. as above, we are travelling around the country, on tax payer money, claiming horror at GST. yet, we are the ones who brought in the emissions scam.
it doesn’t matter that national are in. we are the ones dumping 10% the power and fuel bills of every low, super and the rest of the country come july.
if we had any moral grounding we would on the bus saying sorry for the emissions scam, pointing out the damage this creates and calling for it to be binned.
record numbers of elderly sorry.
Will Labour promise to “axe the tax”?
Buses seem to be quite fashionable at the moment eh? I blame Priscilla. What will the bus be carrying?
National plans to increase GST by 20% (from 12.5% to 15%) in order to fund tax cuts to the top 10% of wage and salary earners. Its a little unfair though that wage/salary earners earning over $70K pay a higher rate of tax than those high earners that are not on a wage/salary and thus have an opportunity to feed their earnings through companies/trusts. I don’t see why a school principal on $100K should pay a higher rate of tax than a dentist on a much higher income.
The Economist article included a warning about not increasing taxes and TIGHTENING monetary policy too quickly.
As for the actual tax issue – the purpose to raising GST is to discourage spending and encourage saving – so the focus on income tax cuts means the exercise is one in futility as the higher GST revenue is not being used to encourage savings. The proper course is to compensate those who cannot afford to save (and thus have higher spending costs) and as for those who can afford to save providing tax incentives so they actually do so rather then cutting their income tax.
Labour focus should be on adequate compensation for the poor and that should include the ETS costs as well as the rise in GST – this is consistent with the many not the few theme. Supplementing that theme with a focus on a better economic policy to get savings and investment, rather than simply cutting the top rate to allow the few to buy up state assets in a second government term.
Is there an itinerary i.e. dates and places?
Will Labour promise to “axe the tax”?
By leaving ETS in place and compensating for it shows one thing. Society and we are tolerating and then compensating for fraud. It also leaves the lever of future scamming in place.
it needs to go. Pure and simple
As several here have noted and not answer to date – but in order to have credibility are Labour going to repeal this tax – and put up income tax? This is a question Labour have been very careful to avoid answering. As as Labour are now so good at asking for clarity in Question time – can you please answer this question?? There is a credibility issue here.
simon, there is a need to discourage wasteful energy use and the money to finance energy efficiency projects for the poor come from sonewhere.
@ Monty is the fullness of time and at the appropriate moment.
Whos funding this bus?
The good people who dole out the doe for the opposition to spend however it pleases I imagine.
Fairly allocated funds. 
Trevor, With all due respect, for Labour to go out on a bus campaigning against the raise is GST the time is nigh that they tell the people of NZ what they would do if elected? That would be the appropriate thing to do.
SPC so you saying we should contradict ourselves? you are saying we should make the poor poorer to fix a problem that does not exist? its no wonder we are bombing in the polls.
the fact is ets doesn’t resolve a carbon problem (check nasa’s latest admission). there is also no warming (check Un and phil jone’s admission). as was said elsewhere, we can take a breather on this. there is no point trapsing around nz on a bus, saying we want gst rising stopped but, still saying we are going to swipe 10% or more anyway?
but, if you are know talking about funding energy efficiency projects for the poor, we are still from the poor, to feed the poor? or are you talking about the UN? we all know any money stolen will never get to the poor.
we just look very silly with this. very silly indeed. as was said elsewhere all this will do is prevent our low and super income from being able to afford to pay the power this winter. are you saying you wish to kill them to fund the un now?
When a Government suspects or knows of benefit fraud, it sets about chasing the fraudsters and often goes after everyone to weed them out. Why is it that when people are avoiding tax we don’t go after them, we lower the tax rate to legalise their behaviour? The recovery against the banks recently is kudos to IRD. I know that it costs money to go after tax avoiders because those doing this usually have enough money to fund a defence.
Are we really saying that we only want, as a society, to uphold principles against those who can’t afford to fight back?
@ Charles, Labour dosnt have to say what it will do in detail in the next political term at all!Why should they, at presnet we don’t even know what National are doing with regards to tax on income in the next few months.
Goff has already said if GST goes up to 15 it is not likely that it will come down. That is why he is saying don’t put it up axe the tax/GST increase.
@mark
Who is funding the bus. The taxpayer of course.
A couple of questions we need to have answered
Exactly who is paying for the bus?
Can we have it in writing that GSE will be repealed by Labour next time they are in Government?
If not what is being proposed?
Charles, Labour dosnt have to say what it will do in detail in the next political term at all!Why should they, at presnet we don’t even know what National are doing with regards to tax on income in the next few months.
Exactly. I don’t know, Labour doesn’t know and who knows if National even knows? Yet here Labour is opposing ‘tax cuts for the rich!’
Good to see the debate – and that is part of the point of the bus. A couple of thoughts on the thread above:
First, Labour making clear its tax policy before the next election would be a big step up on National who: a) promised three years of bonkers tax cuts even though they knew the GFC was happening; b) rammed the first through Parliamnet under urgency then c) cancelled the other two in Budget 2009 when it finally dawned on Bill English the numbers didn’t add… and d) told NZ before the election they would NOT raise GST, then said they would, with lame semantic excuses.
Why not be definitive now?: a) because we don’t know what the books will look like after another two years of these clowns; b) because we are respectful of the caucus and party processes around policy development and prioritisation, and c) because we have yet to see the Govt’s policy announcements, in Budgets 2010 or 2011.
Rest assured though, Labour’s tax plan will be fair to all Kiwis, not one aimed at delivering big cuts to the top end.
I want to underline that while “axe the tax” often mentions GST for the sake of brevity, what are highlighting is the tax package, which includes all of:
– GST
– whatever compensation the government uses to offset it (and whether that is sufficient to truly insulate Kiwis from the full costs e.g. of consequent inflation)
– the top rate reduction dressed up as “alignment”, which delivers windfall gains to the top few percent
– whatever moves are put in place to plug the loopholes around upper income tax avoidance and the runaway property sector.
To some extent the government’s “GST for compo” tax “switch” is cover for the bigger shift towards top end tax reduction.
Politics is, at least partly, about who gets what – and guess who stands to benefit most from National’s plans?
are we going to abolish ETS yes or no?
Labour are campaigning against the GST increase (yet being careful not to promise to reverse it), saying it will hit households hard. Well Stats NZ have calculated that the impact of GST going to 15% will be a one off increase of 2.0% in the CPI.
Now let’s see how that compares to the CPI increases under the last two Government’s.
In December 1990 the CPI was 731 and in December 1999 it hit 837. That was an increase of 14.5% over nine years – an average of 1.5% a year,
From December 1999 to December 2008 the CPI went from 837 to 1072 – an increase of 28.1%, and an average of 2.8% a year.
The difference between inflation under Labour and under National is around 14% – or seven times greater than the one off 2% increase caused by a GST increase.
Now if one takes just food prices, it is even worse. The food price index increased only 9.9% under nine years of National. Under nine years of Labour it shot up a massive 37.1%.
So if you hear a Labour MP talking about the impact increased prices will have on families, remind them of the 37% increase in food prices and the 28% increase in all prices that occurred under Labour.
Now you lot.
These figures are from NZ stats so lets see you wriggle your way out of this bunch of FACTS!
“Who is funding the bus. The taxpayer of course.” Yeah, but the opposition is entitled to tax paid funding, it’s part of democracy.
Wow, hats off to you Mr Cunliffe, you have been the only Labour member so far to address the points that people want to know Ka Pai. I don’t necessarily agree, but I do respect you for being open about the parties opinion. If only your leader subscribed to your transparency…
David; I guess you don’t believe there’s political capital in releasing shadow budgets either?
Why not reduce the bottom rates to compensate and whack up GST to 45% for the duration of the world cup. I am a great fan of getting other people to pay for my taxes.
simon, it is ACT policy to block the ETS, not Labour policy.
Matt, so Labour is responsible for the fact that worldwide inflation was higher in the past decade than in the 1990’s? (the post 2002 worldwide credit binge). And Labour is responsible for rising global food prices and the rising for energy worldwide – in the development of more expensive renewables (and our growth beyond the old cpacity level of hydro)?
You have no spporting argument as to why you infer Labour government’s “cause more inflation” – because the only significant pertinent policy involved (government spending levels) hase no relationship to food prices, energy prices or the level of worldwide credit (causing asset value inflation and the sense of consumer wealth which results in rising demand).
Some things right SPC, but CPI figures are commonly adjusted to hide energy etc, Theory is that govt cant control oil price so adding it in would crush the rest of the economy when the higher figure hits the desks of the decision makers. It also flows on to lower wage inflation figures. The distortion is aptly seen in US where an economic consultancy release real inflation to go with govt stats. For the first term of Dubba real inflation was 13% but govt reported about 4%.
Not just energy excluded but some taxes, distribution, interest etc.
Yech, David Farrar got a bit of a smack down from his commenters for that inflation argument last week-ish I think it was.
Jeremy, you state that “CPI figures are commonly adjusted to hide energy etc, Theory is that govt cant control oil price so adding it in would crush the rest of the economy when the higher figure hits the desks of the decision makers.”
Your example seems to relate to the United States. Do you know if this process is also done in by Statistics New Zealand?
I’m not trying to trick you, I just wondered.
@Jeremy 3.12 LOL
guys – sorry for the late reply – only just managed to get on line. David C has answered a lot of the queries, and there are others that require a dissertation to answer – and this site isn’t the place for that. I personally don’t believe that an increase in GST is set in concrete. It is hugely unpopular amongst the majority of Kiwis, and Key will have to spend nearly all his political capital getting this through. If he thinks he’s bullet proof, then he is very wrong.! There is an undercurrent of discontentment, and I get the very strong impression that Mr Key is not listening… He ignores the voice of the people at his own peril. Thanks for all the comments, and lets keep the debate going.
Sean – Yes anyone touched by IMF. In the 70s/80s I think they changed the figure to one in line with “management” accounting – ie one figure for tax, one for reports to shareholders and another to make it clearer for managers to see where risk/opportunities lie and what they can influence. I have been unable when looking for the real NZ figure (occasionally pops up in media) but I have only found references to infometrics or others that charge.
What a pity the bus will be driving through my electorate without stopping. The local Labour members knew nothing of this and would have loved to welcome Phil and his colleagues. Though we should have guessed this was just another media stunt, like the 20-second “we will not raise GST” video (try 23 seconds and you might hear the rest of the quote) and the motorbike silliness at conference last year.