Abolish *all* GST

We produce the goods and services – let’s take ownership of them all!

GST was first introduced in NZ by the fourth Labour government in 1986 at the rate of 10%. While a similar tax in Britain excluded basic family items, the only things Labour excluded from GST here were financial services, real estate transactions and the operations of very small firms.

GST significantly raised the level of indirect taxation. The proportion of government income derived from indirect tax rose from 22.5% to 33.2% within just the first two years of the new tax.

In 1988, the fourth Labour government slashed the top personal tax rate from 66% to 33% and, the following year, 1989, GST was increased to 12.5% and imposed on all goods and services.

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EPMU leaders’ strange behaviour

– Don Franks

Celebrating the 20th anniversary of Labour’s Goods and Services tax, Listener columnist David W Young wrote:

” The reason GST is much-loved by right-of-centre policy wonks in New Zealand and marvelled at by their colleagues overseas, is that it’s “pure”. (Finally, a tax that right-wingers like!) GST wasn’t adulterated to make it palatable to the masses. Calls to exempt food, education and health were rejected by Douglas and Brash’s committee. The few exceptions are rents on residential rental properties, donations and financial services.”

Young noted:

“The biggest concern about GST was that it would disproportionately harm the poor. That argument, made strenuously by unions and mainstream politicians in the 1980s, has shifted over time to the fringes of debate. It’s based on the fact that GST is effectively a regressive tax, because poorer people spend a greater proportion of their income than the rich, who put more into savings.”

(“Happy Returns”, Listener Dec 1 2006)

Today, argument about GST is continuing inside the trade union movement, but with some union leaders opposed to the wishes of their rank and file.

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Why socialists oppose GST

We publish below a talk given by Philip Ferguson at a recent Christchurch Workers Party forum.  It is an expanded and updated version of an article originally published in the Spark in 2005 available here.

Most of the parliamentary parties favour tax cuts both for individuals and companies. Indeed, under Labour there has been a small cut in company tax and also tax credits for companies investing in R&D – and, in the latest budget, some personal tax cuts. Although the personal tax cuts are presented in a populist way, as if they would benefit workers, these parties vigorously oppose measures such as substantial increases to the minimum wage, serious across-the-board wage rises and increases in welfare payments to keep up with inflation, let alone living real wages and incomes for people on benefits. And all the parliamentary parties oppose the abolition of GST.

During the upcoming election campaign, one of the minimum platform points of the Workers Party will be demanding the abolition of GST, something that would be done by any government with even a token desire to make life a little easier for workers, especially the poorest workers.

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