Plurality support quake levy

Written By: - Date published: 11:29 am, April 4th, 2011 - 4 comments
Categories: disaster, greens, polls, public services, russel norman, tax - Tags: , , ,

A UMR poll shows that 40% of Kiwis support paying an earthquake levy to help pay for the Christchurch rebuild. 22% prefer more borrowing, and 29% want spending cuts. Asked just whether they supported or opposed a levy – 57% supported it. Yet the Nats are choosing cuts instead.

I have shown before how we could avoid any spending cuts to important stuff simply by reversing the tax cuts for the wealthiest New Zealanders, reversing the brand new corporate rate cut, getting rid of polluter subsidies under the ETS, and not building motorways whose costs exceed their benefits.

The Greens’ proposal is focused solely on raising money to pay for the Christchurch rebuild. They say that a 1.5% levy on income over $48,000, a 3% levy on income over $70,000, and returning the corporate rate to 30% would raise $1 billion (which looks about right according to Treasury’s guide).

John Key, however, is determined not to listen to the people. He is going to push ahead with spending cuts instead, claiming that raising a levy will hurt the economy.

Of course, Key has made no attempt to explain why taking money out of the economy through a levy and then returning it via the earthquake rebuild will slow growth yet taking money out of the economy through spending cuts and returning it via the earthquake rebuild will not. Key never attempts to explain his voodoo economics. We’re just meant to bow down to the supposed superior macroeconomic understanding of a money-trader.

In reality, it is deep cuts to public services and transfer payments (Working for Families, etc) that will hurt the economy.

Except for the younger amongst you, we all remember the never-ending recession of the early 1990s. Just as things seemed to be looking up, Ruthanasia came along in 1990 and the guts were kicked out of local communities and economies, sentencing the country to more years of recession. It wasn’t until 1994 that economic output per person regained the level enjoyed in the late 80s.

Russel Norman warns that National will extend this never-ending recession if it repeats the folly of the 1990s:

“This is the 1991 lesson which National should have learned.

“New Zealanders clearly want to do the right thing and we know a temporary levy is smart economics, so the Government’s refusal to consider it looks more and more foolish,”

Norman is hopeful that Key will be swayed:

“John Key has shown in the past he’s willing to listen to New Zealand. Hopefully this poll, on top of the advice of several economic commentators, will shift his thinking.”

I wish I could share that optimism. Key and English are not choosing to cut public services because they aren’t aware of or don’t understand the alternatives. They’re doing it because they want to, because they choose to. This is their ideology in action.

4 comments on “Plurality support quake levy ”

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  1. randal 1
    4 April 2011 at 11:58 am

    according to hooton on  9-noon this a.m. any levy would be a distortion of the tax system.
    so what.
    there is no natural law saying that the universe will collapse if the govt imposes a levy.
    a government has the right to do what it likes without being constrained by the ideology of one faction of the electorate.

    • Pascal's bookie 1.1
      4 April 2011 at 12:12 pm

      fark, someone should tell the solipsist little freak that christchurch has had a distortion of it’s not-being-munted system.

  2. Pascal's bookie 2
    4 April 2011 at 12:15 pm

    The other thing is that a levy can be named and have the funds dedicated, and be legislated with a sunset clause.

    Funding cuts are permanent.

  3. Rich 3
    4 April 2011 at 12:43 pm

    Firstly, the concept that we have a financial gap to be filled in order to rebuild after the earthquake is a misreading of economics. We are currently in a recession, and the quake is making it worse. The correct economic approach in a recession is for government to borrow and invest in order to make up for a lack of demand in the private sector.

    (See Johann Hari and Paul Krugman on why debt crises are an engineered myth. And remember that those articles are about the US and the UK, who have *way* higher public debt than NZ (we have the 7th lowest in the OECD).

    Secondly, if there is to be an earthquake levy, it should fall equally on corporations and the asset rich, rather than just shafting earners. A wealth tax and global turnover tax would be much fairer than just jacking up tax rates for middle income earners. Why should corporates and millionaires be given a free ride (well, because they own the government, but apart from that).