John Armstrong’s contacts in National are telling him that Working for Families and student loans are the targets for cuts in this year’s budget. He also reveals the real reason for National opposing the widely-supported earthquake levy: putting on a tax would be an admission that tax cuts for the rich were a mistake in the first place.
Armstrong says National’s ‘the sky is falling, the sky is falling’ cries are about
“softening up voters to a paring back of so-called “middle-class welfare” by removing the entitlement of large, wealthy families to Working for Families income top-ups while stopping interest-free student loans.”
Of course, these measures would raise just a fraction of the money needed, the rest would have to come from widespread cuts to other public services. So why doesn’t National just fund the rebuilding out of an earthquake levy? Key says that would strangle growth. To which the response might be ‘what growth?’ but, more seriously, how does raising a tax and spending that money straight away hurt growth more than slashing household incomes with WFF and student loan costs?
Armstrong reveals the real reason for National not putting on a small earthquake levy is pure politics:
“Though Opposition parties such as the Greens back a levy, its introduction could end up being widely seen as a reason why National should not have cut taxes in the first place, even if the last round of such cuts was fiscally neutral.”
So, there you have it. Key just can’t admit he made a mistake, so he’s digging us deeper into trouble. Rather than putting the rich back in the position they enjoyed just two years ago, he wants to shove the cost on to the poor and middle income families instead.
Btw, come on, John, you go to the Budget lock-up don’t you? You should know that the last round of tax cuts weren’t fiscally neutral, it’s right there in the executive summary: