Herald preaches class warfare

Written By: - Date published: 2:00 pm, May 1st, 2009 - 39 comments
Categories: articles, tax - Tags:

cap160If you’d told me the Herald would use International Workers’ Day as an opportunity to preach class warfare I wouldn’t have believed you. But there’s really no other way to describe today’s editorial.

We all know the Government is running a large deficit at the moment. Of course, the deficit would be much smaller (about $2.5 billion a year smaller) if we hadn’t just had two rounds of tax cuts in six months, but that’s where we are.

I’ve already suggested that a small tax increase on the very wealthy would be a good way to make sure debt doesn’t get out of control. Now the Herald is calling for a tax increase to control debt too. Except, where I’m asking for more from those who can most afford it, the Herald wants to sock low-middle income Kiwis with the bill.

The Herald says we should raise GST to 15%. No one, not even the Herald, disputes that GST is felt most heavily by people on low incomes because they spend more of their money buying goods and services. The editorial uses typical meaningless neoliberal rhetoric like ‘broadening the tax base’ to justify it, but we can all see the real game.

The logic is simple. The Herald believes that our most vulnerable citizens, increasing numbers of them unemployed, even more working reduced hours, should have to pay more for their milk and cheese just so that those living it up on $200,000 a year can get a tax cut. It’s an absolute bloody disgrace.

For years, the Herald has been cheerleading National’s tax cuts for the rich. If it was geninuely concerned about debt it could have called for them to be reversed at any time. But it hasn’t. Instead, it’s turned around and demanded a tax increase that falls mainly on the poor. This is class warfare in its purest form.

39 comments on “Herald preaches class warfare”

  1. I was pretty shocked when I read this too…. is Roger Douglas writing Herald editorials these days or something?

  2. Brett Dale 2

    Dont you call the very wealthy people on 100 thousand?

    • Draco T Bastard 2.1

      No, we don’t – that’s why people on $100k+ incomes get WfF. We really do accept that it costs more to live than what the capitalists are willing to pay. Unfortunately, a lot of people, including many on the left, aren’t willing to openly say this.

  3. George Darroch 3

    GST is the flat tax that Labour refused to touch. This move is sick, but having a GST of 12.5% is hardly a good thing either.

    Remove GST.

  4. Tom Semmens 4

    I see another one of the government cheerleaders, Richard Long, flew this kite as well in his stuff column. Clearly they are under orders to sound out the public reaction. No matter how you dress it up, a government elected primarily on the basis of promising wildly unsustainable tax cuts would see its popularity implode if they actually put taxes up.

  5. Brett Dale, can’t you read? Tane’s post clearly says $200,000.

    I’m not sure whether the complete removal of GST is the answer, but certainly it would be very unfair for GST to be increased at a time like this. Does the NZ Herald not make the link between the unaffordability of basic items like food & petrol last year as a significant pre-cursor to the economic recession?

  6. Peter 6

    Push GST higher and slash our taxes.

    We simply don’t need more poor people buying extra large KFC portions, we need savings and investment in productivity.

    You’ve had your fill under Helen. Our turn now, fatties.

    • r0b 6.1

      You’ve had your fill under Helen. Our turn now, fatties.

      Classy.

      we need savings and investment in productivity.

      That’ll be why the nats slashed KiwiSaver and R&D tax credits then.

    • sanson 6.2

      Obesity is a disease of poverty. You don’t like fat people? Reduce poverty. Don’t put up the price of food by increasing GST so that poor people are forced to choose the worst, most obesity-causing foods.

      Also, tell ‘two pie’ Brownlee that he needs to cut back.

      • jerry 6.2.1

        Gosh there must be a lot of poverty in parliament at the moment….Gerry, Parekura, Nanaia the list goes on ….we must start paying these people more otherwise they’ll become so corpulent there won’t be room in parliament for anyone else.

        Captcha .. against twaddle 🙂

        • Peter 6.2.1.1

          Another Bucket-O-Chicken for the South Auckland Labour voter? Some more Warehouse trash?

          Sorry. No more, Helen. Bye-bye.

          More money for the producers of wealth to reinvest!

          Thanks John.

          Love ya.

          Raise that GST. Have a three piece pack. And go for a run.

          • Tane 6.2.1.1.1

            Peter, fuck off. We don’t need your racist and classist shit here. This is your final warning.

          • Lou 6.2.1.1.2

            I have been reading this blog site since the lead up to the last election, I have read some comments that make me furious by the same token I have read some really good comments,
            I feel A need to reply to this A*** H*** Peter what a P****. I really hope you or some one close to you feels the full impact of trying to make ends meet, I hope one day you have $50.00 after paying the mortgage and bills to feed a family of five after being made redundant
            Fruit and veges actually become a LUXURY Item, come and live in the real world for a month fat cat.

          • BLiP 6.2.1.1.3

            Classic National.

            Helen’s gone, now make fun of fat people and the impoverished. Next it will be the homeless and the mentally insane. Oh, no. Sorry. They’ve already started on the homeless.

          • Draco T Bastard 6.2.1.1.4

            The rich do not produce wealth – they abscond with it from those who do.

          • Peter 6.2.1.1.5

            Oh, do – in the words of Michael Cullen – lighten up, dudes.

            You know you’ve thought it, so don’t come over all high and mighty with me for articulating it.

            Point is – there IS a lot of low quality spend if you simply hand people more money. It isn’t productive, it gets churned and burned. How does this increase productivity?

            It doesn’t.

            You need to leave it where people will save and invest it. We live beyond our means, and that includes the poor.

            BTW:

            I was raised poorer than any of you, I guarantee it.

            But I escaped poverty.

            By facing reality.

  7. The Voice of Reason 7

    “our turn now, fatties”

    Oh, no, has anyone warned Bunter Brownlee?

    Captcha: $10,000 minds ( about $9,999.99 more than Peter O’Tools is worth)

  8. Zaphod Beeblebrox 8

    A Carbon and a Capital Gains Tax would be massively more beneficial to our economy, our planet and our spending habits raising the GST. Our children would be thanking us for it. We could then use the income from these taxes to fund infrastructure, green technology and food and crop research as well as removing GST from milk, fruit and vegetables. Let no one accuse the Herald of progressive thinking.

  9. gobsmacked 9

    The Herald editorial is nasty, but we should be getting past stage one (outrage) and getting smart on stage two. Otherwise it’s just rinse and repeat for three years. This is not going to stop.

    Stage two, as Tom suggests above, is looking for motive. It looks like a classic softening-up process. Key/English will say they have “no plans” to increase GST (oh! thank goodness! how centrist, how fair!), Douglas/Hide will propose increasing it, the usual commentators will float other reactionary moves, and in the end some version will be brought in (but not the worst ones, so let’s all be grateful, eh!).

    These people are smart, and know what they’re doing. Don’t get played.

  10. George Darroch 10

    So if 15% GST is full on class warfare, is 12.5% mostly class warfare?

    If “No one, not even the Herald, disputes that GST is felt most heavily by people on low incomes because they spend more of their money buying goods and services.” then why has Labour retained it?

    Is it because they’re too scared of raising headline tax rates? NZ has one of the flattest tax systems in the world (outside tax havens), thanks to Roger Douglas, and it’s essentially stayed that way for 20 years.

    • Tane 10.1

      Because they’re cowards, George. They know it’s wrong but they haven’t got the guts to change it. Understand that and you’ll understand the Labour Party.

      • Quoth the Raven 10.1.1

        Yep. GST should go. A more prgoressive taxation regime would be preferable to this regressive tax. Another idea would be to replace it with a carbon tax, which itself seems preferable to an ETS.

  11. Peter 11

    >>We don’t need your racist and classist sh@t here

    Just their votes, eh Tane.

    Thing is – you get nowhere by stimulating low quality spend in a recession. You need to leave the money with those who know how to save it, and make more of it.

    Youse need to be watching Peter Schiff, dudes.

  12. Bill 12

    Given that charities are facing a shortfall in funding, a rise in GST is a bloody good thing. Consider the following figures.

    Between 1980 and 1988, in the US ( that’s the country whose culture of charity JK wants to see emulated here lest you have forgotten…old post at Standard) …

    charitable donations from those earning over $500 000 fell by 65%.

    People earning between $25 000 to $30 000 raised their donations by 62%.

    And people earning under $10 000 gave 5.5% of their income to charity. A bigger share of their income than anyone else.

    ( Business Week, 5 Nov 1990 and Boston Globe, 16 Dec 1990)

    In other words, making the poorest poorer will in actual fact make the poorest less poor.

    So raise that GST and flatten those tax rates and philanthropy of the poor will see the poor through. Meanwhile the rich will be just dinky and everyone will be happy. No?

    • BLiP 12.1

      No, not really. Even with a rise in GST, the dole is still too high. How will the rich get someone to mow the lawns and clean the cars if the unemployed are getting paid enough to eat for doing nothing by the government? No, “dinky” doesn’t cut it. Its important that they are aspirational going forward.

      The rich have democracy by the balls, this is no time for them to settle for just “dinky”.

  13. BLiP 13

    The New Zealand Fox-News Herald is a foreign owned multinational operating with the sole aim of maximising return to shareholders. Everything and anything it says should be considered in this light.

  14. SPC 14

    I vote Green and regard myself as on the liberal left side of the fence – and my opinion is that GST at 20% makes good economic sense.

    The economics stack up. We need more tax on personal consumption (our BOP shows us as one of the worst in the OECD for living beyond our means).

    Sure any human being would only do this if they were to compensate the poor by taking GST off food, deliver a large increase in support to families and either eliminating income tax on the first $20,000 or having a 10 cent rate all the way up to the minimum wage.

    Thus the only ones actually paying more tax with higher GST would be those on higher incomes.

    That said, a carbon tax and CGT are as useful and any intelligent government would do all three (as broad a tax base as possible is the ideal).

    These extra taxes could finance less tax on savings (deducting the CPI off interest income before it its taxed) and more investment in economic growth – depreciation writeoffs, R and D tax incentives, Fast Forward, home insulation/energy efficiency, a programme to build up the state house stock while the construction sector was underused, loans to farmers to finance the requirement to clean up their waterways).

    • Ari 14.1

      Or you could actually tax resource use rather than the exchange of goods and services. GST doesn’t discourage consumption, it discourages exchange of goods and services altogether.

      Taking GST off food is a nightmare as you have to ask “what counts as food?” Do you only take it off ingredients? What about a precooked chicken from the supermarket? And if you take GST off restaurants as well, you face subsidising the food industry, and subsidising unhealthy eating habits at that, too.

      • SPC 14.1.1

        GST is necessary to tax the “black” economy and to reduce the perverse impact of high levels of tax on income.

        The advocacy of another form of tax, whether CGT or a carbon tax (you are not seriously suggesting the taxing of resources such as water or land are you?) is irrelevant to that. I support these two as well, as I posted earlier. The more diverse taxation the better.

        GST is a consumption tax and thus it discourages consumption. You say it discourages the exchange of goods altogether. Are you seriously saying that tax on income discourages work altogether or that a carbon tax would discourage production altogether?

        At present we have an imbalance – we consume more goods and services than we produce (financed by growing debt). The only way to address this BOP deficit is to consume less (especially discretionary spending choices on imported goods). Our present course is not sustainable.

        A tax on consumption has the added advantage of increasing the relative reward for saving and thus consequently investment. This is what the economist would call a necessary structural path for sustainable growth.

        Now food is not a discretionary choice and is largely a locally produced good. We would not be unique in choosing to exempt GST from consumption tax and most countries have correctly chosen this course. You take the tax off food. Ingredients, food sold in shops and food sold ready to eat from outlets. If this means some relative advantage to an industry operating and employing locally so be it. Need I belabour the point that food is not a discretionary choice and people only need so much of it.

        Are you opposed to GST, or a fan of it in so far as food? Oh my gosh are you the person Cullen was talking about – you want GST on the food industry to punish us for eating unhealthy food.

        • Quoth the Raven 14.1.1.1

          SPC – The fact remains that GST disproportionately affects the poor by dint of it being a regressive tax.
          Need I belabour the point that food is not a discretionary choice and people only need so much of it.
          A lot more of what we buy than food is not a discretionary choice and has GST on it e.g., medicines. and the line between what is discretionary and what is not is not stark. I would prefer a carbon tax with the revenue being offset by decreasing GST or income tax for those on low incomes.
          The advocacy of another form of tax, whether CGT or a carbon tax (you are not seriously suggesting the taxing of resources such as water or land are you?) is irrelevant to that. I support these two as well, as I posted earlier. The more diverse taxation the better.
          Why is it that the more diverse the taxation the better? I’m not advocating a land tax but it doesn’t seem like an entirely bad idea. Myself I’d like to see a more egalitarian distribution of land. As such I’m quite sympathetic to those, like geoists, who propose a land tax.

  15. jarbury 15

    If GST was to be increased to discourage over-consumption then you would need to ensure that it was taken off basic necessities. I think there’s a reasonable “Green” argument there.

    However, in order for this to not hurt the poor you would need an extremely progressive income tax system to make up for it.

    • SPC 15.1

      No not really, just reduce tax at the lower levels (zero up to 20,000 or 10 cents up to the minimum wage and more generous family support for those on middle incomes) – that does not increase the income tax rates applying on higher incomes.

      The left alternative to a more progressive tax structure is such an across the board tax cut – where all obtain the same tax cut (everyone gets the same $20 a week income tax cut whether on the minimum wage or $150,000 a year). The point being to compensate everyone for the extra GST cost on necessities but leave people more highly taxed on their discretionary consumption choices.

  16. Adrian 16

    Tax free up to $20000 sounds good but it would cost about $3-3.5 billion and that has to be found somewhere. I’m not a very good mathmatician but I think an extra 2.5% GST would fall short of this by quite a margin.

    • SPC 16.1

      Oh Adrian, why not read my original post (6.23pm) before jumping in. It referred to “20%” GST – the option is zero up to $20,000 or 10 cents up to the minimum wage ($25,000 and rising each year) – 20% GST would fund this and zero rate GST on food, and increases in family support.

  17. Anthony Karinski 17

    You guys noticed that Tamiflu and it’s equivalent is up for sale for people without prescriptions, priced at $60 – 80 per treatment? The government’s stockpile in NZ sits at 40% of the population, whereas in France and Britain it’s at 50% with the latter going for 80%. The government here is saying it will provide for those who cannot afford the drug, which has to major flaws.

    1. People get flu symptoms, and those with enough money are rushing to the local chemist, mixing with a lot of other people with a potentially reduced immune system increasing the risk of yet more infections (People go to a pharmacy because they’re sick)

    2. A 40% government stockpile is not quite the same as an 80% one. I suspect Britain has got some realistic advice saying that if this one mutates into something similar to the Spanish Flu most of the population will come down with it at some stage. If the government is happy to let the remaining NZ stock go to the highest bidder they’re potentially denying genuine sufferers treatment in the future. They’re also increasing the likelihood that someone who’s got the real flu buys the drug and uses it in a way that risks the virus mutating into a resistant strain that becomes immune due to the lack of professional advice.

    The people best set to deal with this disease are health professionals. What the government should be doing is not setting up a system where people can rush to the chemist and buy medicine if they got the money. Rather, they should put in place plans for people with symptoms to be able to see a doctor without the potential of them infecting other patients and get the drug administered by the same principle.

  18. Adrian 18

    I take your point SPC but any GST rise over the minimum possible would lead to massive inflation, not from the tax rise butfrom profiteering, it happened last time and a 7.5% rise would see prices go up by close to 15%. I can’t remember exactly how much inflation went up when it was raised by 2.5% but prices lifted by a multiple of that and when anyone complained the government was blamed.

  19. SPC 19

    The best time to do it is when inflation is going down as it is (some even fear deflation), and remember that if the GST rate on food is falling from 12.5% to zero the impact is being offset.

    Its with a little inflation that real losses can be mitigated – and this is why deflation the alternative is so feared.

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