This press release from the CTU deserves wide discussion:
Tax Switch Created Many Problems
The New Zealand Treasury has revealed that the tax switch has created a $1.1 billion hole in the already weakened Government accounts.
Peter Conway, CTU Secretary and one of a number of economists who participated in the Tax Working Group, said that the tax switch has created many problems.
“It pushed up the cost of living, dramatically increased income inequality, failed to stimulate the economy, and has opened a big hole in Government revenue”, said Peter Conway.
“There is no doubt that the Government has had to face many challenges such as global financial crisis and the Canterbury earthquakes. But they have also made some poor policy choices that have made things worse.”
“The tax switch put up GST pushing inflation to 5.3 percent. The take home pay gap between someone earning $30,000 a year and $150,000 a year has grown by $135.00 a week due to tax cuts. And now despite assurances that the tax switch would be revenue neutral, it has already added over $1 billion to the deficit.”