Garner: poor GST compo will cause backlash

Written By: - Date published: 11:43 am, February 23rd, 2010 - 13 comments
Categories: gst, john key, poverty, tax - Tags:

Duncan Garner on John Key’s ‘soak the poor’ GST hike:

It’s not like Key runs a smooth Government. He is loose. He is casual in his approach probably too casual. It’s likely to trip him up one day…Even by his own admission he was ‘sloppy’ over his management of his shareholding in a mining company. But more fundamentally and more importantly, he has proposed a new tax he said he wouldn’t introduce during the election campaign.

I’m glad to see Garner acknowledge what is important here. Key’s lazy, sloppy style of doing nothing for ordinary people while National’s mates are paid off might be endearing to some but they’re a stab in the back for the 276,000 jobless Kiwis who look to the government in their hour of need.

The increase in GST would, under normal circumstances, be complete madness and a one-way ticket to political oblivion for many political leaders. But Key is holding out the hand of compensation. It’s a strange political strategy. Despite three in four voters saying they don’t want GST to go up, 54 percent say if it comes with compensation and tax cuts, then that’s ok. So, Key must get the compensation right or there will be a backlash from voters. He must make sure people don’t feel out of pocket.

The money simply doesn’t exist. You can’t get everyone to put some money in a bucket, give a large chunk of it to a couple of people and then compensate everyone else for what they put in with what is left. Keith Ng calculated that compensating the bottom 50% of taxpayers for the GST hike would necessiate a $6,000 0% bracket or cutting the 12.5% bracket to 6.7% at a cost of a billion dollars. Personally, I think the best way would be to cut both the 12.5% and 21% rates by 2 or 2.5%.

Either way, there’s no money left in the till for tax cuts for the rich if Key does that. Which is why Key dismissed Ng’s suggestions out of hand at the press conference yesterday and why he has repeatedly indicated there will be no reduction in the bottom tax bracket. No wonder 69% of people oppose a GST hike and 63% believe they won’t be fully compensated.

After the Budget, quarter of a million or so jobless Kiwis and hundreds of thousands more of the working poor are going to feel their wallets a little lighter, watch their social wage diminished by public serivce cuts, and still see no jobs on the horizon, while a few rich people make off with hundreds of dollars a week in tax cuts. And they’ll ask ‘what has John Key done to offer me a brighter future?’ and the answer will be ‘nothing’.

13 comments on “Garner: poor GST compo will cause backlash ”

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  1. Evidence-Based Practice 1
    23 February 2010 at 11:53 am

    You can add to that the elderly people on low fixed incomes who will now have to pay for home help to stay in their own homes after the DHB funding cuts.

  2. Lanthanide 2
    23 February 2010 at 12:11 pm

    “he has repeatedly indicated there will be no reduction in the bottom tax bracket.”

    The only thing I have seem him “repeatedly indicate” is that the tax cuts will be “across the board”, which presumably includes the lowest bracket.

  3. Pascal's bookie 3
    23 February 2010 at 12:18 pm

    The other thing he is clear on is that there will be no “comprehensive capital gains tax”…

    oh …and that the average worker will be seeing north of fifty dollars a week in tax cutz.

    • Lanthanide 3.1
      23 February 2010 at 1:29 pm

      Yeah, I think if he was trying to be crafty by saying “comprehensive” so he could come out at budget with a limited CGT, he will really piss off a lot of people for misleading them. While technically he didn’t mislead them, it will still be taken that way. Especially because in the weeks after his speech when he’s been having interviews and talking about it, he’s never made any mention of a watered-down CGT.

  4. pollywog 4
    23 February 2010 at 1:12 pm

    So when does the compensation package get trundled out and we get a decent look at it ?

    Realistically what can the working poor expect ? food and petrol vouchers vouchers ? Yeah, cos we love going cap in hand to WINZ asking for a handout. It’s not like we got anything better to do anyway and the staff there are always so helpful, understanding and sympathetic and they never look down their noses at us.

    Honestly, i feel so privileged for the opportunity to beg from the state. It does my self esteem all manner of good…nah seriously, honest. I’m just so thankful the welfare system is there and in gratitude, I is always gonna be good n*gga for you massa…

    (umm…prolly not the petrol vouchers cos a car in these times is a luxury not a neccessity …eh ? )

    captcha : thanks ( in advance for nothing)

    • Lanthanide 4.1
      23 February 2010 at 1:32 pm

      GST will be raised on the 1st of October, and the benefits will be raised by 2.2% on 1st of March next year. Nevermind that:
      1. That’s a six month lag
      2. The inflation is likely to be higher than 2.2% ($99.99 + 2.2% = $102.19, but shops will probably mark up to $105).

  5. pollywog 5
    23 February 2010 at 1:44 pm

    hah…a six month lag

    Oh my aching ass…apparently it hurts less if i stop resisting.

  6. Draco T Bastard 6
    23 February 2010 at 1:52 pm

    And they’ll ask ‘what has John Key done to offer me a brighter future?’ and the answer will be ‘nothing’.

    Wrong answer, it will actually be “given it to himself and other rich pricks”.

  7. rainman 7
    23 February 2010 at 2:01 pm

    “And they’ll ask ‘what has John Key done to offer me a brighter future?’ and the answer will be ‘nothing’.”

    Good. Because hopefully then they’ll vote the useless buggers out smart quick come the next election.

  8. tc 8
    23 February 2010 at 2:52 pm

    Surprising from garner who mostly thinks he’s the story……I’d be amazed if he maintains this very rational and substantive approach what with all those troughs the parliamentary gallery enjoy and Nat’s ease of dealing with those pesky journo’s when they make them work by thinking before replying.

    I’d be suspicious this isn’t a play for some delineation from the sycophantic behaviour eminating from Aunty TVNZ as a ratings ploy given TV3’s debt levels and axeman audsley lurking in the wings shaking it up (not before time)….as TV3 do enjoy more of the sweet spot demographic that spends up large whereas TVNZ reign supreme amongst the elderly

  9. SPC 9
    23 February 2010 at 10:08 pm

    Reducing the bottom tax rate to 10 cents and zero rating food and public transport is the way to go.

  10. DeepRed 10
    24 February 2010 at 12:45 am

    If worst did come to worst, maybe it’d be prudent to pull your helmets out of the attic…

  11. randal 11
    24 February 2010 at 1:36 pm

    looks like idiot boy must have had too many knocks to the head?