Labour’s Revenue spokesman, David Clark, has picked up on a statement in IRD’s Briefing to the Incoming Minister that “2.5 percentage points of this decline [in tax take as a percentage of GDP] is attributable to policy changes”. 2.5% of GDP is $5 billion a year. So, a huge chunk of the record deficits that National is running is attributable to their tax cuts for the rich.
Next time you hear a rightie saying ‘we have to balance the budget with spending cuts or we’ll end up like Greece’, remember that it was National’s tax cuts for the rich that created the problem.* **
If they were really serious about getting the deficit down, National would just reverse the tax cuts that are causing the biggest slice of it. But they’re not. Instead, they’re cutting thousands of jobs and important public services – which just makes the economic and fiscal problems worse as public servants go on the dole and people have to turn to more expensive private options for those services.
And the Nats are using the giant pile of debt they’ve built up thanks, in large part, to the fact they’re borrowing $5 billion a year unnecessarily as a justification for selling our assets. Even though Bill English admits that assets sales would make the deficit worse to the tune of $100 million a year.
This just goes to show that National is not acting in the country’s best interests. They’ve run a strategic deficit by sending mountains of cash to the people who need it least – who just so happen to be themselves and their supporters. And now they’re using that deficit to justify their ideological agenda to starve public services and cut our assets.
* by ‘problem’ it’s worth noting that NZ has the 11th lowest level of net government debt in the OECD
** interestingly, it was tax cuts, not spending, that caused Greece’s unsustainable deficits in the 2000s, too.