GST and things to consider.

For many years now we in the Alliance have been saying that GST is an unfair and regressive tax that takes more than its fair share from the pay packets of the lower and middle income earners. Now a petition has been presented to parliament and it seems that our idea to get rid of GST has finally caught on.

The problem is though, that nobody has come up with a viable way to remove GST and maintain social spending. Nobody that is, except us, the Alliance. GST on food alone generates almost $2 billion a year. That is quite a chunk out of the budget. We have long said that GST should go and be replaced with a Financial Transactions Tax. This means that every time $100 is taken out of a bank account (withdrawals, not deposits) 2 cents is paid in tax. So you can pay $12.50 in every $100 in GST, or you can pay $0.02 (2 cents) in every $100 in a Financial Transactions Tax. I know which one I’d prefer and I know which one is fairer on the middle and low income earners, not to mention beneficiaries and the unemployed.

Below is the latest Alliance press release on this matter if you want to read further.

Alliance Party Media Release – For Immediate Release, Friday October 3,
2008

The Alliance Party has congratulated the Residents Action Movement (RAM)
who today presented a petition to Parliament calling for the abolition of
GST on food.

This petition was received by Maori Party MPs, who support the call. But
no one is talking turkey over how wiping GST on food can realistically be
achieved, says Alliance Party list candidate, Sarah Campbell.

“We need to talk about why GST should be abolished, and as to how we
can afford this. This is not just a question of making food cheaper because
people are struggling as it is, but it is more a matter of economic
justice and of being fair to all New Zealanders,” says Ms Campbell.
The Alliance Party supports wiping GST on food, and has a fully costed  alternative budget that shows how this consumption based tax can be  replaced by a financial transactions tax, where basic financial transactions are taxed at the small rate of 2 cents per $100. The revenue from this tax
would be entirely dedicated to removing the GST from food. Alliance policy is to work toward removing GST entirely, but its removal from food would be
an immediate priority for the party.

“GST is an unfair tax because those on lower incomes spend a higher  proportion of their incomes on basic commodities such as food, and  therefore pay a higher proportion of their incomes in tax. It’s a regressive     tax, and  that is the opposite of what Alliance policy is about,” she says.

A financial transactions tax (FTT) would be a very small amount to most
New  Zealanders – far less than they are currently paying in GST – but it
would  draw its biggest funds from the realms of currency speculation and
money  trading that made the likes of John Key unconscionably rich. While
everyday New Zealanders in 2008 pay 12.5% GST, and do not have the option of   moving their funds to Cayman Islands holding corporations, these Business Roundtable jockeys manage to move millions around the globe and through  New  Zealand markets without contributing to the future of New Zealand’s education, health, or infrastructure.

But the tide is turning. The financial crisis is raising awareness of
continuing structural inequalities in the world, and in New Zealand, and
the  public aren’t going to swallow it anymore.

“New Zealand is responding to the idea of GST off food, but it’s about
more  than cheaper cheese, and I think people know that. It’s about a fairer
future for all Kiwis and the Alliance can show you the money!” she stated.

Contact details for Alliance Party list candidate Sarah Campbell:

Email: sarah.campbell@ alliance. org.nz

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