Click photo to enlarge
Prime Minister John Key delivers his opening speech to
Parliament for the new year. Photo by NZPA.
Prime Minister John Key's economic growth package is
just tax cuts in disguise, says John Armstrong, of The New
Zealand Herald.
Wait patiently for three months for the real oil
in the Budget before passing judgement on the Government's
latest and seemingly insipid prescription for shifting New
Zealand's sluggish-performing economy into the growth
fast-lane.
That is the message from Government insiders.
Only then, they say, will the exact extent of sweeping tax
cuts planned to take effect from this October become evident.
National took a fair bit of stick yesterday in the aftermath
of the Prime Minister's tabling of his Government's new
23-page economic and social policy programme in Parliament -
most of it without flinching.
The Government remains unconcerned that between now and the
Budget in late May, Labour and the Greens might sway those on
middle and lower incomes into believing they will suffer from
the projected rise in GST from 12.5% to 15%.
National is quietly confident it can compensate middle and
upper income households handsomely for the rise in GST and
those on lower incomes to adequately to meet the extra cost
of food, fuel, housing and other bills.
A simple political axiom is responsible for that distinction.
The lower-paid largely do not vote National. Those who earn
more do.
A land tax would have been political suicide in mortgage-belt
New Zealand, likewise a capital gains tax.
In contrast, lifting GST should provide enough revenue for
large enough tax cuts to keep middle New Zealand voting
National.
Yesterday's programme is a tax-cut package masquerading as an
economic growth package.
As for something which could generate substantial growth - a
major cut in the corporate tax rate - the statement says
nothing.
The Government is instead relying on a lot of disparate
things making a big difference - such as increased funding
for research and development and spending on infrastructure.
Those expecting something special will be disappointed.
On a measure of economic boldness, John Key's statement
scores about four out of 10.
