Labour campaign on GST disciplined, coherent

Axe the tax? Labour would if it could. But it can't. So maybe the tax will stay. Maybe it won't. Who knows. Labour isn't saying. And it won't be saying for quite a while yet.

Confusing? Not really. Labour's campaign to halt the projected hike in GST is about the here and now. In the lead-up to the Budget in late May, the campaign's sole focus is just that - stopping the rise in GST.

Of course, Labour does not have a donkey's chance of doing so. Its MPs will pretend otherwise, but the party's "Axe the Tax" bus tour from Auckland to Dunedin will have zero impact on National's intention to lift the rate of GST from 12.5% to 15%.

In fact, Labour's high-profile campaign has made it that much more difficult for the Prime Minister to backtrack on GST. That may have been Labour's unstated intention all along. That may be one of several agendas operating below the surface politics.

Come Budget day in late May and everything changes, however. The tax hike will be official.

To borrow Phil Goff's analogy, the egg will be scrambled. It is going to be pretty hard to unscramble it.

National's overall tax package will leave Labour nursing a big political headache - how to make up the $2 billion shortfall in revenue if Labour pledges to restore the rate of GST back to 12.5%.

Labour won't say how. But it can hardly talk of raising income tax rates which National will have just lowered. No party - not least one coming from such a long way behind its rival - can afford to saddle itself with that kind of platform.

So will Labour accept that GST at 15% is here to stay? Labour is unlikely to answer that question either.

National consequently thinks Labour's campaign on GST will increasingly be seen as lacking any credibility unless it says what it would do were it the Government.

But that is one thing Labour will definitely not be doing. It is not going to be trapped into declaring a position which it might later regret.

Mr Goff has been around long enough to remember National's very own GST-induced political disaster. When Labour introduced GST in 1986, National felt obliged to come up with an alternative - the long-forgotten "Extax".

With Labour determining no items would be exempted from GST, National saw a gap in the political market. Extax allowed exemptions for basic foods, doctors' fees, local authority rates and some charities. The tax was universally panned as an administrative nightmare.

The ridicule prompted senior National MPs to lose faith in the policy resulting in mixed messages as to where National really stood on a broad-based consumption tax. Once the 1987 election was over, Extax was quietly buried and National weighed in behind GST.

Labour has absorbed another lesson from National. At the last election, National got away with not revealing a lot of policy until the formal election campaign - much to Labour's annoyance.