Friday, January 22, 2010

Robbing the poor to pay the rich

As people begin to look at the Tax Working Group's proposals to raise GST and impose a land tax to pay for lowering taxes on the rich, it just looks worse and worse. While beneficiaries will be automatically compensated, the working poor and middle classes won't be, and so the burden will fall on them. The Standard has a nice chart of who wins and who loses here, and its pretty clear: 2.5 million of us will be made actively worse off through uncompensated GST hikes and rent increases, in order to marginally benefit a tenth of that number on higher incomes, while 1% of them - the top 25,000 taxpayers, those who earn over 190,000 a year - will make out like bandits. This is what National calls "fair". And it isn't. Instead, it is robbing the poor to pay the rich - exactly like they did in the 90's.

(And that's without even getting into the lunacy of their corporate tax cut - the only beneficiary of which is foreign-owned corporations. So, the poor pay higher taxes to reward Aussie banks with a history of tax evasion. Screw that)

The Tax Working Group's entire focus on redistributing the burden to allow tax cuts for the rich is fundamentally missing the point. We have bills to pay. As the government is constantly reminding us, we are facing a decade of deficits. On top of that, we have delayed contributions to the Cullen Fund to make up, plus the prospect of higher healthcare and superannuation costs from an aging population. If we are to pay for this, then shuffling the tax burden around isn't enough - we need to increase revenue by raising taxes. And fairness dictates that the burden should fall on those most able to pay.

They recognise this over the Tasman - there, their tax review will be looking at how to increase revenue to cover their long-term costs. We should be honest enough to do the same.