Tuesday, March 22, 2011

There is now no principled argument against an earthquake levy

Last week, I posted about the idea of an earthquake levy, and took the position that while a progressive levy (as suggested by the Greens) is absolutely the fairest way to pay for rebuilding Christchurch, raising taxes in the depths of a recession isn't a good idea and so it would have to wait. The government's planned spending cuts have made me change my mind about this. Why? Because there is no effective difference between sucking $800 million out of the economy through increased taxation, and sucking $800 million out of the economy through reduced government spending.

The question thus becomes purely distributional: who pays, and how? And on that, an earthquake levy wins hands down. National's cuts would put the costs of the earthquake squarely on the poor, through reduced government services and rotting infrastructure. An earthquake levy puts it on those most able to pay. And that is unquestionably the fairer solution.

As for the government, its clear now that their response to the greatest natural disaster to affect new Zealand in living memory is to use it as a cynical excuse to wage class warfare against ordinary New Zealanders. That is absolutely despicable. And hopefully they will be paying for it in November.