Wednesday, May 11, 2011

Collapsing revenue

John Key has confirmed that he is going to cut Working for Families and KiwiSaver, thus breaking his 2008 election promises. His excuse? We can't afford them anymore, due to the collapse in government revenue since 2008.

So, what has caused this collapse in revenue? The recession carries some blame, certainly, leading to lower revenue from GST and company taxes. But the prime culprit here is the government's 2010 "tax switch", which radically cut the top tax rate. While the rise in GST - something else Key promised not to do - was supposed to compensate for this, the recession meant that it didn't. The result has been a billion dollar a year hole in the government books, all of which has been effectively redistributed to the richest New Zealanders.

It speaks volumes that rather than plugging this hole and reverse the top-rate tax cuts, National is instead taking more money from the poor by cutting KiwiSaver and Working for Families. In their eyes, we are not all in this together. The recession is just another opportunity for them to pillage the state for the benefit of their rich mates.

Meanwhile, its a bit rich for Key to complain that the government is "no longer running the big surpluses that the previous Labour Government thought were there". Those surpluses weren't just a figment of Michael Cullen's imagination, they were real. National undermined them with its constant calls for tax cuts, then delivered the death blow by handing over money to the rich the moment it gained office. And as a result, we're now running record deficits. National has no-one to blame for that than themselves. They inherited a government on a very sound financial footing, and promptly pissed it away in bribes to their mates. And now they're pleading poverty in an effort to get the rest of us to pay for it.