Wednesday, March 07, 2012

The strategic deficit

Yesterday Treasury revealed its latest financial statements, showing another blowout in the budget deficit. The reason? Tax revenue is a billion dollars lower than forecast - about the same amount that National gave away to its rich cronies in top-bracket tax cuts. While this was supposed to be compensated by a rise in GST, revenue has in fact fallen due to the recession - something which should have been obvious from the start.

The net result is that the government's unnecessary tax-cuts have gutted its revenue base, at a time when expenses (due to the recession) are growing. Which means we have to borrow more. Its a strategic deficit, existing purely because the government has chosen to create one - and it is being used to push privatisation and public service cuts the government could never get away with otherwise. Result: the rich get tax cuts and get to corruptly buy our stuff at bargain-basement prices, while the rest of us get screwed. Just an example of how national wages class warfare on behalf of the rich against ordinary New Zealanders.