Wage package can work but needs some tinkering

PROF Tim Hazledine proposes a GST holiday (Opinion, 29.4.20) for our economic recovery after the Covid19 crisis.

It is surprising that he does not promote a more immediate fiscal remedy, and that is immediately making the Government wage support package payments taxfree.

While a considerable period of the initial threemonth package has already passed, it is not too late to implement such a change. The announcement of the package, that $585 per week would be available for every qualifying employee, amounted almost to fraud, as the amount received by employees is considerably less when income tax is deducted.

It is difficult to understand the rationale of the Government imposing tax in the design of the package as there is a substantial cost in collecting PAYE tax. Many economic commentators have said that the bureaucracy should be bearing some of the pain of the pandemic crisis, and that it is widely accepted that the cost of collecting such payments exceeds the payments that are being made.

This concept already applies to Universal Government Superannuation where the cost of meanstesting payments exceeds the payments saved, and global proposals for a Universal Basic Income are based on the same concept.

Making the wage support payments taxfree would save substantial bureaucratic cost and put more money into the hands of recipients and then flowing into the economy.

Trevor Croot

Kenmure

[Abridged]

Reunion

Otago Girls’ High School: Registrations are now open for the 150th Jubilee to be held February 57, 2021 (Waitangi Weekend). Please visit our website www.otagogirls.school.nz to register for the weekend or contact 150th@otagogirls.school.nz if you have any inquiries. ...................................

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