The truth of the tax de­bate

The Southland Times - - POLITICS -

Less con­tentious are a GST in­crease from 12.5 to 15 per cent (al­beit in­come taxes were cut at the same time), a cap­i­tal gains tax on in­vest­ment prop­er­ties sold within two years, a new tax on em­ployer Ki­wiSaver con­tri­bu­tions, a $22 bor­der levy, to­bacco tax rises, tax on dig­i­tal pur­chases and a $2 rise in pre­scrip­tion charges.

And what about Joyce’s claim of only one new tax? The list above in­cludes at least three that ap­pear to be com­pletely new - cap­i­tal gains tax on spec­u­la­tors, tax on em­ployer Ki­wiSaver con­tri­bu­tions and a bor­der levy. In Joyce’s de­fence he did say ‘‘maybe one’’.

$2.3 bil­lion health short­fall

This sub­ject came off the back of a dis­cus­sion about ter­tiary ed­u­ca­tion poli­cies, when Robert­son said: ‘‘I think the pri­or­ity right now is re­build­ing the health sys­tem you’ve un­der­funded, in­vest­ing in houses and giv­ing fam­i­lies a fair go’’.

Joyce re­sponded: ‘‘We ac­tu­ally put more money in this bud­get, ex­tra money for health, than Labour have put in their fis­cal plan for each of the next four years’’.

Sev­eral times, Robert­son at­tempted to ask a ver­sion of the same ques­tion: ‘‘Are you go­ing to put more money into health and ed­u­ca­tion for the im­pact of in­fla­tion and pop­u­la­tion?’’

‘‘We do that,’’ Joyce re­sponded. ‘‘We have done that ev­ery year.’’

Robert­son dis­agreed: ‘‘No you haven’t. You’re $2.3 bil­lion short.’’ Joyce, again, dis­agreed. First, it’s clear there’s no real an­swer to this dis­agree­ment. It’s a po­lit­i­cal ques­tion, with dif­fer­ent an­swers de­pend­ing on who’s side you’re on. But it’s worth pro­vid­ing con­text around where that $2.3b fig­ure came from, con­sid­er­ing it gets bandied around so much.

It orig­i­nally came from the New Zealand Coun­cil of Trade Unions, who in May this year said health fund­ing ’’has not kept up with to­tal costs, in­clud­ing the in­creas­ing costs of tech­nol­ogy, grow­ing health need and, to some ex­tent, per­sonal costs, let alone to­tal costs plus new ini­tia­tives’’.

One of its key points was that ‘‘for the Health vote to re­gain the spend­ing power of the 2009-10 Health vote and pay for the ini­tia­tives and ad­di­tional costs an­nounced over that time, it would need to in­crease by $2.3 bil­lion in the 2017 Bud­get to $17.6 bil­lion.’’

Labour then also com­mis­sioned a study, which threw up the same num­bers: ‘‘The fund­ing needed for health to be re­stored to the level it was seven years ago to keep pace with cost pres­sures has widened to a mas­sive $2.3 bil­lion.’’

When Labour’s health spokesman, David Clark, brought this up dur­ing an ur­gent de­bate in the House, Health Min­is­ter Jonathan Cole­man called the $2.3 bil­lion fig­ure ‘‘com­plete fic­tion’’.

An in­come tax in­crease un­der Labour?

The pair later clashed for a sec­ond time over tax. This time it was over whether Labour will in­crease in­come taxes.

Robert­son: ‘‘You keep say­ing we are rais­ing in­come taxes Steven, we are not’’. ‘‘Well you are,’’ replied Joyce. ‘‘No New Zealan­der will pay more in­come tax than they are to­day [if Labour are in Gov­ern­ment],’’ Robert­son shot back.

Be­fore Joyce clar­i­fied his po­si­tion: ‘‘They will pay more in­come tax than they would have been on the 1st of April [2018] if you change the law, that’s the re­al­ity of it,’’ he said. Here’s the low­down: In the Bud­get ear­lier this year, Na­tional an­nounced that it would cut in­come taxes in April 2018, if re­elected (tech­ni­cally it’s a tax bracket ad­just­ment, but we di­gress). The ef­fect will be an in­crease in take-home pay for work­ers of up to about $1000 a year.

Labour plan to can­cel th­ese tax cuts and spend the money on Work­ing for Fam­i­lies and pub­lic ser­vices like health and ed­u­ca­tion.

So, will Labour in­crease in­come taxes? In short, no. You can cer­tainly ar­gue that they won’t cut in­come taxes or that taxes would be lower in fu­ture - and that is es­sen­tially where Joyce went with his later clar­i­fi­ca­tion. But the claim that in­come taxes will in­crease is false.

Chil­dren in hard­ship

In talk­ing about poverty, again, those child hard­ship statis­tics came up. It was just a line, near the end, but we didn’t miss it: ‘‘We’ve ac­tu­ally had a re­duc­tion in 40 per cent of the num­ber of chil­dren grow­ing up in hard­ship and that will come down by 50,000 next year,’’ Joyce said.

That’s sim­ply not true, or, if it is, it’s only true af­ter be­ing very ma­nip­u­la­tive with the num­bers.

Data col­lected in the New Zealand House­hold Eco­nomic Sur­vey, which in­forms the Child Poverty Mon­i­tor, shows the num­ber of poor chil­dren in New Zealand - that is, the num­ber of chil­dren in house­holds with in­comes be­low the se­lected thresh­olds. In 2008, it was 260,000 and in 2016 was 290,000. That’s an in­crease of 10 per cent. But go­ing by ma­te­rial hard­ship rates, in 2008 there were 170,000 chil­dren liv­ing in hard­ship and in 2016 there were 135,000 chil­dren in that cat­e­gory. And that’s a de­crease of 21 per cent.

How­ever, there is no sin­gle low­in­come mea­sure that sat­is­fac­to­rily di­vides chil­dren into the poor and non-poor, as both lead­ers have pre­vi­ously tried to do.

Steven Joyce

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