Feeling impacts after more than 30 years of GST
It was 33 years ago when GST was introduced to New Zealand, adding 10 per cent to the cost of most goods and services to everything we buy. The people weren’t happy and spending dropped by 28 per cent in the first month, but bounced back after six months. GST was key part of what was dubbed “Rogernomics” after Minister of Finance Sir Roger Douglas. Douglas implemented the reforms after Labour won a landslide victory in the snap election of July 1984. NZ History reports: “The new Government inherited an alarmingly high Budget deficit and overseas debt, an overvalued dollar, and rocketing inflation. Rogernomics was a readymade solution — or so it seemed to many. New Zealand was quickly reinvented as one of the most free-market economies in the industrialised world. Radical change came thick and fast: deregulation, privatisation, the sale of state assets, and the removal of subsidies, tariffs and price controls. GST was added to the mix in 1986. This ‘regressive’ tax hit the poorest the hardest, because people on low incomes spend a higher proportion of their money on basic goods and services than the better-off. The rate of GST was increased to 12.5 per cent in 1989 and to 15 per cent in 2010.”