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Farrar: The government needs to treat people that work like people that don’t work

Summarised by Centrist

Pollster David Farrar says, “treat tax brackets like benefits, and have them automatically adjust every year. If it is good enough for people not working to protect them against inflation, it is good enough for those who do work.”

The Labour and Greens’ 2017 campaign promise was to cap core crown expenditure at 30% of GDP. Current expenditure is forecasted at more than 33% of GDP. This difference, equivalent to more than $14 billion, has led to a roughly $9 billion deficit instead of a potential $5 billion surplus (if the promised cap was kept). 

Tax revenue has also increased, with a current rate of about 29% of GDP. This means that the government’s proposed tax cuts are, in actuality, only partial refunds for 13 years of tax increases, says Farrar. He says what’s needed to counter inflation are tax bracket adjustments. 

“We have an intolerable situation where people who do not work and are on welfare get their welfare payments indexed to inflation, but working people do not get tax brackets indexed, which means your net income drops due to inflation even if your gross income stays the same in real terms,” he says. 

Read more over at Kiwiblog 

Image: Dunedin City Council Archives

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