11. RAHUI KATENE (Māori Party—Te Tai Tonga) Link to this
to the Minister of Finance
What policy solutions are being considered to respond to the comments of the Tax Working Group regarding GST, that “Increasing the rate could impact on lower-income or vulnerable households, especially in the short run”?
Hon BILL ENGLISH (Minister of Finance) Link to this
The Tax Working Group is deliberating, and will be until later in the year. The Government will not consider any options it proposes until after it reports back in December. I note, however, that Budget 2009 ensured that the most vulnerable in our society were protected despite the change in the economic outlook, and that should be a good guide to the attitude of the Government.
Does the Minister consider it socially responsible for the group of experts in the Tax Working Group to deliberately design a scheme that discriminates against low-income and vulnerable households; if so, what areas of Government would he expect will need to pick up the discriminatory effects of this scheme?
I would refer the member’s concerns to comments made, I think, by Susan St John, who is well-known for her economic work in this area to do with poverty and income equality. She said publicly that she was impressed with the transparent way in which the working group was dealing with issues of equality and income equity, and I can assure the member that when the Government considers proposals from this group, it will certainly be taking account of equity issues.
What are the implications of removing GST from food and of offsetting the tax take by increasing GST on tobacco and alcohol?
The member clearly has a proposition here, and I would welcome the working group looking at it. We can signal that generally the Government prefers having a uniform GST with no exemptions. If issues to do with lack of income are to be dealt with, then those can be dealt with by other means, and I know that the member’s party is advocating an increase in GST on tobacco and alcohol as a health-related measure.
Stuart NashCan the Minister guarantee that he will not introduce any further changes to the tax system that will benefit mainly those on high incomes, given that the tax changes he has introduced so far disproportionately benefit those on high incomes, as he has repealed the tax cuts Labour legislated for that would have benefited those on lower incomes?