Friday, January 22, 2010

Increasing benefits to compensate for GST rise - stupid

Another day of reading the news and shaking the head. Keys says if GST rises, so will benefits. That's only fair.

A wealth of research shows behavioural changes according to benefit payment rates. For example, the rate of single parenthood rises with an increase in the relevant benefit payment.

Do those people reacting to a higher benefit spend time analysing why the benefit payment has been increased? And if they did they would figure that benefits have increased relative to low wages. There is no mechanism for lifting low wages to compensate for increased GST (unless the government lifts the minimum wage but that hasn't been suggested - yet).

By the time the behavioural change is factored in, the extra revenue from increased GST (only $200 million after adjusting benefits, Working For Families and pensions) could disappear. If there was just a 3 percent rise in working age people claiming a benefit, the advantage would vanish. Any higher percentage growth and the government's position worsens.

This really is a pathetic government. Face facts Mr Key. We got by before WFF and all the other increased spending Labour introduced. We got by before the feminist, minority and human rights lobbies started using the benefit system to further their causes resulting in an explosion in welfare receipt. We need real tax reform and that can only happen with real spending reform. But you are not the man for that job.

Moreover, if you are talking about increasing WFF then you are, by your own previous definition, talking about increasing "communism by stealth."

11 comments:

KG said...

AMEN!

bez said...

Hear hear

dave said...

So, on that basis, you won't support a rise in GST, then....

ZenTiger said...

I certainly don't support a rise in GST on the basis the government is currently justifying it.

Anonymous said...

Throw the stupid Key out! The PM is thick as a plank.

Lindsay said...

Dave , It is better to tax consumption than work effort. I would support one flat tax rate on all forms of income and consumption. No WFF.

However, if employers won't pass on their tax breaks in the form of wages (we have to break the low wage economy) then perhaps the next thing to consider is an income free threshold combined with flat tax. Obviously the flat tax would then have to be higher.

The principles of fairness, equity and efficiency are all best met by flat tax.

Anonymous said...

As a single earner on a low-medium wage I get screwed again.
I have to fund all the govt services of which I use virtually none , while those who use schools, free health, free dentistry ... etc, get WFF and pay less or no tax (if they earn as much as me) as well as funding those on benefits. These people are going to be compensated for increased GST but not me who is already paying tax for them.
Lets have that tax free threshold, then everyone gets something, from richest to poorest.

Anonymous said...


The principles of fairness, equity and efficiency are all best met by flat tax.


That's right. No a progresive flat tax RATE but a real flat tax. Ideal about 5k per person per annum. But not even ACT will argue for that! So yes we need a tax free threshold - a threshold ABOVE which your income is tax free! These days about 100k seems right. Individual income not family income of course. In these electronic days a GST rebate for the productive too!

But raising benefits??? NEVER!

Anonymous said...

And - why the fuck should employers have to "pass on anything"? That's fucking socialism and you know it!

So is the frankly iliterate idea of "breaking the low wage enonony". Frankly I can get much better trained more comliant more loyal workers by far in India than I can in NZ for just dollars a day. Why the fuck should I pay any more in NZ??? Yep NZ where even the so-called hard right are socialists

You of all people lindsay can do better.

Lindsay said...

Anon said; "And - why the fuck should employers have to "pass on anything"? That's fucking socialism and you know it!"

No. Socialism is FORCING employers to pass it on through legislation. If you don't understand that difference you don't understand the fundamental principle behind socialism. In a genuinely free market you would have to compete and pay for labour instead of having the government subsidise it.

Anonymous said...

Years ago, fifties I think, when the Calshot refinary was being built opposite Southampton there was wide industrial unrest. The builders agreed to pay x1.5 usual wages and had a trouble free ride. Workers benefitted and also management If management look after their workers they profit. The problem is the lack of intelligent management to appreciate which side of the bread to butter, coupled by similar lack in the union movement.
I suggest the businessman move to India and employ some of those poor people, its where he belongs, not in a civilised country like NZ.
jcuknz