Monday, April 28, 2008

Taxing food as food keeps getting dearer

As food prices go through the roof for all sorts of reasons -- most of them involving government meddling -- people are sensibly demanding that government here removes GST on food.  Quite right.  Government Slavery Tax on food is an abomination.  As I've said before, "Who else but a politician would see the poorest of the poor and still want to take the money out of their pockets they could have used to eat."

Turns out however that defenders of big government have no intention of taking their hand out of food-buyers' pockets.  Helen Clark, says nay.  So too does Michael Cullen.  And, of course, David Farrar -- never one to miss a chance to defend bigger government just as long as it his brand of bigger government -- who gives four reasons Grab Snatch and Take shouldn't be taken off food, and not one of them holds water:

  1. While poorer people struggle to pay their food bills, David says we can't take GST off food because "it would impose significant compliance costs on retailers" if GST were removed on one category of goods and not from others.  The answer, surely, is a simple one: remove it from all categories of goods. But a defender of bigger government like David Farrar wouldn't countenance this.
  2. While poorer people struggle to pay their food bills, David says we can't take GST off food because "it would start a trend of removing GST on more and more items, and the future political scene will be a series of debates about what GST should be one." And the problem with that is?  What better way could the "the future political scene" spend its time than discussing ways to remove the encumbrance of government from people's lives? But a defender of bigger government like David Farrar wouldn't countenance this.
  3. While poorer people struggle to pay their food bills, David says we can't take GST off food because "this is a one-off change that can never be repeated, and any benefits from it could well be swallowed up by further changes in international food prices."  This is insane.  A permanent removal of GST on food is not a one-off change -- it leaves poorer people permanently better placed to respond to price rises, and to better plan their lives with their money.  On the other hand, if GST isn't removed and there are further increases in food prices coming down the pike, then poorer people will be even less well placed to deal with them, and permanently less well off.  But a defender of bigger government like David Farrar wouldn't consider this.
  4. Finally While poorer people struggle to pay their food bills, David says we can't take GST off food because "it would mean direct taxes would be $2.4 billion higher than they need to be, to compensate for the GST loss."  Not if you put the bung back in the pork barrel ands cut spending by that same amount it wouldn't.  And don't tell me there are no means by which you couldn't kill of some of the bigger white elephants and put our own money back in our pockets.  But a defender of bigger government like David Farrar wouldn't countenance this.

The only argument for the government not taking its hand out of food buyers' pockets is government greed.  Instructive, isn't it, which bedfellows are in favour of government greed at the expense of greater penury from their countrymen.

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44 Comments:

Anonymous Elijah Lineberry said...

Is this another example of Mr Farrar being the Number 1 libertarian in the Country?

4/28/2008 01:20:00 pm  
Blogger PC said...

Yes, I believe it is.

Someone needs to revoke his membership card.

4/28/2008 01:44:00 pm  
Anonymous Anonymous said...

Is this another example of Mr Farrar being the Number 1 libertarian in the Country?

And of course Elijah, you're the Number 1 libertarian wannabe in the Country as Duncan Bayne correctly put it to you sometime ago here at Not PC blog.

4/28/2008 02:00:00 pm  
Anonymous Elijah Lineberry said...

Ha ha...I seem to have struck a raw nerve there..but Mr Farrar is the one poncing about Facebook.com with his 'libertarian' group whilst advocating taxes, Government spending and other Socialist bulwarks...and trousering taxpayer money.

Better a wannabe than a 'LINO' [Libertarian In Name Only] which the Capital seems to be polluted with a surprisingly large number of.

4/28/2008 02:22:00 pm  
Anonymous Sean F said...

Well said PC - I saw these folk on Sunday and signed their petition - said I was with Libertarianz and they seemed surprised! Oh well, have to spread the word and make alliances where possible - hopefully make a few converts on the way!

4/28/2008 03:09:00 pm  
Anonymous Anonymous said...

Isn't it better to tax consumption than income, keeping GST and reducing income and company taxes? Lower income and company taxes have the benefit of lowering the cost of business and hence what businesses charge for their goods and services.

4/28/2008 03:10:00 pm  
Anonymous Anonymous said...

Also remember that GST was introduced at 10%, with corresponding reductions in income tax, including a proposed 23% flat tax with family subsidies in Sir Roger Douglas' budget way back in 1987. The real problem is why wage earners haven't gotten ahead over the last 10 years and can't cope with these kind of wild price fluctuations. And to be hoenst, if GST ws removed, it wouldn't stop oil prices being so high, or the marke distortions that bio-fuel subsidies and ethanol mandates are causing.

4/28/2008 03:23:00 pm  
Blogger Blair said...

Blind adherence to dogma despite the practical implications... PC does a snarky post on this sort of thing every Sunday, but on Monday he's in favour of a differentiated GST because it "lowers tax". Never mind that the compliance costs will swallow up any price reduction, never mind that it will put a lot of dairy owners out of business - all so much the better if it means PC can argue for the elimination of tax altogether!

You are also fully aware that Farrar's argument is not pro-tax, so stop trying to pretend it is.

4/28/2008 03:28:00 pm  
Anonymous Elijah Lineberry said...

..never mind that it will put a lot of dairy owners out of business..

Ha ha..that sounds so funny.

So we should continue to overtax everybody to provide protectionism for dairy owners? ...hmmmmmm...(bizarre)

I know! why not introduce a 25% tariff on all imports to provide protectionism for Manufacturers?

4/28/2008 03:35:00 pm  
Blogger Blair said...

Elijah... *sigh*... I don't know when you had the frontal lobotomy, but I guess I am going to have to explain this to you carefully.

A universal GST does not subsidise dairy owners. It does not subsidise anybody. It penalises all equally.

A differentiated GST penalises dairies more because of the additional costs of keeping track of what is taxed and what is not. Supermarkets can afford these costs, dairies will struggle.

I am all in favour of lowering taxes, and if someone wants to petition to lower GST across the board I will be the first to sign up. But if you make the tax system so complicated that lowering it on some goods has a negligible effect then what is the point of doing it?

4/28/2008 04:11:00 pm  
Anonymous Anonymous said...

Blind adherence to dogma despite the practical implications... PC does a snarky post on this sort of thing every Sunday...blah blah blah

Yeah right. Farrar's post is elitist rubbish.

What *is* breathtaking is the contempt that politicians, political candidates/partisan water carriers really do have for the voters. Anyone with half an eye - or half a brain - can see that. And the broadband thing is repulsively elitist as well.

4/28/2008 05:10:00 pm  
Anonymous LGM said...

Blair, you utter moron. A universal GST penalises the productive in favour of mindless unproductive drones. Try thinking before posting here you shallow minded little creep!

You posts on this subject are stupid, even by your own low standards. Get a mind!

LGM

4/28/2008 07:37:00 pm  
Blogger Blair said...

LOL oh dear, I think LGM needs to re-read what I wrote and come up with a decent counter-argument before he or she has the right to hurl abuse.

Perhaps he or she could explain how a selective GST would not lower productivity even more than a universal GST does? Silly me, I thought that was what we were debating....

4/28/2008 09:41:00 pm  
Anonymous LGM said...

Blair, whenever you steal wealth away from the man who produced it, then consume it on the non-productive, you destroy productivity. Reduce the stealing and you reduce the destruction of productivity. There now, that wasn't so difficult to understand was it?

Best thing to do is to get rid of the GST altogether. If that occurs in a step by step fashion it's not ideal but it's still an improvement. Apply it to yourself (assuming you do something productive for a living and are not on welfare or in some make-work scheme sucking off the state tit). Let's see, food goes down 12.5% or more. That means more money left for other purposes like. Wow! Fancy that! Even you must realise that's an improvement in your situation. Now apply that improvement to others as well. Gosh! They retain more of their own wealth to employ as THEY see fit.

Now surely that's simple enough to understand, even for a moron like you. If not, well then, you need to do some reading in economics. Try Von Mises or Reisman.

The deal is, let each keep what is his.


LGM

4/29/2008 04:54:00 am  
Blogger David Farrar said...

Hey once you manage to get rid of all income tax, then talk to me about joining the fight to lower or get rid of GST. But while we have both taxes I prefer to have taxes on income lowered in preference to taxes on spending.

4/29/2008 08:32:00 am  
Anonymous LGM said...

David

Unlike you, I prefer not to have either. There is no need for stealing.

LGM

4/29/2008 09:02:00 am  
Anonymous Anonymous said...

Great post PC.

Mark Hubbard

4/29/2008 09:29:00 am  
Blogger Blair said...

LGM, people like you are the reason the abolition of tax is unlikely to ever happen. All you seem to be able to do is abuse those who do not subscribe to your dogmatic "100% or nothing" line. To implement what you propose, the Libertarianz need to get a significant proportion of the vote. That will never happen, because you think its more important to trash-talk fellow travellers for not being objectivist enough. Which is about as sensible as your simplistic view of the consequences of a selective GST.

Here's what will really happen: GST gets taken off food. Well congratulations. You've now just forced every food retailer in the country to buy a computerised scanning system - a compliance cost that will set each of them back thousands of dollars. They now have to pay their accountant more money to work out the return. Some will simply find it all too hard, and move to selling either just food, or remove food from their stock entirely. All this results in reduced profits and, if you have read Bastiat, is an example of Broken Window economics.

So how are all these businesses going to recoup their lost profits? Guess what genius - they have to put their prices up! Now I don't know if the compliance costs will amount to the full $2B that the cut would entail, but it doesn't matter. It's still an avoidable drain on the economy for not all that much benefit.

Surely it would be better to simply advocate for a blanket GST reduction to 10%? This would give back the same amount of money to taxpayers without all the added economic drain. Or am I just wasting my breath here - I mean, do you want a tax cut that actually improves people's lives, or do you just want one for the moral victory of the thing?

4/29/2008 10:33:00 am  
Anonymous Elijah Lineberry said...

I hear what you are saying, Blair, but cutting gst to 10% whilst a good move is still an unnecessary tax.

I believe the NZ Government could do all the things it is actually required to do with a 5% income tax and the abolition of all other taxes and duties, including gst.

What you perhaps need to do is think in terms of, say, $40 billion of spending cuts from 9 o'clock Monday morning (so to speak) rather than the mindset of 'freezing' spending levels, or "we cannot cut this it will hurt [write some group's name here]".

You claim to be a 'fellow traveller' but let me ask you this...if you had the power would you simply abolish 30 Government departments.. just like that, stroke of a pen "everyone clear out your desks you are sacked"?

Or would you set up a committee to look into it? ..have consultations? ..an 'impact report' and other such nonsense?

If you would not be prepared to do that you are not a fellow traveller, but instead just seeking to perpetuate Socialism..."Lenin Lite"

4/29/2008 11:04:00 am  
Blogger Blair said...

Elijah, this is not a pissing contest. Maybe I think 5% is too much tax? Surely that makes you "Lenin lite"? Honestly. You are reading an awful lot into what I have said so far, but go right ahead if it makes you feel like a better libertarian than me. I am prepared to argue for and against concrete policy proposals, but I don't participate in those sort of games.

4/29/2008 01:26:00 pm  
Blogger Comrade MOT said...

I agree with lower taxes, but if you were going to lower taxes by only x number of dollars, I would reduce the m across the board by a small amount rather than removing the GST from food.

4/29/2008 01:32:00 pm  
Blogger PC said...

You know, I'm continually astonished by the impracticality of so called practical men.

Faced with a clear and present groundswell against a tax -- all of which and decent person should agree should go -- the so called practical men are here wringing their hands and saying, "No, I'd rather we tinker with this tax instead," or "I'd rather tinker with that tax."

Fact is, you so called practical men, you can't see an opportunity when it strikes you right in the face.

Here is a groundswell to get rid of a tax that you might never see again -- and you want to spurn it. Here is a groundswell to get rid of a tax, and you want to ignore it and argue about tax codes instead. Here is a groundswell to get rid of a tax, and you're disgruntled because it's not your favourite way to start getting rid of taxes.

FFS people! How impractical can you be?

Here's a chance! A red hot opportunity! Don't carp, don't bitch, don't mutter to yourself about how 'tax bands' should be changed or some such -- Grab the bloody chance and run with it, and take it as far as you can go!

Use the power of popular opposition to GST on food and explain why compliance costs necessitate that GST be lowered across all goods classes.

Or use the power of popular opposition to GST on food and explain why GST should be removed completely!

In any case, use the power of popular opposition to GST on food to do some damn thing along the lines you claim to support.

This is an opportunity, a genuine opportunity, but (like always) all you so called 'practical' bastards are just too damned impractical to see it.

4/29/2008 01:50:00 pm  
Anonymous Elijah Lineberry said...

All rather sad, Peter.

Unfortunately we live in a "Let's get rid of the Labour Government by any means, and by the way Sir Roger is a great bloke" World...rather than a World of chaps who actually believe in something.

4/29/2008 02:38:00 pm  
Blogger Comrade MOT said...

Are you suggesting to go with popular oppinion rather than what is better in principle? If you agree with targeted tax breaks? would you agree with GST off health insurance? Isnt targeted tax breaks even more unfair than general tax breaks? even if they may be preferable to no tax breaks?

On another note, SOEs are non libertarian, but they are not "stealing" like taxes, therefore if the government needed a small amount of money for law and order and deffence etc. would it be more libertarian for the government to have some SOEs to fund them rather than have a flat say 10% tax?

4/29/2008 02:58:00 pm  
Blogger Comrade MOT said...

I am talking about which of the two options would be prefferable, I would be happy with either from a practical point of view. But on a practical note. my vote for ACT will do a lot more for lowering taxes than your vote for libz will. libz voters are the ones who put principle over practical opportunity.

4/29/2008 03:08:00 pm  
Blogger PC said...

Comrade Mot, you asked""Are you suggesting to go with popular opinion rather than what is better in principle?"

I'm pointing out, Comrade, that when you know your principles and you identify that popular opinion on some particular issue is heading in the direction of those principles, then the practical man would grab on to that issue and ride it for all he's worth.

That, quite simply, is the point of transitional policies designed to shrink government one popular move at a time.

And the opportunity exists with this issue for whoever wants to pick it up.

4/29/2008 03:26:00 pm  
Anonymous Sean F said...

I have to back PC up here. The GST is closest it has ever been to having a bullet put through it's pointy little head and folk want to argue over whether the slug should be fired from a Colt or a Smith and Wesson. People, ANY move in the right direction is just that. It is an opportunity for the very thing Libertarianism needs if its going to get established in the kiwi political scene: MOMENTUM. One the issue/s surrounding such a move are openly and actively discussed the environment is all the more ripe for a more full explication of Lib philosophy in the public arena.

4/29/2008 03:30:00 pm  
Anonymous LGM said...

Blair

You lack the ability to comprehend what is written. You need to do something about your shortcomings!

Here is what I wrote previously: "Best thing to do is to get rid of the GST altogether. If that occurs in a step by step fashion it's not ideal but it's still an improvement."

You have a problem with that? Clearly so. Try reading it again. Put your finger on each word as you sound it out. Get your Mommy to help you with the words you can’t understand. If you’re a good little boy, she might explain it to you. Perhaps you’ll get it then.

A more serious problem is that you lack the ability to comprehend what is going on with the real world. Here is an example of your lack of understanding. You wrote this: “Here's what will really happen: GST gets taken off food. Well congratulations. You've now just forced every food retailer in the country to buy a computerised scanning system - a compliance cost that will set each of them back thousands of dollars. They now have to pay their accountant more money to work out the return. Some will simply find it all too hard, and move to selling either just food, or remove food from their stock entirely.”

Why don’t you get that passport of yours taken out of your bum, go out to the airport, buy a ticket to fly to Australia and visit some of the establishments you are making such fantastic claims about. You would find out first hand that in Australia there is a GST system which applies the tax to some foodstuffs but not on others. You will also discover that many dairies and retailers don’t have computerized scanning systems. In fact, most of the local dairies in the suburbs don’t have that. Many don’t even have EFTPOS. Gosh, Australians can operate a till with several different function buttons on it (like “GST sale” or “sale” or “ZR” -zero rate or “EX”- tax exempt etc.) but you think New Zealanders can’t. Or perhaps New Zealanders could as they are not all quite as stupid as you are. How about that?

Seriously now, I was resident in Australia at the time their GST was introduced. Over there, it is applied to some things but not to others. Some foods are taxed and some are not. It’s not that difficult to work with. Heck, Australian retailers do it every day. Note that dairies and other businesses did not get forced to purchase thousands of dollars of equipment to deal with it. Some updated and some did not. Some still have not felt the need to go to scanners and computerization. Fancy that! Those that have taken the opportunity to update are able to hire, lease or finance equipment should they decide- even on 100% tax deductable rolling PO loans (didn’t you know about that Mr retail genius? Oh, that’d be right, you weren’t there. Of course. You’re just another blow hard who talks about what he doesn’t know about).

Filing a BAS for a small to medium sized business enterprise in order to meet ATO regs does not require an accountant (assuming you can keep a clean set of books, which you most probably could not- you should never try to run a business Blair). It is so very simple. You don’t even need a till.

So you are making up tall tales and childish fibs again (which is about all we can expect from the likes of you).

In the end, assuming that GST is removed from food (and that’s but a start) the result is a net benefit. Every person who purchases food (including dairy owners and retail workers) ends up keeping more of their own money- keeping more of the fruits of their own labours, in other words keeping their own property. They all receive an increased profit. That is a benefit well worth seeking. It's valuable to each person that they retain their own property (yet you pretend that it's "an avoidable drain on the economy for not all that much benefit"- again, it's their property, not the collective economy's and certainly not yours).

Your mindless diatribe is mere excuse and false choice rhetoric.
You really are an ignorant fool.

LGM

4/30/2008 12:43:00 am  
Anonymous Mum of Eight said...

"Isn't it better to tax consumption than income, keeping GST and reducing income and company taxes?"
couldn't agree more.
We are a family of 10 (8 children) living in South Auckland. We would still spent less on food that some wealthier households and hence less tax. (Our weekly food spend is under $250, I can get it under $200 if I am very careful) Stop taking the money that we work for and then having us apply for it back. Because of the Working for other peoples familes scheme we are on a marginal tax rate of over 50%. Unless the plan is to get rid of tax altogether. GST is a fair and relatively transparent way to collect tax.

4/30/2008 07:32:00 am  
Anonymous Elijah Lineberry said...

Mother of Eight...I gather your $250 per week spending on grocery items does not include condoms.. (!)

4/30/2008 07:59:00 am  
Blogger Blair said...

Good God, somebody needs a hug.

So by your own admission there are still compliance costs LGM? That still represents an unnecessary drag on the Australian economy that is not needed here.

Presumably you support Working for Families as well? Any reduction in tax is good, right? Look, if you want to sort this out like a man, fuckwit, my number is 021 523 103, otherwise fuck off.

4/30/2008 08:12:00 am  
Anonymous Mum of Eight said...

LOL! Do not fear, I can get those on prescription, boxes of them for 3 dollars, that is, if we wanted them. BTW we have a TV but other things are more fun!!!
My husband said to let you know that last time he got a prescription for them he got 6 boxes. He asked, "Are you only allowed a month at a time" (LOL).
I could put my younger kids in childcare paid for by your taxes and go and get a job at the same childcare centre. Go figure?
You should be appauding me. It will be my children that will be paying for your healthcare in your and my old age if we don't die before we get the surgery we need. But I digress.
European Women in NZ have a fertility rate of 1.4 live births per woman. We are not even replacing ourselves. Experts say no culture has ever recovered from a total fertility rate that has fallen below 1.3 - the "lowest low" - so we Europeans may be on the brink of extinction.

4/30/2008 08:27:00 am  
Anonymous Elijah Lineberry said...

I do applaud you..for being the first person on here to have a sense of humour!

It makes a pleasant change...well done!

4/30/2008 09:08:00 am  
Anonymous benjamin said...

This comment has been removed by a blog administrator.

4/30/2008 10:35:00 am  
Anonymous Sean said...

Why would you think that Ben? What is your evidence?

I only ask, because I know Elijah and LGM and can confirm that they are, in fact, completely different people.

I would suggest that you pay less attention to the activities of Elijah and focus on your own.

Sean

4/30/2008 11:57:00 am  
Anonymous LGM said...

Brendan

Temper! Temper! Stop being such a sook! No-one is interested in fits of pique.

Look Brendan, your arguments are worthless fibs and cheap fabrications- easily detected and exposed. Childish stuff. Shallow. You really do need to get a good grip on yourself and start doing some solid research. I'm serious about that. Find out about what you are writing about BEFORE you write. That way you won't get things wrong the whole time and make such a fool of yourself.

A few points to take away and consider.

1/. All tax imposes un-necessary burden & drag one way or another. That can be by way of compliance, loss of property, opportunity costs, loss of money, limitation of choice and so on. None of those burden are needed here.

2/. Reduction and elimination of tax is good- fair enough. I'm all for it. The sooner the burdens are eliminated the better. I don't really mind how it is accomplished. Just get rid of all of it fast. Let people keep what belongs to them.

3/. There is a difference between churning other people's money and letting them keep it in the first place. See item #2.

LGM

4/30/2008 12:51:00 pm  
Blogger Blair said...

Who's brendan?

Dear LGM, if you can't make a point without resorting to the ad hominem, you're not worth listening to.

You have admitted that there is a compliance cost to a selective GST. You have also pretty much said it would be better to have no GST at all. So why continue to defend the selective GST? You can't make up your mind. As I have pointed out with the Working for Families analogy, just because something MIGHT put more money in peoples pockets, doesn't mean the long term effects are good.

You don't seem to have any new points to make in rebuttal, but if you are going to continue to abuse me, I repeat my request to man up in person rather than hide behind the anonymity of the internet.

4/30/2008 02:05:00 pm  
Anonymous Sus said...

Hi Blair .. can't agree with the WFF analogy in conjunction with (some) reduction in GST.

A reduction in GST equates to me keeping more of my money, period. It is a measure of instant tax relief, yes?

Contrary to the bleatings of Clark & Cullen, WFF is *not* tax relief. To repeat: tax relief is me keeping more of my money in the first place, *without* having to apply to the state bureaucracy to do so, a la WFF.

Do you see the point I make?

4/30/2008 02:45:00 pm  
Anonymous LGM said...

Ah, I meant to address my comments to Blair, not Brendan. Sincere apologies to Brendan.

4/30/2008 03:55:00 pm  
Blogger Blair said...

Thank you for the politeness of your disagreement Sus. It is true that WFF is churned through government before you get the money back. But it is the equivalent of a tax cut nonetheless.

I am simply not convinced of the economic merits, the fairness or the benefits of the selective GST proposed. It may be that I am wrong. But it would be nice to have the argument without some stupid pissing contest along the lines of "I'm so much more libertarian than you", which is just childish.

No sane person could accuse Farrar of not wanting to cut taxes or reduce the size of government. To call him (and myself) names - Lenin-lite FFS! - nigga, please! Well I am glad your libertarian penis is so much bigger than mine. Congratulations. Can we have an adult conversation now?

4/30/2008 06:28:00 pm  
Anonymous LGM said...

Blair

Returning to where we left off.

You write: "You have admitted that there is a compliance cost to a selective GST."

I never indicated otherwise. There is compliance cost to any tax, as you well know.

One of your unfortunate habits is to misrepresent the argument of those who oppose your view. As before, your deceptions are not very difficult to identifty and expose. If you want to have a civil debate you really need to read what is written, learn to comprehend it, think about it and avoid pretending it is other than what it is. Simple enough to do, surely.

Here is another example. "You have also pretty much said it would be better to have no GST at all. So why continue to defend the selective GST? You can't make up your mind."

That accusation is false. It's another example of a dishonest misrepresentation on your part. My position is clear. I support elimination of tax. I prefer to see it occur quickly, but I'm not opposed to it ocurring in a stepwise fashion.

A reduction of tax on food is good. It is a useful FIRST STEP. Right now, many people are discussing removal of GST on food. That's good. I encourage it and support it, as it's a step in the right direction.

Now, I did not defend ANY tax. That's you making things up again. Remember it was you who made up fibs about a partial removal of GST. I did demonstrate that you were incorrect, but that is in no way a support of tax. I support the reduction of tax.

I suggest you go back and read what was written again.

Abuse? Get over yourself. You really are a laughable wreck. Next time try debating honestly. Stop being the fool!

LGM

5/01/2008 07:12:00 am  
Blogger Blair said...

So you think it is perfectly acceptable to misrepresent my arguments but you can't take it when I use the same line of logic against you?

For the third time, I invite you to stop being a cowardly bitch hiding behind the anonymity of the internet and ring me if you have something to say.

5/01/2008 09:36:00 am  
Anonymous Elijah Lineberry said...

Oh! you want him to ring you to discuss things further, Blair?

I thought you meant to ring you to organise 'pistols at dawn' ...

5/01/2008 11:55:00 am  
Blogger Crampton said...

A lot of the discussion here has made no sense at all.

First, to those who berate the GST because it's a tax on the productive, suppose that the government can either raise a billion dollars via a GST or via income taxes. Which is a tax on the productive? I'd say the income tax, because productive and unproductive alike pay the GST while the productive are hit hardest by the income tax.

Second, to those who argue we ought take any opportunity to cut taxes, I'd ask you to think ahead a bit. The next election is likely to be fought over income tax cuts. Suppose that we can reduce government revenues by the same amount either with an income tax cut or some GST cut. Isn't the income tax cut the better way to do it? Of the two taxes, the income tax is by far the worse. To the extent that the GST is only cut on some items, massive distortions are created in consumer purchasing behaviour. The GST cut would almost certainly come at the expense of income tax cuts to come. Government revenues would drop sufficiently for both Labour and National to swear off of cutting income taxes.

Think about it. Some of you are more than happy here to be giving the government carte blanche to declare some kinds of purchasing decisions to be good (no gst) and bad (gst). Another dimension on which the current government can paternalistically try to guide our choices for the better, as they define it. Look at the mess they have in Canada on their GST. Junk food -- GST. Lettuce, no GST. One donut: GST. A crate of donuts to take home: no GST 'cause that's groceries rather than a snack. It's a confusing (and horribly administratively expensive) nightmare.

5/01/2008 02:15:00 pm  

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