12 tax experts on Labour’s GST policy

The Herald talked to 12 tax experts on Labour’s Get policy. Here is the summary.

• VUW Taxation Professor: “I think it’s one of the worst ideas I’ve heard for a while.”
• NZ Initiative Chief Economist: “It’s complicated, it’s annoying, it adds an awful lot of cost to running a tax system, it makes everybody’s tax returns more complicated… and it’s all for nothing. It doesn’t give you any benefit.”
• CTU Chief Economist (and former Advisor to Grant Robertson) – not his first choice, worth exploring, but better than anything National and ACT would do
• AUT senior taxation lecturer: “Inequity will increase because the benefit will go more in the pockets of rich people.”
• Infometrics principal economist: “If you can find an economist that supports this policy, they don’t deserve the title”
• Chair of GST design committee in 1985: “It’s a very inefficient way of helping the people you most want to help – presumably, low income people. Most of the money spent on food and vegetables is spent by middle and high income people, so you give away a lot of revenue as a government for very little benefit to the people you most want to help.”
• Tax specialist: “It’s an expensive option for little gain,”
• EY tax partner: “From a tax policy perspective, it is not a good idea,”
• Former head of policy for IRD: “Once you take it off something, how do you stop? We also have GST on doctors’ fees. How do you justify that? “Eventually, you end up with a very narrow base and if you want to collect the same amount of GST, you would have to massively increase the GST rate on everything else that you do catch.
• Child Poverty Action Group economics spokeswoman: “It’s probably one of the least cost effective ways for helping people who are struggling to feed their families.
• Tax specialist and member of 2009 Tax Working Group: “The compliance and administration costs in tax is large, and people tend to ignore those… indeed, there are some studies that suggest that those administration and compliance costs are the biggest component of the deadweight loss of taxes, tax costs, and they go through the roof as soon as you complicate the design of the system.
• Findex tax partner: “The basic bottom line is that removing GST just isn’t a smart way of lowering food prices,”

Labour know this is a terrible policy. Both the Minister of Finance and Associate Minister of Revenue have condemned it in the past.

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