I was scrolling down Scoop's top 30 stories for the day and got quite excited by this headline: "Labour Wellington MPs want to Axe the Tax". What tax? Must be GST. I'd better read on.
Yes, Wellington Labour MPs do want to "Axe the Tax", but they only mean the portion that National is planning to increase GST by, from 12.5% to 15%. I should have known not to get too excited by a headline. Never-the-less, Labour MPs are getting out there in response to the groundswell of public opinion against any hike in GST.
Judging by the language these Labour MPs are using and the basic food examples in their media release, it would be reasonable to assume these MPs would support removing GST from food. A demand that's proven to be hugely popular with people (see the front page story in the Whangarei Leader for a snap-shot of the mood on the street: Take GST off food, 16 Feb).
Connect with this grassroots mood and you've got a campaign that could undermine the whole neo-liberal tax structure. A mass campaign for GST-off-food would, if successful, be a mortal blow to one of the pillars of neo-liberalism, as GST certainly is.
But Labour has so far been very reluctant to embrace this popular demand. Is it because GST-off-food strikes at the very heart of neo-liberalism? To roll back GST would mean campaigning against the powerful proponents of this regressive tax: the big corporates operating in NZ. Is this a step too far for the Labour Party leadership?
Phil Goff says Labour won't support Maori Party MP Rahui Katene's private members bill to remove GST from healthy foods. And Goff won't even commit to reversing National's GST increase if Labour were the government. What does this mean for the "Axe the Tax" bus? Does it get parked away after the Budget in May?
Prime minister John Key has challenged Labour to campaign on reversing the GST increase at the next election. Key has framed the debate in these terms: you either have an increase in GST or an increase in personal income tax. This has put the Labour leadership in a bind.
But only if Labour wants to accept how the debate is currently framed, because there are circuit-breaking options. Most clearly, a Financial Transaction Tax (FTT), or Robin Hood Tax, as it's been so-named by the campaign originating in Britain.
Instead of the GST-income tax trade off, let's target the mega-wealthy. A small percentage tax on financial transactions (say 0.5% or 1%) would raise billions of tax revenue from the banks and other big corporates, including the global financial speculators who buy and sell the Kiwi dollar, one of the world's most traded currencies. (For more on why a FTT is an idea whose time has come, read these recent articles by John Minto, Finlay MacDonald and Barry Coates.)
So a circuit breaker for Labour MPs exists, but do they have they have the guts to take it? A tax on financial transactions would hit the big banks and other global financial overlords that have run amok with the world economy since the mid-1970s. In campaigning for an FTT you're buying a fight with some powerful global forces.
But it's a fight that must be fought if any kind of tax justice for grassroots people is to be achieved.
With the banks and other financial "fat cats" on the back foot following the financial implosion and their widely perceived role in causing it, there's an opportunity to go on the offensive. That's not to underestimate the size of the task. To roll back GST and force the introduction of a FTT would require serious and sustained campaigning by broad forces, in order to win the active support of the majority of New Zealanders. So that when the inevitable opposition from powerful political and economic forces comes there's a mass base from which to push the cause of tax justice.
Is Labour going to be part of this struggle, or not? Will the axe stay out, or will it be left in a cupboard in one of the corridors of parliament?
Here's a challenge to Labour: why not keep the axe out and support the campaign to remove GST from food, which would be a decisive first step towards tax justice in New Zealand.
So Labour Party people, what do you say?
Labour Wellington MPs want to Axe the Tax
Tuesday, 2 March 2010
Press Release: New Zealand Labour Party
“Balancing your budget and having something left over at the end of the week isn’t easy for a lot of Wellington families and higher prices won’t make that easier. The National Governments proposed increase in GST will push many Wellington families into further hardship" say Labour MPs Annette King, Grant Robertson, Trevor Mallard, Charles Chauvel, Chris Hipkins.
Labour Party MP’s have been travelling down the country on the “Axe the Tax” bus – protesting against the National Governments proposed increases to GST.
The bus will be in Wellington on Sunday 7 March.
“If GST goes up, increased prices are a certainty. That’s not good news for the 50 per cent of New Zealanders who didn’t get a wage or salary rise last year while prices went up,” says Labour list MP Charles Chauvel. “Fifteen per cent GST means a twenty per cent increase in the tax on the basics.”
MP for Wellington Central, Grant Robertson said “An increase in GST means Wellington residents will face 20 per cent more tax on bread. 20 per cent more tax on milk. 20 cent more tax on electricity and petrol. 20 per cent more tax on rates. And 20 per cent more tax on a block of cheese.”
“High GST means higher prices. Cost of living is already an issue and this just makes things worse, even worse than that is the fact that no one voted for an increase to GST,” said Hutt South MP, Trevor Mallard
Annette King, Deputy Leader of the Labour Party and MP for Rongotai said “Under National’s package, people on the top incomes will get more then lower income earners. Does that sound fair to you? People on the bottom of the heap, the minimum wage, got a huge 25 cents an hour more earlier this year – enough to buy a family size pack of Weetbix. As for the rest of the population, you’ll also get more than National promised – more GST and higher prices.
Labour opposes unequivocally the increase in GST. Labour wants fair tax changes that benefit everyone. “If we tell the Government No now, then we can still stop the GST rise,” says Chris Hipkins, MP for Rimataka.
All four of the Wellington Labour MP’s agreed that “We can make the tax changes fairer, and look after the many, not the few”.