National government to borrow $40 billion over 3 years

TVNZ Press Release 22 March 2009 Prime Minister John Key has unveiled a new economic initiative to borrow $40 billion to help NZ through the recession and believes we will come out of it “reasonably aggressively” in a year’s time during an interview with Political Editor, Guyon Espiner this morning on TVNZ’s new political show Q+A. Points of interest: - PM said Govt would borrow $40 Billion over next 3 years - PM refused to commit to 2010 & 2011 tax cuts - PM believes NZ will be coming out of recession “reasonably aggressively” in year’s time after 2-3 quarters of negative growth - Treasury estimates tax cuts will mean a 5% reduction in Government revenue See transcription of full interview at http://www.scoop.co.nz/stories/PO0903/S00241.htm See also It’s Time for a New Monetary System for another possibility to government debt.

National moves to cut government spending

The contradiction between all the talk of “economic stimulus” and the realities of declining tax revenue in a recession hits home. Bill English, National's finance minister, is actually preparing to slash government spending – but the rich can have their tax cuts. What will this mean for the provision of education, health and welfare services? How long before the National government is deeply unpopular? And what will the alternative be? And hasn’t gambling the future retirement income of workers on the world’s sharemarkets been a disaster. What remains of the SuperFund should be brought back immediately to NZ and invested in sustainable and socially beneficial enterprises.

Treasury: Effects of recession could last 15 years from TV3 News 25 Feb 2009 Treasury officials believe the current recession could affect us for 15 years. Finance minister Bill English has called for Government department heads to cut spending, and has joined John Key in hinting that the New Zealand superannuation fund may be tampered with to find extra dollars. "Treasury has produced deficits and growing debt for 15 years, and as I have said, that is unacceptable for us," says Mr English. In the last week English summonsed more than 30 Government department heads to the Beehive with the message to cut back and get real. "I want to dispel any notion that CEOs may have had that this will blow over, as some of them said to me," he says. "It won't blow over." The Government needs money, and it is looking at stopping or cutting back the $2 billion it puts away every year into the Superfund to pay for the future costs of national superannuation. Mr English has until now been silent on the issue. Every dollar the Government currently saves in the $12 billion fund is borrowed money, and the fund is losing money big time. "We have to look at whether we're happy to have $5.5 billion of losses," says Mr English. "It actually wipes out two years of contributions." Labour set up the scheme, nicknamed 'the Cullen Fund'. Labour leader Phil Goff is urging National not to touch it. National says entitlements to superannuation won't change, but Labour is sceptical. National is also refusing to put its tax cuts on hold, despite some saying only the rich benefit and it is the poor who need them. "We are committed to going ahead with the April 1 tax cuts," says Mr English. Mr English is a man under pressure, and given the outlook, it won't ease for sometime.

See also:

• Gordon Campbell on "nice guy" Key and National's pitiful response to the global economic crisis
• Building a mass movement for tax justice

Building a mass movement for tax justice

As the New Depression takes hold the Left must push hard for tax justice. An economic recession will see tax revenues fall, putting pressure on government's social spending budget, which in times of severity will be even more necessary. For its part, big business will be pushing for a combination of "stimulus spending" - on their terms with the most benefit to their profits - and tax breaks. Thus social spending will come under the squeeze. Government revenue from tax, and where the government directs that wealth, will be a political battleground in the years ahead. The call for tax justice will resonate with low and middle income earners. Mobilisng masses of people behind concrete demands like getting rid of GST or a Finnancial Transaction Tax (FTT) is very possible. It will only be through truly mass campaigns that such progressive tax reforms will be won. Below is article penned by longtime US social justice and environmental campaigner, Ralph Nader, on the need for a Financial Transaction Tax in America. He argues that hundreds of billions dollars of government revenue could be raised by a modest tax on financial transcations in the order of 10 to 25 cents per hundred dollars. The left in New Zealand has long seen the need for a Financial Transaction Tax. It was one of RAM's Ten Commandments (for more detail see The RAM Plan).

How to Lighten the Income Tax Load on the American Worker: Tax the Speculators! by Ralph Nader from Counterpunch 7 February 2009 Let's start with a fairness point. Why should you pay a 5 to 6 percent sales tax for buying the necessities of life, when tomorrow, some speculator on Wall Street can buy $100 million worth of Exxon derivatives and not pay one penny in sales tax?Let's further add a point of common sense. The basic premise of taxation should be to first tax what society likes the least or dislikes the most, before it taxes honest labor or human needs.

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See also Who bears the tax burden - the poor or the rich? A global battleground