Friday 1 October 2010

Claiming GST is universally applied today is the biggest lie

Tax Justice media release
28 September 2010

“John Key has accused the Labour Party of lying in their pamphlet on National’s GST hike, but Mr Key is hardly squeaky clean,” says Vaughan Gunson, Tax Justice campaign coordinator.

“John Key and the National-led government have been spinning untruths about GST,” says Gunson. “Chief among them is the claim that the “beauty” of New Zealand’s GST regime is that it’s universally applied.”

Peter Dunne, Revenue Minister in the National-led government, said in July that “it’s not New Zealand’s policy to have a non-universal GST.” (See Key rules out GST-free food, 21 July 2010.)

“This is not true,” says Gunson. “GST is not applied universally today. The major exemption is for financial services.”

Inland Revenue lists the following financial services as exempted from GST: dealings with money; certain dealings with securities; provision of credit and loans; provision of life insurance; provision of non-deliverable futures contracts and financial options; the payment and collection of interest, principal and dividends; and issuing securities such as stocks and shares.

“The main users of these financial services are rich investors, speculators, banks and other wealthy corporates,” says Gunson.

“Why is it okay for them to get off paying GST, when grassroots people struggling to make ends meet have to pay tax on food?” asks Gunson. “John Key needs to fess up to the people of New Zealand and admit that our tax system has a rotten core.”

“We’re forced to stomach GST on food, while something as destructive to the economy as financial speculation goes untaxed.”

The Tax Justice campaign is promoting a doable solution to New Zealand’s unjust tax system. Over the last few months over 12,000 New Zealanders have signed a petition calling on parliament to:

1. Remove GST from food; and
2. Tax financial speculation.

“The tax revenue the government’s receives from GST on food could easily be replaced by introducing a Financial Transaction Tax (FTT),” says Gunson. “A small percentage tax on financial transactions would net billions from rich speculators and wealthy corporates, who are today enjoying a free ride from GST. We need to move quickly on this now.”

“The issue of tax justice for grassroots Kiwis is not going away. We’re confident the campaign is going to get bigger and bigger.”

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