Several commentators have seized on John Key’s statement that GST will only go up if most people will be better off because of income tax cuts as a sign of potential for backtracking.
I don’t think he’s being cautious, I think it’s a sign of how confident he is that most people will be better off and that cuts in income taxes will more than compensate most of us for the increase in GST.
What’s better for individuals and the wider economy – less money in our pockets and lower GST or more money in our pockets and higher GST?
I’d vote for the latter any day because it gives us more choices.
If people already live from payday to payday they may keep on doing that and they’ll be no worse off. But some might also find that a little more in their pay packet enables them to save something.
Those who already have something left over at the end of the week will have more left over and the choice to spend or save it as they want to.
The plan to cut income taxes and raise GST isn’t just about how much everyone will be left with. It’s also about a change in attitude. John Key and his government wants us to have more of our own money and to reduce the burden of the state on individuals.
It’s far better to let us keep more of what we earn and have a small increase in the tax on what we spend than to take more from our pay packets and take less from what we spend.
It’s better for us and it’s better for the wider economy which in turn is better for us.
