Labour is attacking Finance Minister Bill English for saying last year he wanted to maintain GST at 12.5 percent.In a speech last year on the tax and policy options the Government faced as it grappled with the recession, Mr English said he did not believe
Labour is attacking Finance Minister Bill English for saying last year he wanted to maintain GST at 12.5 percent.
In a speech last year on the tax and policy options the Government faced as it grappled with the recession, Mr English said he did not believe in using tax policy to stimulate the economy.
"We generally believe that the manipulation of the tax system isn't the best way to ensure that an economy grows. It's one tool that can be used sometime, but we think the best use of the tax system is to collect revenue, not to achieve a whole lot of other objectives in fact," Mr English said in the speech last February.
"We want to maintain GST as it is -- probably one of the best examples of indirect tax in the world. We want to keep that rate and no doubt there will be continuing debate about where the corporate tax level should go and the need for a capital gains tax."
Since then a tax working groups has advised the tax system is flawed and the Government is now proposing to lift GST to 15 percent, reducing personal tax rates and removing property tax deductions to stimulate the economy.
Labour leader Phil Goff said there was no way Labour would support a hike in GST.
"This is further evidence of National's broken promise on GST," Mr Goff said
"After breaking their promise on GST National can't be trusted to deliver a tax package that makes all New Zealanders better off. This is further evidence that John Key's defence to his broken promise yesterday doesn't stack up."
Yesterday Prime Minister John Key was forced to defend his 2008 comment that he would not raise GST.
Mr Goff leapt on the 2008 election campaign statement that Mr Key would not raise GST to cover deficits, but Mr Key said the proposal to raise GST released yesterday was to allow for lowering taxes overall.
During the campaign Mr Key was asked to rule out raising GST to 15 percent to cover deficits.
"National is not going to be raising GST," he said.
"National wants to cut taxes, not raise taxes. We acknowledge the point that John Shewan (chairman of PricewaterhouseCoopers New Zealand) is making which is that there is a decade of deficits facing New Zealand unless we get it right."
Today Mr Key said he was asked a specific question and gave a specific answer.
"He also floated increasing the top personal rate to 45 percent, I said no and I remain of that view. No to cover deficits. At that point we hadn't considered GST as part of a tax switch."
National was also not breaking its campaign pledge to not raise taxes.
"We stand by that. We won't be raising taxes, we will be overall lowering taxes."
Mr Goff said it was a clear cut case of Mr Key going back on his word.
"Before the election he promised not to raise GST, yesterday he said he will... He has broken his promise it is a simple as that."
Mr Key's defence was just "semantics," he said.
