Last week’s budget does not tackle the high level of inequality in New Zealand, and may even make it worse, says Peter Malcolm spokesperson for Income Equality Aotearoa New Zealand Inc—Closing the Gap.
“While there will be small gains, in April next year, for some people through shifts in the levels at which the tax rates change, the gains are greater for those earning more,” Mr Malcolm said “Meanwhile the increase in the accommodation supplement will quickly be absorbed by rent rises with no benefits at all for those who need rent relief.”
Mr Malcolm went on to say, “The increase in Working for Families payments, with the levels of abatement still much the same, will not even restore these entitlements to levels that existed before the losses due to inflation.”
“New Zealand has one of the highest levels of inequality in the developed world and the research shows very clearly that this exacerbates many social ills, destroys the cohesiveness of society and is bad for the economy” Mr Malcolm said.
“At a time when we are being told our economy is in good shape we should be taking bolder steps to make sure that everyone benefits, not just the well-off. Significant increases in our low wages and controls on the obscene levels of pay at the top through a decently progressive tax structure, plus a proper capital gains tax would make a huge difference.”
Mr Malcolm said it is interesting that the major tax income for our Government comes from GST at about $20 billion—a totally flat tax rate, under which the rich pay exactly the same as the poor— with only half as much again, $32 billion coming from income tax, which is barely progressive. Together with the very high income at the top, this means there are no controls on high levels of income, which has a huge impact on inequality.
With New Zealand Government debt levels among the lowest in the OECD, now is surely the time for serious increases in benefits, spending in education and health. and a major commitment to provide social housing. This housing crisis is another major contributor to inequality.
“Mr Joyce, you missed a wonderful opportunity to make a real difference to our country” Mr Malcolm said..
