Rival tax schemes bid for votes

Press, 14 August 1978, Page 16

Rival tax schemes bid for votes

By

CEDRIC MENTIPLAY

With the General Election date no more than 15 weeks away. New Zealand’s electors are theoretically in a better position than ever before to decide who shall occupy the Treasury benches for the three years from November 25.

As is usual, the Government has set out its plans in detail, and has backed them with a set of estimates, now being examined by the Public Expenditure Committee and by Parliament itself. The remarkable factor is that the Labour Opposition has produced an alternative, and in a series of releases and speeches is continuing to set out the small print in increasing detail. This is in breach of previous Labour policy, and has led to some predictable results. The late Sir Walter Nash did not believe in producing a shadow Cabinet or a shadow Budget, and was doubly against eithe. in any election year. His reasons were: “If we produce a budget in Opposition, the Government will proceed to discuss ours. Our task is to concentrate discussion on theirs, to demonstrate weaknesses, and to let the public know.”

Not all Labour politicans thought that way. The late Mr N. E. Kirk, for instance, once made some striking predictions of what would

happen if Labour were successful the following year — and was chagrined to sea the National Government apparently take over soma of his ideas. I say “apparently” because in such matters it is often difficult to determine which side had

the idea first. In 1978, however, there has been no coy concealment of Labour’ promises. The first “Labour alternative” followed closely on the heels of Mr Muldoon’s Budget, and was “thickened up on the ground” by subsequent clarifications. One of these was a folder of releases on July 24; another a four-page newspaper containing explanatory tables and examples of how the Labour system of taxation would bring ordinary families more savings than the National system. Inevitably, what Sir Walter Nash claimed would happen has happened. Parliament’s oral and written questions and notices of motion are full of comparisons between the National rates of taxation and the proposed Labour rates. Indeed, it has been said that some members, having before them these comparative tables, are

finding it hard to look anywhere else. The 1978 Budget has taxation concessions which, according to one source, will

save taxpayers $320 million in a full year. The total savings to taxpayers of the Laoour alternative has been variously computed, but seems likely to be more than S4OOM.

It does appear, however, that Labour’s proposals are very different from a simple scaling-down of the taxation take. Poorer taxpayers would be a little better off, but the moderately wealthy would be wealthier. A clear view is obstructed, however, by the various allowances worked into the pattern. What nobody seems able to assess, is the effect on our cost of living of the other half of the Labour system. The plan is to make a surcharge of 10 per cent on imports. Various attempts have been made to assess what this would bring in, but again the clear answer is obscured by Mr Rowling’s expressed intention to give a Labour Government ex-emption-power in certain categories.

How will this power be applied? We have had several suggestions. Imports designed for re-export as part of a manufactured item may escape the impost. So May imports such as fertiliser,

agricultural machinery, and the like. The New Zealander going on an overseas holiday for the first time may be made happy . . . National and Labour may both have their problems in explaining how such largesse can be distributed at such an apparently unfavourable time. Generally, economists have not been joyful over either scheme of taxation. The recent advance in wages has been supplemented by payments to Public servants retrospective to October. There have been increases in superannuation rates, and in payouts to beneficiaries in various categories. No sudden access of capital in the hands of any Government has showed itself as imminent. Certainly the Minister of Overseas Trade (Mr Taiboys) brought no joy back from Europe. . Possibly the worst aspect of this offer and counteroffer is that Parliament can be expected to waste valuable time by discussing the matter over the remaining 10 weeks or less of the session.

There is no plan in sight which will offset unemployment. Possibly the Govern-

meat’s tuning of the economy will ease things, but more probably New Zealand will drift along in the backwash of the world economic crisis, recovering or relapsing as the fortunes of other communites wax and wane.

This is not good for a Government which has given much lip-service to planning. It is no better for an Opposition which should be devoting more time to the obvious weaknesses of Government policy. What has Labour done, for instance, about National’s “let the user pay” policy? This phrase surfaced again and again at the recent National Party conference. It was so apparent that when three good South Island electorates (Ashburton, Nelson and Tasman) put forward a remit: “That a through freight rate be charged between both islands, including passage of Cook Strait,” it was lost on the voices. Is this the end of the socalled “iron bridge concept?” It would appear so — and yet this could well be the crux of a new political divisiveness.

A powerful and confident

opposition might well forget its money-games and attempt to regain justice on these points: 1. New Zealand is a long, narrow country — but everyone in that cleft, 12uomile’strip is a New Zealander by equal right. .2. When the North Island saw the beginning of the end in hydro-electricity, cables were laid across Cook Strait to get power from South to North. 3. When a new powersource (liquefied petroleum gas) was found in the North Island, however, a "let the user pay” doctrine was enforced which is likely to deprive the South of lowpriced L.P.G.

4. This doctrine is expressed even though the costs of another energy source (petrol) have long been adjusted to New Zea-land-wide limits.

5. Now National has abandoned the concept of balanced rail freights, thus increasing the isolation of the South.

"Let the user pay" is the policy Labour should be attacking with far more vigour than has been the case. The Greater Auckland development which has drained the South Island, and which is even taking its toll of the capital’s resources, is something our politicians should be trying to offset, for the good of New Zealand as a whole.

Comment from the Capital