Sweeping tax reform sought

Press, 31 August 1984, Page 1

Sweeping tax reform sought

By

OLIVER RIDDELL

Two Treasury documents and one Reserve Bank document have been published by the Government in full to reveal the state of the economy as at July 14 for whichever main party was elected. These (when taken together) exhaustive analyses of the state of the economy, and what options were open to fix it, follow up Labour’s promise to “open the books” so that the public could learn the condition of New Zealand’s finances. The Prime Minister, Mr Lange, described their contents as gloomy but the Leader of the Opposition, Sir Robert Muldoon, described them as Labour Party propaganda. Sweeping suggestions for

taxation reform and costcutting are made by the Treasury. These include a capital gains tax, stern taxation of perks, extending sales tax, value-added tax, the selling off of Government enterprises, better targeting of social welfare, and many others. The Reserve Bank chimes in with great alarm at the prospective costs of debtservicing (one dollar in five of Government expenditure) and the high levels of overseas debt ratios. The reports emphasise the need to restrain wages, and for the need for real wages to fall in the interests of reducing unemployment. There are sections on the need for devaluation (since adopted), realistic exchange

rates, and the reduction of the internal deficit. As well as the reports themselves, two pamphlets have been produced for distribution in schools and to the general public. The reports will be available from the Government Bookshop. The reports prompted Mr Lange to predict a “lean Budget,” with help for the needy but little for anyone else. His criticism of the performance of the former National Government was rejected by Sir Robert Muldoon. Sir Robert said that criticism of the economic policies of his Government in the reports came from people at “junior level” who were “not in the real world.”