Tax-reform White Paper due sooner

Press, 19 March 1985, Page 6

Tax-reform White Paper due sooner

PA Wellington The Government is expected to accelerate its move to taxation and welfare benefit reform by tabling a White Paper in Parliament next week to detail its proposals for the administration of a goods and services tax to be introduced next year. The paper originally was not expected to be released until next month, but the Minister of Finance, Mr Douglas, and his Associate Minister of Finance, Mr Prebble, last evening said it would be tabled in Parliament on Tuesday. Public submissions on the proposed value-added tax will be taken until May 17. Yesterday the Government released a discussion paper on welfare benefits and income tax to draw

submissions for a task force putting proposals forward for this year’s Budget, with the reforms expected to be in the second half of the Budget in September or October. The Ministers also said they had been pleased by the “resounding rejection” of a Labour Party remit which called on the Government not to proceed with its proposed goods and services tax. They said such a remit had been rejected on both a show of hands and a card vote which included representation by tirade unions. The 100 delegates to the regional conference of the party’s Waikato division near Ruatoria had called for more information about the unfairness of the present tax system, and how the G.S.T. would affect people at different income levels,

the Ministers said. Detailed analysis of spending in New Zealand showed that a decision not to tax necessaries such as food would only give a huge concession to higher income groups, said the Ministers. “Out of every $lOO spent on clothing in New Zealand, $19.50 is spent by the richest 10 per cent of households,” they said. “Only $2.50 is spent by the poorest 10 per cent. “On this basis, if apparel is exempt from G.S.T., the poorest households save 25c for every $1.95 the richest households save in tax — that’s hardly a recipe for perfect fairness,” they said. A similar pattern applied to food, where the richest 10 per cent spent $l2 out of every $lOO that went on food, compared with only $6.50 for the poorest 10 per cent of homes.