Mr Douglas accused of ‘tired old tactics’

Press, 1 April 1985, Page 13

Mr Douglas accused of ‘tired old tactics’

By

PATRICIA HERBERT

in Wellington

A leading trade unionist yesterday accused the Minister of Finance, Mr Douglas, of resorting to “the tired old tactics of personality politics” in the economic debate.

The chairman of the Combined State Unions, Mr Ron Burgess, made the statement in reply to Mr Douglas’s remark that union opposition to the goods and services tax was limited to one or two academic advisers.

The reference was understood to have been directed to an economist with the Public Service Association,

Mr Peter Harris, and Mr Rob Campbell, a Federation of Labour executive.

Mr Burgess said he was disappointed that the Minister had stooped to “snide remarks" and “innuendo.”

Mr Douglas should be under no illusion about the widespread nature of the concern in the union movement at many aspects of the Government’s economic policies.

Their reservations about the GST were genuine and should be seen in context, he said.

"It will apply at the end of a series of moves that have freed up the financial houses, forced up interest rates, allowed rents to rocket, unleashed prices and stripped away the necessary protections that working people had from the excesses that can be associated with the marketplace.” Mr Burgess said that any type of uniform sales tax took a higher proportion of the incomes of the poor than of the rich. This was because low income groups spent all their money and most of it in New Zealand while the wealthy saved and invested overseas.

“Our present tax system

is based on the principle of the ability to pay so that the proportion of income that is taxed rises as income rises. “The GST reverses the ability to pay principle and is therefore a regressive move,” he said.

Mr Burgess disputed Mn Douglas’s arguments in defence of GST and his assurances that any negative effects would be compensated through the tax and benefit system. “If the only effect of introducing the GST is that we will pay our taxes through shop-keepers rather than have them collected by employers, then there is no point behind the exercise,” he said.

He disputed Mr Douglas’s assertion that it would provide the Government with a way of catching those who were now slipping through the tax net.

“I cannot accept that we need to impose a massive price hike on all people in order to achieve that. There are cheaper ways and more effective of widening the tax base to reduce evasion and avoidance,” he said.

Mr Burgess also said that to compensate the untaxed or low-taxed for the extra prices they would pay, the Government would have to introduce a further layer of income-related benefit payments.

“All this does is extend the poverty trap,” he said. “It also makes people more vulnerable to changes in policy because we will have .widened the numbers of people that are directly de-, pendent on the State for support.” Instead, he said, New Zealand should be moving toward an adequate welfare system built round a wage structure to provide people with their primary means of earning a decent living. Mr Harris yesterday questioned the value of the Government’s White Paper on the GST because it lacked the information needed to make an assessment.

He said the union movement was now trying to do its sums on the GST but that it was difficult because of “three main unknowns.” These were:

® The rate the GST would be levied at, some were saying 10 per cent, others 15.

• How much of the revenue yield would be used to fund the deficit and how much would be channelled into benefit and income tax trade-offs. • How much direct taxation would be reduced and how the compromise between giving relief to low income earners and lowering marginal tax rates would be achieved.

Mr Harris said an analysis was being prepared and that he hoped it would be completed within the next couple of weeks. Until then, he was reluctant to comment on “the compensation aspect.” He was replying in part to a call for patience from the national secretary of the Printers’ Union, Mr Colin Chiles. He said the Labour Government was the friend of the trade union movement and that there was “no point in shafting it to death when the alternative (National) was so much worse.” He also said the bottom line for the average worker was “what is going in or out of his wage packet” and, while reserving his position on the GST package, Mr Chiles said that at least one measure, the lowering of overtime tax, should be welcomed by the unions.

Asked his reaction to Mr .Douglas’s comments about union opposition to GST being unrepresentative, Mr .Chiles said they were “interesting” and agreed there was a gap between the thinking of the rank-and-file and the leadership of the union movement on the issue.

He said union criticims were now based on “fairly set-piece arguments” which were being put up without regard to the whole picture of what the Government was trying to do.