GST to benefit wage and salary earners

Press, 2 May 1985, Page 1

GST to benefit wage and salary earners

By

MICHAEL HANNAH

in Wellington

Substantial benefits to wage and salary earners from the goods and services tax are promised in figures that the Minister of Finance, Mr Douglas, has released. Mr Douglas gave one set of figures, applying to a worker on the average wage, of about $3OO a week, and supporting two or three children, during the Labour Party’s southern regional conference at Mosgiel last week-end. He said yesterday that this figure was only one of several he had had run off to show the sort of income tax cuts and rises in welfare benefits the proposed GST made possible. On the example given, the

worker on the average wage of $3OO, with dependent children, could expect “about $3OO in the hand, or more,” Mr Douglas said. He would not say whether this was purely in tax cuts or a mixture of tax and welfare benefits. “What I said was that the delivery mechanism was something the trade union movement and the Governmeent could sit down and talk about,” he said. Mr Douglas said he also had examples of the effects on single people and twoincome families. Without giving details, he said that a couple, with one partner earning $4OO a week, and the other partner earning $2OO, would be “ahead of the game, too.”

“I am convinced we can help wage and salary earners more or less across the board, but obviously we will be able to help some more than others,” he said.

“We ought to decide what the equity case is to help single people, as opposed to two-income families, or married people with families, or what have you.” Mr Douglas said he was inviting further discussion from interested groups on the equity issue. Asked whether workers earning above the average wage would benefit, he said, “Sure. They are going to win all along the line.” He said the tax would bring in about $2OOO million, $l5OO million of which would come from wage and

salary earners, and $5OO million from people not receiving wages or salaries as income. This latter group would include people who took their income from fringe benefits, or capital gain; the "black market economy,” which he described as people who “put money in their pocket”; “dissavers,” or people who spend more than their stated income; and tourists.

“Obviously to give the whole $2OOO million back to wage and salary earners, they must as a group be $5OO million better off,” he said.

“You have some redistribution power within the $l5OO million, and that is what we ought to be talking about.”