March 6, 2010 11:43am by David Farrar

Armstrong on Labour and GST

Axe the tax? Labour would if it could. But it can’t. So maybe the tax will stay. Maybe it won’t. Who knows.

Labour isn’t saying. And it won’t be saying for quite a while yet. …

National’s overall tax package will leave Labour nursing a big political headache – how to make up the $2 billion shortfall in revenue if Labour pledges to restore the rate of GST back to 12.5 per cent.

Labour won’t say how. But it can hardly talk of raising income tax rates which National will have just lowered.

No party – not least one coming from such a long way behind its rival – can afford to saddle itself with that kind of platform.

I would welcome Labour giving New Zealanders a clear choice, and campaigning on increasing personal income tax rates.

But that is one thing Labour will definitely not be doing. It is not going to be trapped into declaring a position which it might later regret.

Goff has been around long enough to remember National’s very own GST-induced political disaster.

When Labour introduced GST in 1986, National felt obliged to come up with an alternative – the long-forgotten “Extax”.

With Labour determining no items would be exempted from GST, National saw a gap in the political market. Extax allowed exemptions for basic foods, doctors’ fees, local authority rates and some charities. The tax was universally panned as an administrative nightmare.

The ridicule prompted senior National MPs to lose faith in the policy, resulting in mixed messages as to where National really stood on a broad-based consumption tax.

Not just National MPs. I was an office holder in National in 1987 and I actually voted for the Labour Party, partly because of National’s ridicolous Extax policy.

Meanwhile Bryce Edwards looks at the Axe the Tax campaign. He looks at whether or not is is electioneering regardless of the rules devised by MPs on what is legal:

The Labour Party obviously hasn’t learned much from the severe public ignomany suffered when it was revealed that the party had been paying for its electioneering Pledge Card with public funds while in government. Their latest rort – running a heavily branded bus campaign around the country – is no less electioneering, yet Labour has once again used taxpayer funds to pay for this political advertising. This blog post looks at whether such electioneering can really be called ‘legitimate’, even if the exercise is made to fit into the dodgy Parliamentary Service rules. Regardless of the expenditure’s legal status, few voters will appreciate having to pay for such overt political advertising.

Bryce goes on to distinguish between whether something is “legal” and “legitimate”