Repeating Labour’s lines

Bernard Hickey writes in the HoS:

The charts reveal the results of the cut in the income tax rate from 39 to 33 cents, which was in theory partly paid for by an increase in the GST rate from 12.5 to 15 per cent. They also reveal a massive reversal in a decade-long trend of improvement in New Zealand’s public debt position.

Our tax-to-GDP ratio has crashed from almost 34 per cent in late 2008 to 29 per cent last year, which means yet more borrowing on the horizon.

This is almost directly taken from David Parker’s talking points, as they make the same mistake.

There were three sets of tax changes. Tax cuts on  1 October 2008 with no spending cuts to compensate, Tax cuts on 1 April 2009 (with some spending cuts to compensate) and a tax package on 1 October 2010 which was meant to be broadly fiscally neutral (income tax down, GST up, no tax benefit from depreciation on investment properties).

Bernard, like David Parker, is using the change in tax from 2008 to cast judgement on the 2010 package. It is absolutely misleading to do. I can understand why David Parker does it, but am disappointed Bernard is repeating his tactics.

The 2008 and 2009 tax cuts saw tax rates reduce for everyone. It is again dishonest to suggest that fall from 34% to 28% (tax as % of GDP) was just related to dropping the top tax rate from 38% to 33% in 2010.