In the lead up to the NZ election, a crucial issue that may heavily influence the outcome is also the oldest one in the book. Namely, the question of whether the left-wing party will increase taxes whereas the right-wing party will not. In the view of DownToEarthKiwi, Labour's strategy of not identifying practically any future cuts in government spending to reign in our burgeoning public debt will leave them heavily exposed. Why? Since public debt is forecast to explode from 20% to over 50% of GDP the next few years. And a party that offers no plans to cut any forms of government spending to counter this increase becomes a party that is likely to increase taxes.
The Finance Minister has just claimed that "National would need to cut tens of billions in public services to meet its debt target". However, Kiwi public debt can easily be brought under control with no cuts to public services. Simply by stopping existing government transfer schemes to high income, wealthy folks, our debt mountain could be flattened. Some examples include:
- subsidies to Kiwi Saver contributions
- free tuition fees and interest free loans to students from wealthy families
- winter heating payments to high income earners
- corporate welfare to businesses
- accelerated depreciation tax allowances to the forestry, farming and bloodstock industries
Stopping such schemes alone would cut debt by more than $30 billion over 10 years. None of these cuts involve reducing public services. Furthermore, speculation that taxes may rise in the future would end - speculation which can depress investment and consumption spending, thereby knocking the stuffing out of the economy, right now. See: