Is the NZ government pricing NZ out of the market? The NZ government has recently increases the GST tax rate t0 15%. Clearly the NZ government recognises that NZ is not earning enough, so is not therefore in a position to pay for services. Consumption taxes are one way to go to rein in budget deficits....but are they the best way to go. There are reasons to wonder.
1. Tax on spending: We might argue that NZ'ers spend too much....but really the greater issue is that they earn to little, that they cannot sustain those expenses.
2. Tax on tourism: One of the growth markets for NZ has been its tourism industry. Is that inclined to stay true if the government takes the easy steps of hiking consumption taxes, and then offsetting them with tax breaks for the lower income earners.
The problem is that in the context of a stronger NZD, tourists might reflect on NZ beyond the 'pretty pictures' and see that the country offers no job prospects, higher costs of living (because tourists are unfairly burdened relatively) and decide to go elsewhere. It is not even that NZ is 'so expensive', it is that its pretty expensive already to get here, and its at the 'arse end of the world'. We might ask where the government is positioning itself. The NZ is too small to interest most business people. It is increasingly expensive for students any young adults. Its so far away for busy travellers and the NZD is higher than average. So we might ask... Is NZ pricing itself out of the market?
Shouldn't the government be trying to raise the earnings potential of NZ jobs? There are signs that they are doing this. I can see that they are getting rid of disability pensions, and requiring people to show proof of working, or trying to find work. This government is the best government NZ has had in a while...but is it acting quick enough? Is its reforms as comprehensive enough? On some levels they are very good, but on some issues they make a poor case.
1. Binge drinking - too pissed
2. Speed limits - too cautious and non-intellectual
3. Consumption tax - reactionary
4. Regulation- very poor
5. Infrastructure - its building roads when it should be building fibre networks. The population is hardly growing...why build roads? This creates jobs in the wrong areas.
The trend is good...its just the rest of the world is moving as well, and NZ is at the 'arse end' of it. It needs to do it better. We need to recognise that costs are going up everywhere, and there are many ways to travel around a country. The best way to travel around NZ is to go to a car auction and buy a van...sleep in the back of it. Sadly, that route might become illegal given the complaints over 'stranded turds' in picnic and car parking areas around NZ. Not pretty. I guess one of those 'negative externalities' arising from tax or cost changes and new technology.