GDP

Idiot has got very excited on his blog, as he has discovered that there has been GDP growth, and hence this makes it all okay for the state to be taking in $30 billion of extra revenue.

I’ll ignore his fairly personal comments about truthfulness and my former occupation (which he has wrong, but hey facts …) and concentrate on the economic issues.

First of all it is totally appropriate to look at the actual amount of crown revenue and expenditure, not just as a percentage of GDP. Just because my business grows by 10%, doesn’t mean we should spend 10% more on hip hop tours, simply because the money is there from taxation.

The tax and spend article refers to the 1990 to 1999 period where it mentions crown revenue also increased by $8 billion. This was against GDP growth of 42% over that period. Labour has $30 billion increase against 62% growth.

Idiot also refers to the accounting changes in 2002. The $30 billion increase takes that into account, as I have backdated revenue from 1999 on the basis of the new policy. The increase would be greater than $35 billion if I had not. Again those pesky facts.

I stated in the article that only $20 billion of the increase was from tax. People may be interested in a further breakdown on this. The amount of income tax paid by individuals is forecast to increase by 70% (more than $10 billion) from 1999 to 2008. Company tax increases by $4 billion which is around 108%.

Every year more and more New Zealanders pay more and more tax. This is a combination of bracket creep and tax and levy increases. And the more money the Government has to spend, the lower the quality of the spending. Just look at the $115 million on community education.

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