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Monday, September 27, 2010

The reality of the GST rise

This GST rise to fund a tax cut, (the benefits of which will see 2 thirds of the tax cut go to the wealthiest 1 third of the population) is being spun by the Government as 'neutral' in that the GST rise will be offset by the paltry crumbs being offered to the majority. Well the reality is that the GST rise is being seen by price setters as a chance to ramp up those prices...

Power bills could rise 'by 5pc'
Average household power bills could rise up to 5 per cent if monopoly watchdog the Commerce Commission gives in to electricity lines companies, according to big power users.

Cry of gouging as fares go up
Auckland public transport rides will cost at least 10c more from the end of next week, and fares on Fullers' unsubsidised Waiheke Island ferry service will be boosted by an average of 4.7 per cent.

The claim by Bill English on Q+A when being challenged on price increases was that 'the market' would sort it out, but if these prices are going up on necessities which people can't limit their demand for, the 'market' is going to do bugger all to help.

The Government have sold these tax cuts and GST rise to fund those tax cuts to NZers as making them better off, the reality is that come October 1st NZers will feel the extra pain every week evaporating the vacant aspiration Key oozes and it was very interesting to note that on Q+A, Bill English started claiming that this 'better off' will mean long term, not immediate.

Tracy Watkins quotes Phil Goff perfectly in todays Dom Post...

"I can spin or Mr Key can spin as much as we like; in the end it's what people experience when they go through the checkout at the supermarket that will tell them whether or not this so-called tax switch is a good thing."

...and that is where NZers will make their mind up about Key's claim they would be better off and why Labour's plans to take GST off fresh fruit and vegetables will become increasingly popular.


At 27/9/10 2:07 pm, Anonymous Anonymous said...

In doing the sums, what Discount Factor would you use, and would that alter after 1 October.

Maybe you could show us a DCF analysis on the impact of these GST rises?

At 27/9/10 5:51 pm, Anonymous Anonymous said...

Bomber do you know what DCF is?

At 27/9/10 6:18 pm, Blogger Bomber said...

YAWN - that would be discounted cash flow anon.

Look you National Party Research types can try and spin this any which way you like, NZers will feel the reality in their pockets and they will compare that not to your DCF, but to John Key's promise they would be better off.

At 27/9/10 8:38 pm, Anonymous Anonymous said...

Do you know how a DCF works? Have you ever done one?

At 27/9/10 9:04 pm, Blogger Bomber said...

Is this 20 questions is it? I'm pretty sure most NZers will feel the reality of the GST tax rise and not give a toss about DCF's. Look, if you think crowing about DCF's will help explain to NZers why they are worse off, knock yourself out, I beg you keep using it.


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