No GST On Food

Mana media release

Mana is challenging John Key to front up and apologise to New Zealanders for National’s misleading election material about the percentage of tax paid by New Zealanders

In their election handouts shoved into every letterbox in the country National claims that three-quarters of New Zealanders now pay a top personal tax rate of 17.5%. This is a carefully constructed lie because it airbrushes out GST which hits those on low incomes the hardest.

The awful truth is that when GST is factored in those on the lowest incomes in New Zealand are now paying the same tax rate as those (such as Prime Minister John Key and all our politicians) in the top 10% of income earners.

A person earning less than $3000 per year is paying the same 26.5% of their income in tax as the top 10% of earners on over $87,000.

New Zealand now has effectively a flat tax structure on incomes thanks to the perversion of GST.

Our tax system has become so debased and abused that the tax burden now falls hardest on those least able to pay.

Mana will reverse this taxation perversion by abolishing GST and replacing it with a Financial Transactions Tax. This will mean shifting the burden from those on low incomes to high income earners among the corporate elites.

Letter to Sunday Star Times by Tax Justice spokesperson Grant Brookes.

While campaigning for GST off food in 2008, a NZ Herald reporter interrogated me about the “impossible” administrative difficulties it entailed. He was unmoved by the fact that 27 out of 30 OECD countries had exemptions for tax on food at the time.

I was reminded of that interview when I read “Few details in Mana tax plan” in last weekend’s Sunday Star Times. Your article quoted an economist, uncritically, dismissing the Mana Party’s Hone Heke Tax as one “that no individual country can introduce on its own, as it is easy to shift financial transactions from jurisdiction to jurisdiction”.

It failed to mention existing Financial Transactions Taxes like the UK Stamp Duty, or the continent-wide FTT proposed by the European Commission.

The recent IMF Working Paper, “Taxing Financial Transactions: An Assessment of Administrative Feasibility” describes many successful single-country schemes, and practical measures for tackling transactions shifted elsewhere.

This year I presented a petition to Parliament on behalf of the Tax Justice Campaign (www.nogstonfood.org). Signed by 40,000 New Zealanders, it called for GST off food and financial speculation taxes.

So Mana’s policy is both feasible and popular.

I’m growing tired of business journalists, blinded by economic theories, who echo excuses for why nothing can be done to tax the super-rich.

Reality presents no such insurmountable barrier. I expected more from the Sunday Star Times.

Grant Brookes
Tax Justice Campaign

Here is the Sunday Star Times article that Grant Brookes’ letter responds to:

Few details in Mana tax plan

by Rob Stock
13 November 2011

Mana is the only parliamentary political party tapping into international campaigns by pressure groups and some economists for the global taxation of financial transactions.

But the party’s pledge to replace the $15 billion goods and services tax (GST) with a tax on financial speculation is uncosted and based on observing the lobbying for a so-called Robin Hood tax in Europe and the United States.

There are many economic policy pledges from major and minor parties causing controversy and debate, notably Labour’s tax-the-rich income tax plan and National’s asset-sales promise. But while most of the economic pledges would be deliverable by politicians holding the reins of power – and are backed up with analysis – economist Roger Bowden says Mana’s policy is only deliverable if the entire world decides to do the same.

It is a decision that will be taken in the highest offices of the G20, not in New Zealand, unless we want to see a flight of capital from the country.

The Mana Party has set out its stall as representing New Zealand’s poor, whether unemployed, under-employed or stuck in low-paid employment. It has presented policies to win support from voters who would like to see social inequalities reduced and the relative tax burden shift from the poor to the rich.

That includes making the first $27,000 of income earned tax-free and introducing a Labour-like pledge to introduce higher taxes for the rich. But it also involves a pledge to tax financial speculators.

Mana Party activist John Minto said there is no detail to the party’s pledge to significantly increase the tax take by “introducing a tax on financial speculation, called the Hone Heke tax (chopping down GST and income tax), which will be designed using examples of similar taxes introduced overseas. Initially it will be used to replace the annual $15b collected by GST”.

The Sunday Star-Times contacted party leader Hone Harawira, but for policy detail was referred to Minto, who said given the level of financial speculation on the New Zealand dollar, the party believed the $15b target was quite modest.

Minto said currency speculators were the party’s prime target, in part because the party believes they had helped drive up the value and volatility of the Kiwi dollar which was not good for exporters and workers in New Zealand. Taxing speculation would reduce the level of that speculation and that would provide a win-win situation for the economy as the dollar fell in value, Minto said.

But Minto could not provide any detail on how the tax would be imposed or which kinds of transactions would be taxed.

“We haven’t set rates or exactly what would be covered,” he said. “There have been some good and some bad experiences overseas. There are a whole lot of different forms.

“We are not getting involved in figures,” Minto said. Mana picked the idea up from overseas where there are calls for worldwide financial transaction taxes.

“I would say Mana would actively be campaigning for this no matter how far we are from government,” Minto said.

While financial transaction taxes were possible and some, including emininent economists, see them as desirable, it is a form of tax that no individual country can introduce on its own as it is easy to shift financial transactions from jurisdiction to jurisdiction, Bowden said.

“Everybody has to agree at the same time,” he said, adding that currently, the idea looked like “a dead duck” as places like the US and UK are not in favour.

Bowden recalled the introduction of a transactions tax in one Australian state around 20 years ago which was quietly repealed when there was a flight of capital to other states.

He warned that financial transaction taxes are always ultimately passed on as extra costs to individuals, whether they be shareholders or bank customers, or if hedging contracts on currency are taxed, to exporting firms and even the likes of KiwiSaver funds.

“The banks will always pass [extra cost] on,” Bowden said.

Notes from a talk at Occupy Wellington on 29 October, 2011, to coincide with the #RobinHood Global March (http://www.adbusters.org/blogs/adbusters-blog/robinhood.html)

by Tax Justice spokesperson & eco-socialist activist GRANT BROOKES

The campaign for a Robin Hood Tax began, a little over 18 months ago, with a little-noticed launch in London. Supporters from a handful of British charities, faith groups and unions projected images onto the Bank of England, in an effort to lobby the British government to introduce a new tax on banks to tackle poverty and climate change. Today, it has become a global movement.

It’s easy to see why it has been taken up by large parts of the Occupy Movement, which also began as a small gathering on Wall Street opposing US corporate greed and the role of the top 1% in dictating priorities in Washington, and has now become a global awakening.

What has driven both developments is a realisation that the current world order is failing us — the 99% around the world — and that to fix it, we need to change the system. The catch-cries of the last great global uniting — the anti-capitalist movement which arose after the protests against the World Trade Organisation Summit in Seattle in 1999 — have returned. “Another world is possible, a better world is possible”.

This global vision inspires us, it connects us with people around the world, whose coordinated action and common purpose is essential to make that system change, and create another world.

But we all begin this journey from where we are, in our own countries, our own cities and communities, with our own histories and our own specific obstacles to change.

A Robin Hood Tax in New Zealand would require a radical overhaul of our system of taxation. So it’s important to examine our current system and how we ended up with it, which leads us, at the start, to the last radical overhaul of taxation in New Zealand.

Read the rest of this entry »

Tax Justice media release
28 October 2011

“The Occupy Movement is protesting the injustice of the world’s 99% having to bear the costs of a financial crisis caused by an elite few,” says Vaughan Gunson, Tax Justice spokesperson.

“The best mechanism for making the super-rich 1% pay is a financial transaction tax, or Robin Hood Tax,” says Gunson.  “It’s very exciting to see that the global movement for this tax which targets banks, big corporates and financial speculators is growing.”

The Robin Hood Tax international day of action on Saturday 29 October is timed to put pressure on the leaders of the G20 before their summit meeting in Cannes on 3 November. In New Zealand, actions are being organised in Wellington, Auckland, and Christchurch.

“Tax Justice has been campaigning over the last year for financial speculation to be taxed. It’s criminal that the profits of speculators go untaxed, while ordinary New Zealanders are taxed every which way,” says Gunson.

The Tax Justice petition signed by 40,000 New Zealanders was presented to Parliament on 16 August. The petition calls for GST to be removed from food and a tax placed on financial speculation instead.

“Politicians in New Zealand need to respond to the global movement and start looking at how we can introduce a Robin Hood Tax in New Zealand,” says Gunson.

Tax Justice would like to see the parties of the left come together on tax policy. “A broad coalition that brings together left parties inside and outside of Parliament, along with unions and other grassroots organisations, could achieve a decisive shift towards a more just fairer tax system,” says Gunson.

“The beauty of financial transaction taxes is that they can target the super-rich who aren’t paying enough tax; it’s almost impossible to avoid; and modern technology makes it a simple and low cost form of tax collection,” says Gunson.

Tax Justice has produced a Fact Sheet on Financial Transactions Taxes and their feasibility for New Zealand. To download PDF click here.

For comment, contact:

Vaughan Gunson
Tax Justice spokesperson
021-0415 082
svpl@xtra.co.nz

or

Grant Brookes
Tax Justice spokesperson
021-0532 973
grant_brookes@paradise.net.nz

Grant Brookes will be speaking to the Wellington Occupy movement on the subject of a Robin Hood Tax at 1pm, Saturday 29 October, Civic Square.

Chopping down the speculators!

Tax Justice media release
18 August 2011

In the wake of the ongoing financial crisis, German Chancellor Angela Merkel and French President Nicolas Sarkozy are prioritising the introduction of a Financial Transaction Tax (FTT) in Europe (see Sarkozy, Merkel push new tax, 17 August 2011).

“New Zealand needs to get up to speed with the international debate about Financial Transaction Taxes,” says Vaughan Gunson, Tax Justice campaign coordinator.

“FTTs are the best mechanism for forcing financial speculators to pay tax, we need to be looking at them seriously for our financial markets.”

Mr Gunson says it’s criminal that super-rich speculators are getting away with paying no tax on their profits, while ordinary Kiwis are paying 15% GST on their food.

Tax Justice has produced a Fact Sheet on Financial Transactions Taxes and their feasibility for New Zealand. To download PDF click here.

On Tuesday this week, Tax Justice presented 40,000 signatures to Parliament calling for GST to be removed from food and a tax placed on financial speculation. The petition was received by MPs from Labour, Greens, Mana, and the Maori Party.

The latest Tax Justice cartoon, “Chopping down the speculators”, was inspired by Hone Harawira and Mana’s branding of a FTT as the “Hone Heke Tax”.

For comment, contact:

Vaughan Gunson
Tax Justice campaign coordinator
021-0415 082
svpl@xtra.co.nz

Produced by Vaughan Gunson, Tax Justice campaign coordinator

This is a working document, please make suggestions to it by emailing vaughangunson@taxjustice.net

Last updated 18 August 2011.

To download PDF version click here.

A hyper-financialised “bubble economy”

1. In 2008, prior to the global financial crisis, world trade in various financial commodities was 74 times higher than global GDP. Daily turnover for global currency trade as of April 2010 was $4 trillion ($1,460 trillion a year). This speculative activity is destablising the world economy and creating speculative bubbles that ultimately hurt grassroots people.

2. The unprecedented level of financial speculation represents the desire of the world’s super-rich to continue reaping super-profits. To achieve this, governments worldwide have removed all barriers to financial speculation and encouraged a supply of cheap credit by banks. A giant financial casino has been created, where everything that fluctuates in price has attracted the speculators.

3. Since 1984 a priority of both Labour and National governments has been deregulation of the financial sector. This has opened up NZ’s financial markets to international and local speculators, resulting in price volatility and inevitable cycles of boom and bust.

4. The Kiwi dollar is one of the ten most traded currencies in the world. Global speculators have created a highly volatile market. It’s a South Pacific roulette table for the world’s high rollers.

5. Many mainstream economists and politicians around the world have recognized that financial speculation is out of control and needs to be curbed.

Taxing the speculators

6. Profits from financial speculation are currently not directly taxed by the NZ government. This is a yawning gap which must be closed to bring fairness to NZ’s tax system.

7. The only mechanism that could make speculators pay tax, particularly overseas ones, is a tax on the financial transaction itself. There is growing momentum worldwide for Financial Transaction Taxes (FTTs) to be introduced to a full range of financial markets, not just currency markets as proposed by James Tobin in 1972 (the Tobin Tax).

8. The percentage rates that are being talked about internationally for Financial Transaction Taxes are very small, ranging from 1% to as low as 0.05%. There’s a growing consensus amongst tax researchers that a FTT would work best if different rates were set for different financial markets and types of transactions.
Read the rest of this entry »

Vaughan Gunson, Tax Justice campaign coordinator, was interviewed on Newstalk ZB by Larry Williams. The questioning focused on the introduction of a Financial Transaction Tax to cover the revenue lost to government from removing GST off food. To listen click here. The interview starts roughly one third into the radio segment.

Grant Brookes, Wellington-based Tax Justice spokesperson, was interviewed on TV3 breakfast news on Tuesday 16 August. To view go to http://www.3news.co.nz/Tax-Justice-petition-to-reach-Parliament-today/tabid/309/articleID/222312/Default.aspx

Tax Justice media release
17 August 2011

40,000 signatures calling for GST to be removed from food and a tax placed on financial speculation instead was presented to Parliament on Tuesday 16 August.

“We’d like to thank all the New Zealanders who signed the petition,” says Vaughan Gunson, Tax Justice campaign coordinator. “And particularly the hundreds of people throughout the country who took the time to collect 5, 10 or 20 signatures from friends, family and workmates, and posted them in to us.”

“We know that 40,000 signatures only represents the tip of the iceberg when it comes to how Kiwis feel about having a tax on their food,” say Gunson. “Calls for GST to be removed from all food are not going to go away.”

“Taking GST off food would give immediate relief to people being forced to scrimp on quality food,” says Gunson.

“The foregone tax revenue could easily be replaced by taxing financial speculation, which is currently untaxed.”

Mr Gunson says that one of the heartening things to come from the petition presentation has been the attention given to the idea of introducing a Financial Transaction Tax.

“A small percentage Financial Transaction Tax applied to financial markets is the only mechanism which can make speculators pay the tax they should be,” says Gunson. “In the wake of the global financial crisis it’s only just that banks, hedge funds, and other speculators be made to pay.”

“Tax Justice would like to see the parties of the left come together on tax policy and present a clear alternative to National’s tax largesse for the rich,” says Gunson. “GST off food and a tax on the unpopular activities of filthy-rich speculators should be the basis for common ground.”

“A broad coalition that brings together left parties inside and outside of Parliament, along with unions and other grassroots organisations, is what Tax Justice campaigners will be working for,” says Gunson.

The photo attached can be used in print and online publications. It shows participants in the Tax Justice delegation, which included union representatives, members of the Alliance Party and Socialist Worker (co-initiators of the petition), and Whangarei District Councillor Aaron Edwards. For a bigger image file email Vaughan, svpl@xtra.co.nz

For more information on the campaign go to www.nogstonfood.org

For comment, contact

Vaughan Gunson
Tax Justice campaign coordinator
021-0415 082
svpl@xtra.co.nz

Grant Brookes, Tax Justice spokesperson, speaking on the steps of Parliament.

from NZ Herald
16 August 2011

Inclement weather today did not stop tax campaigners from presenting to Parliament a 40,000-signature petition calling for GST to be removed from food and a tax placed on financial speculation.

Tax Justice coordinator Vaughan Gunson had intended to join campaigners from as far afield as Whangarei and Dunedin to hand over the petition on the steps of Parliament to Labour’s Mangere MP Su’a William Sio, who would then present it to the House.

But he was unable to fly into Wellington and the petition was instead handed over by Wellington campaign organiser Grant Brookes.

Union representatives, Green Party co-leader Russel Norman, Mana Party leader Hone Harawira, and Maori Party MPs Rahui Katene and Te Ururoa Flavell also attended the handover.

“It was great to see them willing to receive our message and to present it to their colleagues in Parliament, and we certainly conveyed our views fairly and strongly,” Mr Brookes said.

He said polls showed most people wanted GST off food, while he thought people were of the feeling that the wealthiest New Zealanders did not pay their fair share of tax. Read the rest of this entry »