Source: Taxpayers Union
11 JUNE 2020FOR IMMEDIATE RELEASE
Responding to new economic data released by the OECD and the New Zealand Treasury, New Zealand Taxpayers’ Union spokesman Louis Houlbrooke says: “Already, Government debt has risen from below 20% to above 25% of GDP. Taxpayers should expect this to get far worse.” “The OECD forecasts a 10% unemployment rate for New Zealand at the end of the year, far above other developed nations like Japan (4%), South Korea (5.1%) and Germany (5.5%). This lift in unemployment, the result of a slowdown in commercial activity, will mean reduced tax revenue for the Government, and ultimately higher debt to be repaid via taxes in future.” “The Government’s $490-per-week Income Relief Payment could explain part of our unemployment rate, as it reduces incentives for people to re-enter the workforce.” “Meanwhile, Treasury reports New Zealanders’ overall earnings have decreased but, thanks to the wage subsidy, have not collapsed. However, with the wage subsidy set to end in September, there is a risk of income levels decreasing further if businesses fail to operate at their pre-COVID levels, which will mean less tax revenue and, again, higher debt.” “It is critical that the Government limits the impact of debt on taxpayers by offsetting new spending with cuts to areas of lower priority. These are the types of sacrifices we see in the private sector. The Government also needs to constantly re-evaluate the impact of hastily-designed COVID-19 responses such as the Income Relief Payment and the Small Business Cashflow (Loan) Scheme, which may be making the fiscal situation even worse.”
