OK, so the Finance Minister has clarified that the General Services Tax will not come into effect next year. I’m glad we have some clarity over that.
With hindsight, it’s not surprising – I am sure there was kick-back from business and, of course, introducing a five percent levy in an election year is hardly good politics.
It must still sting though and I am sure history will judge it as a climb down as Bob Richards was adamant that it would happen.
While saying the GST is off the agenda, for the time being, in the same breath he says: “We are making a lot of progress with payroll tax reform. The general services tax is more difficult and taking more time.”
So while we have clarity on the GST, we have zero clarity on payroll tax reform and the direction that is likely to take us or the timeframe involved. A progressive tax has been mentioned but so has the Minister’s distaste for payroll tax, period.
Kind of back to square one then.
What I found particularly interesting in the article (we knew about GST earlier in the week) was that the Ministry would be “going back to the market and looking for more money”, apparently in as little as a few weeks’ time.
Is this borrowing to pay back existing loans which have matured or is this new debt, either now or in the future? Clarity and context is needed please.
(Was the $250m Butterfield Bank ever used by the way? That was a clever move by Bob because by not borrowing on the international markets, ratings agencies like Fitch could not take it into account.)
If, according to Otto Von Bismarck, a former German Chancellor of the Exchequer, “politics is the art of the possible”, then it should not only be possible for the Minister to borrow, it should be possible for him and his Government to give detailed explanations of why.