Scrap GSTThis week's Sunday programme (TV1) featured the demise of rural towns. While internet purchases are affecting smaller retailers, large New Zealand-owned and overseas-owned retail chains operating mega-stores are also a significant cause.
Why not scrap GST? The removal of GST would provide an increase in purchasing power for allhouseholds and generate more economic activity, giving our towns a much-needed boost.
This would immediately put New Zealand retailers on a more equal footing with overseas online suppliers, as purchases from them don't currently have GST applied.
Business would no longer have the compliance costs involved with filing GST returns. The tax revenue lost from scrapping GST ($15 per $100) could be replaced by a transactions tax of 10c per $100 on withdrawals from all bank accounts, automatically deducted by banks in the same way as account fees are now.
The new tax would hit the paper-shufflers on the money and financial markets (average of $13 billion traded every day) who make large profits from speculating on small movements in currency rates, and would encourage more investment in productive businesses instead.
Additionally, as recommended by the International Monetary Fund report of August 2012, funding local government capital works through no-interest loans from the Reserve Bank would see the millions each year currently paid by our council in interest available for rates reduction, improving the quality of our retail environment or much-needed infrastructure.
