Editorial: We're willing, so tax us for Christchurch

Photo / Dean Purcell

The Prime Minister offers a strange reason for his reluctance to impose a tax levy to help pay for the revival of Christchurch. He says a levy would take money out of the economy and slow it down.

That would be true if he was raising the tax to reduce his Budget deficit but that is not suggested. This levy would be put straight back into the economy for urgently needed reconstruction of Christchurch infrastructure and services.

This is work the Government will have to do. Mr Key says it will be financed by reshuffling some of the Government's capital spending and "taking on a bit more debt in the short term".

That makes no sense. Debt is simply delayed taxation and every "bit more debt" - Mr Key has taken on a bit more every year of his term - adds to taxation that will eventually be needed.

Taking on more debt makes no sense when so many people are telling news websites they are prepared to be taxed for Christchurch's sake. This is a rare sentiment in public opinion, but completely understandable after a disaster such as this. The rest of the country stands ready to help.

Voluntary contributions can be made through various channels but not everyone goes to the trouble. Taxation is effortless for most, it is more equitable and effective. Sometimes people want to act as a nation, not as individual contributors. This is such a time.

A special tax levied over the next financial year would not discredit the tax cuts the Government delivered in October, if that is Mr Key's real concern. Surely it is not.

This is not a time to worry about political criticism, even if one or two opposition parties have licked their lips at the prospect. The Green Party, for one, has been too quick to advocate a tax increase.

It is a step that should not be taken until there are much better estimates of the extent of Christchurch's damage, the practicality of various repairs, the extent of insurance cover and the timing of likely costs.

A week after the event, the Treasury's best estimate of the costs range as wide as $10 billion to $15 billion, based on the $5 billion cost of the September quake.

Business and property owners have hardly had an opportunity yet to inspect their damage, let alone properly assess their losses and then investigate the options for getting back on their feet.

Engineers who have spent the past five months charting the land stability after the September shake now have to begin again and check hill suburbs that largely escaped the earlier quake.

Decisions have to be made about whether it is sensible to rebuild on the hills and in eastern suburbs that have twice proven prone to liquefaction, and whether the central business district can be restored to a position that was steadily fading in any event.

The reconstruction of Christchurch should not be rushed. The Government's relief measures will allow uninsured businesses to pay wages for the next six weeks while they take stock and make some decisions.

When their position is clearer, the future shape and direction of Christchurch may be different. That will be the time to decide how its recovery might best be financed.

Mr Key is right to be reluctant to impose a tax levy "unless I have to". But his reason, "because I think it would slow the economy down" is the wrong one.

A levy should not be introduced unless the country's substantial earthquake insurance is not sufficient and the balance must be raised from taxation or borrowed.

In that event, a temporary tax levy would be better. Far from depressing the economy it would boost it. The Prime Minister should be listening more closely to a country that seems prepared to pay its way.