The NZ Prime Minister John Key recently announced over national TV that he will increase GST from 12.5% to 15% and compensate by reducing personal income taxes across the board.
It's an unpopular move and he might lose his position.
Being a foreigner in NZ, I actually agree with John Key and my reasons are:
1. 15% GST will improve government revenue especially from the tourists who probably wouldn't even notice the minimal increase on the total price of the goods and services / accommodation
2. 15% GST will promote the culture of savings and prudent purchasing among Kiwis. I am hoping that Kiwis will scrutinize the products they buy, resort to more savings and / or put their money where they make most value or in good investments like small businesses.
3. It will force NZ companies to lower their cost of production, become more efficient so they can still produce goods and services that will be affordable to the Kiwi market. This increase in GST will make them more competitive... at least I am hoping.
4. I believe that this system will promote the thinking and culture that Kiwis should only pay / or buy products and services that will benefit them, with long term and critical thinking involved. The government will still earn the revenue it attempts to earn and there is still the risk that the Kiwis may not agree with the local government expenditures but this 'culture' of choosing where to put their money will hopefully later develop into Kiwis and Kiwi companies withholding their taxes for the government services that they think are important! This will, in turn, make government more efficient! Isn't this what we all want?
5. Kiwis need to be more productive and efficient. A pity that there's a huge unemployment rate recently but Kiwis are known to be resilient and this is the time for them to prove their ability! This 15% GST new rule definitely pushes people to be part of the productive work force... as they will have lesser personal income taxes. This new rule also attempts to motivate them to improve themselves and be promoted more easily to reach the higher income bracket for more tax benefits! I believe that a nation should focus on productive individuals - those who want to improve themselves and improve their circumstances.
Wanganui, New Zealand
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