• The Price We Pay for Tax Cuts

    Some things never change – and it is, I suppose, somewhat reassuring when people of whom you have a particular expectation behave in a way that is true to type.

    That is exactly what I felt when Bill English floated the possibility of tax cuts at the National party’s pre-election conference – though in this case, I have to admit, I felt not so much reassured as both depressed and scornful.

    Right-wing politicians across the globe can be guaranteed, when votes are being sought and the road is a bit bumpy, to turn to the promise of tax cuts in order to garner more support, and – at a moment when the Prime Minister is in some trouble over the Todd Barclay affair – the expected has happened right on cue.  Sadly, history tell us that it’s a ploy that works all too often.

    Our fellow-citizens are all too likely to look only at what they imagine will be the immediate impact on their own personal finances and to ignore some of the wider and longer-term implications.

    The voters never learn – that tax cuts can easily, post-election, be reversed, or substituted for by increases in other charges and levies, and that all too often tax cuts benefit the wealthy few first and the average taxpayer a long way back in second.

    Most significantly, few pause to think of the price that will be paid tomorrow for the tax cuts they are promised today (assuming that they do in fact materialise as promised).   If the government takes less in tax, the few dollars saved in the individual pay packet or weekly budget will be multiplied many times over, and will mean reduced spending (usually called cuts) in providing essential services on which a civilised and economically productive society depends.

    I could not help but be struck this week on hearing – on a perfectly ordinary day for news – two further instances of the wearyingly familiar theme of how cuts mean that we are, in large numbers, worse off than we should be.

    First, family doctors pointed out that increasing numbers could not afford to see the doctor when they are sick, because the funding for primary care is inadequate.

    And school principals complained that their low level of funding made it impossible to maintain appropriate levels of trained staff to teach our children.

    A moment’s thought would convince most people that underfunding our children’s health and education in this way is not a sensible way of building our future – yet those same people would happily fall for the bait they are offered when tax cuts are dangled in front of them.

    And that is to say nothing of other cuts, right across the board – cuts in essential services such as defence, or law and order, or biosecurity, or in investments in our future capabilities – that make us less secure, less fair, less integrated and less productive.

    That may be bad enough, but this is a dynamic, not a static, situation.  The offer of tax cuts tells us about both the past and the future.  It tells us that the government has taken more from us in tax over recent times than it turned out to need – that, according to its own calculations at any rate, they can give some of that tax take back to us.  What parades as an apparent act of generosity is, in other words, merely a confession of past miscalculation.

    But it also tells us that the government has learnt no lessons from the downsides of its usual policies.  It is still prepared to gamble with our future and to preside over a country that is weaker, less united and less able to face the future than it need be – and all for the sake of gaining a few more votes from those who can be bamboozled.

    The lesson should be clear.  Tax cuts are bought at the cost of worse public services – and worse pubic services (or cuts) mean that the price we pay is a heavy one, and it is usually paid by those least able to afford it.

    Bryan Gould

    29 June 2017