We can choose to use the deficit crisis as a reason to cut and sell and leave the economy no different from the place we were in when things went wrong. Or we can use the crisis to begin the transition to a more sustainable, prosperous, and fair economy.
Severe cuts risk recession. More borrowing risks a credit downgrade. We can instead raise more revenue and, in the process, help shift the economy onto a more steady footing.
Instead of selling off the last of our best state assets to raise one-off revenue, we could instead introduce a range of eco-taxes to put a fair price on carbon, water, and waste, using market signals to switch the economy to a more sustainable future.
We can introduce a comprehensive tax on capital gains (excluding the family home) which would raise revenue to help balance the books while benefiting the productive sector and making homes more affordable.
Meanwhile, a clear majority of New Zealanders have indicated that they’re prepared to pay a small temporary levy on their income to pay for the rebuilding of Christchurch. So why are we adding $5 billion more to a record deficit instead?
A smart government would balance their books by considering some revenue options like these while revisiting some of the ways its spending money poorly — like the $7 billion it’s pouring into motorways when oil prices are high.
We do have choices this Budget day. This paper sets out some of these choices we can make to take us down this smart economic path.
What do you think of it? Let us know in the comments below!