by Don Franks
In 1919 the New Zealand Labour Party won eight seats contesting its first general election, promising “Increased taxation on monopoly and increased graduated income tax with a corresponding reduction of indirect taxation for the purposes of removing the present burdens on family incomes.”
This echoed the Communist Manifesto‘s demand for “a heavy progressive or graduated income tax”, in both cases a tilt at the rich in favour of the poor.
This was back when the New Zealand Labour Party was a new act juggling two balls; socialist rhetoric and parliamentary politics.
Karl Marx type taxing was never going to be delivered by a party committed to respecting capitalism’s political rules and so it proved to be.
But in 1919, punters could be excused for taking Labour at its face value.
Labour had been in existence for only three years and was in large measure a creation of working men and women. There was then little reason to doubt Labour’s bright new pro worker promises.
In today’s latest skip down that road Labour leader David Cunliffe merrily tweeted: “I’ve just dropped GST off fresh fruit & veges and $5000 tax-free zone. Better ways to help Kiwis. Bold new policies coming in 2014.”
Cunliffe’s protection of the goods and services tax is consistent, because GST was a Labour Party creation. Initially at 10 per cent, then later raised to 12.5 per cent, GST hits the poorest hardest – because low-paid workers must spend a far higher proportion of their money on basic goods and services than do the better-off.
On the eve of GST’s imposition, union economist Peter Harris complained:
“The GST collects a greater proportion of the income of lower income earners as tax than it does of the income of higher income groups….it is largely a way of reforming sales taxes. At present, sales taxes are charged on what the government has decided are luxuries and the more luxurious the item the higher the tax. Food attracts no tax. Cameras attract about 40% . A large part of GST merely lowers the tax on items such as perfume, jewelry, cameras and binoculars and recovers the money that is lost by taxing items such as food and other non-taxed items such as food and other non taxed essential goods and services.”
The Labour Government’s 1985 introduction of GST was part of a package of ‘new right’ reforms after Labour’s election victory in 1984. The new government inherited an alarmingly high budget deficit and overseas debt, an inflated dollar, and rocketing inflation. The economy was in crisis, radical political adjustment of some description was required.
In his pamphlet Night’s Black Agents, the Labour Party since 1984 Jim Delahunty noted: “Labour took on the task of saving capitalism here and so its scope of action was limited to the capitalist possibilities. . . In terms of parliamentary politics Labour had few alternatives – and it chose the worst from the viewpoint of NZ working people.”
“It is so much easier to bash the poor than bash the rich. The poor can’t fight back with conventional weapons. They have no legion of corporate lawyers and crooked accountants to plead their cause. They don’t have the monopoly owned newspapers to make propaganda from the day’s events in their holy task of protecting capital and those who own it at the expense of the poor.
“And if the people have no unions with the guts to fight and are represented by a ‘party of the people’ who have deserted the people, then the way is clear for a free run of capitalist market forces and the reign of Mammon in public affairs.”
At the time of writing this, there has been no union protest against Cunliffe’s recommitment to indirect taxation of the working class.
That is not surprising.
Despite the party’s anti-worker record, Labour can still count most union leaders as their loyal apologists.
To fight back and gain, the poor will need to forge some unconventional weapons.
Further reading: Understanding GST and tax policy