Tim Dower: Government's $5.5 billion surplus can't last - expect more taxes

Author
Tim Dower,
Section
Opinion,
Publish Date
Wednesday, 10 October 2018, 8:54a.m.

So here's a question, when you've just booked the biggest surplus in a decade, how do you justify an envy tax, capital gains tax, or death duties, or higher taxes on petrol?

The surplus of $5.5 billion is massive when you think we were $18 billion in deficit only a few years ago.

About a billion of it is down to timing, it is money the Government was going to spend, but didn't get around to so that will come out of the next set of figures. But the other numbers are still really impressive.

The tax take from companies turning solid profits, from more people being in work, from GST, petrol taxes, the GST on petrol taxes, all those combined kicks the Government's revenue to $1.5 billion dollars a week.

Wow.

The problem for the Finance Minister, Grant Robertson, is that as soon as you start booking big surpluses people start demanding tax cuts.

And people on the public payroll, such as the teachers in the middle of their pay talks right now, will argue there's enough in the kitty for them to get more.

Spending ministers will be in his ear too wanting a bigger slice for their own projects.

So I don't envy Grant Robertson one bit.

Oddly enough, having that surplus and taking debt below 20 percent of GDP earlier than he said he would, creates the impression the Government is flush.

He's trying to hose that down, he just says the books are in good shape.

Because what he knows, and he has said this, is that this is not going to last.

Both business and consumer confidence are way down and those numbers are a very good indicator of where things are headed.

The economy is slowing down there are no two ways about it.

And the Government's big spending is yet to come.

So all up, this is probably as good as it gets.

And that's how they will sell all the new taxes Michael Cullen is working on, capital gains, death duties, you name it, they want it.

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