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The Taxpayers’ Union is today releasing independent research from former NZIER Principal Economist, Dr Michael Dunn, which raises significant questions about the Green Party’s election costings.
Dr Dunn’s analysis of the Green Party’s “Fairer Reward for Fair Effort” policy document shows that the Party’s taxation forecasts are incorrect and instead of generating tax revenue, will actually result in a net loss in revenue.
The Greens say that their policy will mean increased revenue to the Government of $800 million per year, our independent expert says the actual cost to the Government is at least $110 million. That is a massive difference of more than $900 million in the one policy and suggests the Greens' costings are fundamentally flawed.
On top of the drop in tax revenue, Dr Dunn estimates that the policy would increase government expenditure on employee wages and contracts for services by around $1.1 billion over 3 years.
The Taxpayers’ Union repeats our offer to allow our independent expert to confidentially cost any political parties' policy before they are released so that the public can have confidence in how much a policy will cost or benefit taxpayers.
The report's author, Dr Michael Dunn, has told media:
The Greens' costing completely ignores the reduced taxes from companies due to the higher wages. They appear to assume that businesses can magically generate more money to fund higher wage bills. It doesn’t happen like this in the real world.
Expected slower employment growth will also adversely affect tax revenue.
Under this policy the Governments' primary fiscal balance would be reduced, by at least the direct costs already acknowledged by the Green Party, as the incremental tax revenue yield would be minimal, if any. In addition social transfer payments linked to wage rates would be increased.
This isn’t some Taxpayers’ Union hack calling into question the Greens' costings. Dr Dunn led the team at IRD that costed revenue policy and produced budget revenue forecasts for 12 years. He has advised both National and Labour led administrations. We've engaged him to review numerous party costings and provide the information for our Bribe-O-Meter.
UPDATE: Our expert, Dr.Dunn, wishes to thank a reader who pointed out that the proposed October 2014 increase in the minimum wage would be only 75 cents per hour, and that would have a reduced cost and impact. He has recalculated his figures accordingly, but the conclusions are unchanged. The updated report is available for download here.
Greens announce $1B economic policy 3 News - 16/07/2014
Meanwhile, the Taxpayers' Union says the Greens' policy is the "lesser of two evils" and is taking a cautiously optimistic approach.
"Although the Greens' policy still leaves room for picking winners, on balance it is better than the existing corporate welfare scheme operated by Science and Innovation Minister Steven Joyce," executive director Jordan Williams says.
The union is concerned tax credits could be vulnerable to businesses manipulating what they do to qualify for new research and development funding.
Click here to read the full report.
This morning the NZ Herald reported that the Green Party want taxpayers to foot even more of the bill for political parties:
Despite all the rhetoric that private money is bad for politics, it is better than public money cementing the status quo. "Equalling the playing field" by giving political parties taxpayer subsidies gives political incumbents a huge advantage. It makes it more difficult for new political movements to get off the ground. It means that the media gain even more influence.
As it currently stands, the taxpaying public already hand over generous subsidies to political parties so they can in turn be force-fed political propaganda in the lead-up to every election. In the 2011 election alone, taxpayers paid up $3.2m for the privilege.
So, should it really be the taxpayers’ role to support dead-beat political parties whose activists struggle to solicit donations for unpopular policies? Absolutely not.
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