We can expect to be bombarded, at our expense, during the next few weeks by propaganda from the Government and the Opposition parties over the increase in goods and services tax, and income-tax cuts.
There is already clear evidence of manipulation of the facts to suit political purposes, and it is a disgrace that the parties involved in this charade are prepared to use deception when clarity is demanded.
Every person will be affected by the increase in GST, from 12.5% to 15%.
Not every person will be a beneficiary of a tax reduction.
Both the National and Labour parties have been busy making claim and counter-claim and all that has resulted is a state of confusion and growing disbelief on the part of the general population that any of the claims are truthful.
Is democracy well-served by such conduct?There is also much confusion on the street, in the world of small businesses, about pricing to account for the GST increase, and much suspicion that retailers will take advantage to hike increases well above the rate.
The Treasury estimates real after-tax earnings for those on the average wage will rise by 1.2% following the tax cuts, despite the 2.5% increase in GST.
An average income family will be about $25 a week better off, an average wage earner about $15 a week better off and a couple on New Zealand Superannuation about $11 a week better off.
Labour has responded by claiming more than 400,000 earners on lower wages will at best receive a net $5.70 a week tax cut and that this will be "overwhelmed" by higher rents, rates, ACC levies and early-childhood care charges.
Furthermore, the party says the top 10% of earners will get 41% of the tax cuts, whereas the bottom 20% will get just 2%.
Labour has issued a highly misleading pamphlet that contains a falsehood: "National's 15% GST".
The increase is 2.5%, the first since 1989, when it was lifted to 12.5% by the then Labour government.
It had introduced the tax at 10% in 1986.
These claims and counter-claims may be dismissed as the "rough and tumble" of politics, but it is surely self-defeating for Labour to promulgate a deceit, let alone float the possibility of eliminating GST on fruit and vegetables without explaining the likely consequences.
The Tax Working Party did just that earlier this year: apart from the awkward anomalies created, the loss of GST revenue of some hundreds of millions would have to be recovered elsewhere.
As it is, small businesses are faced with considerable costs adjusting to the new GST rate, including updating cash registers and computer systems, new pricing of goods, and taking into account necessary adjustments with suppliers, as well as training staff.
There is also the likely prospect of consumer resistance - at least for a short while - to the new higher prices, although doubtless many retailers will be trying to tempt shoppers by initially absorbing the increase.
Almost everyone has forgotten that in the lead-up to the 1987 general election, the then National opposition proposed "Extax" as an alternative to GST.
Extax was a sales tax with exemptions, was to have been struck at a much higher rate than GST to raise the equivalent amount of revenue, was less efficient than GST and more difficult to administer - and was soon abandoned in the face of business outrage.
In all the criticism of the latest GST increase, however, little has been said about the benefits to the broader economy of the tax cuts in a marketplace still feeling the effects of the recession.
When GST was first introduced, there was a compensating payment for beneficiaries and low-income people.
Of interest to Labour Party leader Phil Goff - he was, after all, a member of the Labour caucus which approved introducing GST in 1986 - should be the argument advanced by the then Minister of Finance and present Act New Zealand list member Roger Douglas, who favoured a tax levied at 15% originally - because it was a way to ensure top income earners actually paid tax.
In 1989, by which time Mr Goff was a Cabinet minister, there were no compensating tax cuts - indeed, the business tax rate was raised - and little impact on patterns of consumer spending, although there was a temporary impact on inflation.
The present Government hopes that the combination of tax cuts and higher GST will avoid any serious impact on the rate of inflation.
The fears being raised by Labour and others, therefore, may have little foundation, especially given that there will be considerably more money in general circulation from the tax cuts - surely a positive for economic growth.
