Bernard Hickey's article

Bernard Hickey writes articles for the New Zealand Herald from time to time. I have to say most of the time I disagree with what he says.

This week he listed 10 reasons why the government should not increase GST to 15%. You can read the article here: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10628904

I agree with some of them, and disagree with others. I'll discuss his reasons here:

1) This point is probably true. However the budget is not released until May. They may come up with ways to come up with the shortfall. Of course, the government may need to drop the corporate tax rate to compete with Australia (which will cause more headaches), so Mr. Hickey has a good point here.

2) This may be true, but surely competition between companies will keep the price increases to a minimum?

3)True. But will a 2.5% (or slightly higher) increase in prices here really change tourists' minds about coming to New Zealand (and make them choose to go to Australia instead)? I don't think it will..

4) I don't think it will. John Key has said the tax cuts will at least offset the rise in GST. Things will seem more expensive, but you'll have more money in your pocket to buy them.

5) Good point, but I think this is covered in point #2.

6) I don't see why this is a reason why it's a bad idea to raise GST..Maybe for John Key and National, but not for the general public.

7)A 2.5% rise in prices wont create that much of a leakage. People are either already doing this, or they are not doing it (and wont in the future).

8)Maybe so, but it wasn't meant to.

9) I don't think the rise will create any new exemptions..It may cause businesses to find ways to weasel out of paying what they should pay, but those kind of losses will be made up in gains from people paying what they should be paying in income tax.

10)lol! It's only a 2.5% increase, not 25%!