Hone said that the increase in GST will hurt the poor. His justification is:
GST hits poor people the hardest because nearly all of their money is spent on things that you pay GST on – food, petrol, electricity – so any increase is going to really hurt them
Interesting. I was under the impression that low income households spent proportionally more of their income on “housing services” (read rents) which are exempt from GST …
Also if we believe that the poor have borrowed relatively more of their income in the past, then an unexpected decrease in a flat portion of income tax and an increase in the flat portion of GST will actually be a transfer too them from people who have saved.
It would be pretty easy to spin the idea that higher GST and broadly lower income taxes would help the poor … but I guess that wouldn’t roll with his politicking now would it 😉