12 Feb 2010

Proposed GST rise not a deal-breaker - Maori Party

5:27 pm on 12 February 2010

Maori Party co-leader Pita Sharples agrees with colleague Tariana Turia that a proposed rise in goods and services tax will not break the party's governing deal with the Government.

The Government wants to raise GST from 12.5% to 15%. It says there will be corresponding drops in personal tax rates and that beneficiaries and others on low incomes will be compensated.

However, the Maori Party is worried its constituents will still be worse off and is getting information from the Treasury about the changes.

Dr Sharples does not see it as a deal-breaker if the Maori Party is still unhappy with the issue and believes it is achieving a lot from working with the Government.

"When I weigh it up how we had to throw stones for three years in the opposition, I think it's a confidence and supply issue. It's related to money - we can't always win those and we've accepted that in signing."

Prime Minister John Key says he will cancel plans to raise GST if evidence shows that people will be worse off.

Mr Key also says he will not proceed with the move if it means losing the support of the Maori Party.

While Mr Key has put conditions on the proposal to raise GST, he says he is confident further work by officials will confirm that low income families will not be worse off.

The Prime Minister says that should reassure the Maori Party, which has concerns about the impact on low income Maori families.

Labour Party finance spokesperson David Cunliffe says comments by Mr Key indicate that the Govenrment's planned tax package is a mess.

Mr Cunliffe says advice from the Treasury makes clear that everyone can be compensated for the rise in GST, including using across-the-board tax cuts.

However, he says even if someone on the average wage ends up a few dollars a week better off, someone on Mr Key's salary is likely to be $500 a week better off.