National Party leader Simon Bridges has announced National would refund six months’ GST payments to businesses that have lost money due to Covid 19. Businesses would no doubt welcome this windfall. But businesses only collect GST from their customers and pass it on to the government.

The government is not refunding the money to businesses, the people are doing this by paying an extra 15% on the price of their purchases. This seems very unfair, especially when most people are strapped for cash in the wake of Covid 19.

Nevertheless, the National Party has clearly decided that GST is expendable and this is good news. Let’s talk about what a regressive and unfair tax GST is and ask, “Why was it foisted upon us?”

GST was first introduced in 1986. It was a tradeoff to allow the government to lower the top income tax rate and move towards the neoliberal holy grail, a flat tax rate, without sacrificing tax revenue. The downsides were a whole new level of administration for businesses and greatly increased inequality for everyone. It was part of a suite of changes that ensured the rich would get richer and the poor would get poorer.

Not only did GST increase the cost of all goods and services by 15%, low and middle income earners who spend all of their income on living expenses pay an extra 15% tax on 100% of their income. Higher earners who are able to squirrel a portion of their income away, pay the goods and services tax on a much lesser percentage of their income. Financial services have, inexplicably, never been subject to GST.

Now that we see the reforms of the 1980s and 90s for what they really were, it is clear that GST should never have been rolled out in the first place. There are many more equitable ways for the government to get revenue. Will one of the other political parties dare to take National’s GST refund bid and raise it to get rid of GST altogether?