The Alliance Party says a rise in GST would impact on bulk-funded organizations in the disability, elderly and social services sector.
Alliance Party co leader Kay Murray says these organizations have to pay GST on their total funding, but cannot claim most of the GST component back because the majority of their costs are staff wages.
“Staff wages are exempt from GST, so the proposed increase in GST will represent a funding cut to these services of close to 3%.”
Ms Murray says the majority of these organizations are Not for Profit.
Unless extra funding is provided, they will be disadvantaged by a rise in GST.
She says that some organizations, particularly in the disability sector, have not seen an increase in funding for existing services for close to a decade.
“What will a rise in GST mean for their workforce who are among the lowest paid in the country? Will they see a further decline in their wages and conditions? Will they be hit twice, once through the decline in their own spending power, and again through the decline in the spending power of their employers?”
The Alliance opposes any rise in GST and supports phasing out GST to be replaced with a progressive tax system that includes a “Robin Hood” tax on financial transactions and capital gains taxes on property excluding the family home.