Key rules out taxpayer levy to rebuild Christchurch
Prime Minister John Key has ruled out a taxpayer levy to rebuild Christchurch, an option the Green Party strongly supports.
Co-leader Russel Norman said today borrowing to fix earthquake damage in Christchurch would cost the country millions of dollars in interest, and a levy on higher earners was preferable.
Finance Minister Bill English said on Friday the Government would borrow overseas to cover its share of the rebuild, spreading the burden over time. A levy was considered, but it would make it harder for the economy to recover, Mr English said.
Mr Key, speaking today on TV One's Q&A programme, said a levy wasn't the Government's preferred option.
"We believe that the rest of the economy is starting to grow, but it is fragile and (a levy) will snuff that out," he said.
Dr Norman argued that Australia was raising a levy to pay for rebuilding after recent floods, and its government was in a better financial position than New Zealand's.
"The Government is being fiscally irresponsible by putting the country into further debt when it could raise some revenue to help pay for the rebuild instead," Dr Norman said.
Borrowing $5 billion, the amount the Government has estimated to cover the uninsured cost of rebuilding Christchurch, would cost an extra $255m a year to service.
"On the other hand, a temporary levy on income could raise an additional $1 billion each year to cover quake-related expenditure, avoiding costly borrowing," he said.
A levy of 1.5 percent on income between $48,001-$70,000 and a 3 percent levy on income above $70,000, with no change needed to the corporate tax rate of 30 percent, would raise $1.026b a year, according to Green Party estimates.
People earning $50,000 a year would pay an extra 58c a week, and those on $70,000 a year would pay an extra $6.33 a week. People on $100,000 would pay an extra $23.59 a week.
"We don't agree with Bill English who says that a small levy could stifle economic performance. The levy would target those on higher incomes who typically save or invest their additional income rather than spending it," Dr Norman said.
"The fastest, fairest, and most economically sensible way for New Zealand to rebuild the livelihoods of those in Christchurch is to introduce a temporary earthquake levy on those who can most afford it," Dr Norman said.