Poll shows solid backing for GST rise if income tax cut

<i>Herald</i> calculations this week showed that a single-income family with two young children would be better off if GST was raised and income tax lowered. Photo / Dean Purcell

Herald readers have given the thumbs-up to Prime Minister John Key's plan to raise the goods and services tax and cut income taxes.

They were asked, "What would you prefer? GST to be increased to 15 per cent but the rise to be compensated with a personal tax cut, or GST to remain the same but no tax cuts."

Of the 1407 Aucklanders on the Herald's online reader panel who replied, 56 per cent opted for higher GST with tax cuts.

Only 40 per cent chose the status quo, and 4 per cent were unsure.

The result reverses years of polls finding that tax increases were unpopular. A Research NZ poll before the last election found 80 per cent support for cutting taxes on food.

But it matches another online poll this week that found a small margin in favour of the Government's proposed package deal combining higher GST with lower income tax.

It comes as Mr Key yesterday backed away from a Radio NZ report quoting him as saying he would not raise GST if the move meant losing the support of the Maori Party.

A spokesman said he stood by what he actually said - that he would need support for the tax package from the Government's confidence-and-supply partners, who include Act and United Future as well as the Maori Party.

"He is confident that we can."

The spokesman said the PM also stood by a statement that he would raise GST only if he had "evidence that the vast bulk of people would be better off".

Herald calculations this week showed that a single-income family with two young children would be better off at all incomes between $30,000 and $100,000 if GST was raised to 15 per cent, the top two income tax rates were cut to 30 per cent, the bottom two by 2 per cent and benefits, pensions and family tax credits raised by 2.22 per cent.

Mr Key declined to comment directly on the Herald reader survey on the basis that it was "not scientific".

Labour leader Phil Goff also questioned whether the survey reflected wider opinion.

"There would be a whole lot of people out there who are finding it pretty hard to make ends meet at the moment, who probably don't buy newspapers and would be pretty strongly against GST going up," he said.

"They know [that] if they are on a lower income, they are not going to be the beneficiaries of cutting the top tax rate."

The survey questions were emailed by Nielsen on Thursday evening to 6432 readers. By the deadline of 10.30am yesterday, 22 per cent had replied.

People aged 35 to 49 made up 40.2 per cent of the sample compared with 30.3 per cent of the national adult population, with older and younger people relatively undersampled. Results were weighted to be representative of adult Auckland readers of the Herald.

Although readers gave a broad tick to the Government's likely tax package, they were less sure when asked if the package was fair. Only 43 per cent said yes and 45 per cent no.

Asked whether the proposals "do enough to promote economic growth", only 22 per cent said yes and 51 per cent no.

A solid 62 per cent agreed that the Government should tax property investors more heavily; 33 per cent were opposed.

Asked whether a rise in GST would prompt them to spend less, 48 per cent said yes and 48 per cent no. But asked if a rise in GST would prompt them to save more, only 27 per cent said yes and 65 per cent no.

READERS REACT

Do you want a GST increase matched by personal tax cuts?

Yes - 56 per cent
No - 40 per cent
Don't know - 4 per cent

Source: Responses from 1407 Aucklanders to Herald reader poll.