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New Zealand's longest-running online daily news and commentary publication, now in its 25th year. The opinion pieces presented here are not purported to be fact but reasonable effort is made to ensure accuracy.

Content copyright © 1995 - 2019 to Bruce Simpson (aka Aardvark), the logo was kindly created for Aardvark Daily by the folks at aardvark.co.uk



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The Covid tax is coming

8 September 2021

The CV19 pandemic has cost us a lot of money. I mean a *LOT* of money.

The wage-subsidies alone seem to have been over a billion dollars a week and that's before all the other costs such as vaccines, MIQ and such are factored in.

Sadly, this money has to come from somewhere and to date it's been funded by borrowing.

Right now we need to remind ourselves that loans, whether from offshore entities or from future generations, must be repaid... with interest.

Where will the money come from to repay those loans?

Well there's only one place that money can come from... your pocket!

The huge costs of dealing with this pandemic is something that can only be recovered by way of the tax base.

Sadly, higher taxes are almost guaranteed to be a part of the CV19 hangover that we'll all have to endure in the years to come.

Sure, our economy has weathered the storm of the pandemic exceptionally well but we will still need to hand over a fist-full of extra cash to repay the money that has been, and continues to be, spent on reducing the CV19 impact.

To all those, perhaps less economically literate folk who think that "the government has subsidised my income during lockdown" it's time to wake up to the reality that the government has simply advanced you some of your yet-to-be-earned wages and it will be sure to claw that money back as soon as it is able to do so.

I'm not saying that the way the government has handled things is wrong, it would have been even worse if we'd just let people go bankrupt and/or starve for lack of such support. Likewise, the cost of vaccination is an investment in protecting our health system from overload and collapse so this is all justified spending.

One can't help but wonder however, just how much taxes will have to rise in order to recoup all this borrowing and spending. Given the amounts involved I would expect to see some significant shake-ups in terms of tax rates or additional taxes at some time during the next year or so.

Perhaps New Zealand will end up falling into line with other countries and introduce a health service tax. In the UK they have "National Insurance" and in Australia it's the Medicare insurance scheme. Most countries have something similar and this helps compartmentalise health costs rather than just feeding them from a general consolidated fund.

Of course introducing a "health" tax may also be an easier sell, in the wake of a pandemic. It becomes easier to convince the public that there will be benefits associated with such a new tax rather than them seeing it as just a tax-hike.

The worrying thing however, is that future, more right-leaning governments might use this as a "thin end of the wedge" method of increasing the levels of privatisation within the healthcare system. We all know how well privatisation has worked in other critical infrastructure sectors -- such as the electricity one (shudder).

Of course I'm simply speculating, perhaps readers have their own ideas as to how the government will balance its books in the wake of the CV19 pandemic. If so, please share them with the rest of us in the forums.

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