A tax with no compromises is an efficient way of collecting revenue, says Helen Clark
If Financial Secretary Henry Tang Ying-yen needs a soul mate as he licks his wounds after the ill-fated GST debate, he has one in New Zealand's veteran prime minister, Helen Clark.
Ms Clark wrapped up a two-day visit to Hong Kong yesterday by outlining the virtues of a goods and services tax - across the board and without exemptions - even as she acknowledged its political costs.
'I think if you held a referendum [in New Zealand] it probably wouldn't pass,' Ms Clark said. 'But nonetheless it is a very efficient way of collecting revenue for the government ... it has proven to be a very substantial part of the New Zealand tax system, and it has helped us to completely restructure our revenues.
'One of the keys is no exemptions ... that is a key part of ensuring its efficiency,' she added, and highlighted the awkward compromises made in Australia, where distinctions were even made between cooked and uncooked chickens.
Mr Tang last week shelved - for the time being - the government's controversial plan to introduce a goods and services tax to broaden the tax base. It has not ruled out reviving the idea.
New Zealand has long been cited as an example by advocates of GST. A Labour government which included Ms Clark, then a young MP, introduced a sales tax 20 years ago.