Please compare like with like

TVHE makes a point that has been occurring to me recently.

Wages not keeping up with inflation” that is the headline we get here.  While I’m sure that will get a lot of people wound up and complaining about something, its a load of cr*p.

Actually looking through the numbers, we see that gross wage growth is roughly inline with the growth in consumer prices excluding GST.  Why do this?  Well the increase in GST was met with a corresponding cut in income taxes, so that NET wage growth is that much larger than gross wage growth.

National did increase GST, but overall they did not increase tax. So adding in the GST increase into inflation then claiming that wages did not increase by that amount is inherently dishonest.


Comments are closed.

%d bloggers like this: