The government says that most people would be better off after taking into account the GST rise and the income tax cuts. Their calculator uses the estimate of 2.02 percent inflation arising from GST alone.This seem odd since an increase in GST has no effect on inflation at all. The GST increase will increase the price level but will do so instantaneously which, by definition, isn't inflation. I would have thought that someone, like David Cunliffe or Eddie, claiming to be an expert on the economy would have known this econ 101 type point and corrected such an error.
Friday, 21 May 2010
Do people understand inflation?
Over at the Standard I see that Eddie is quoting as saying David Cunliffe as saying,