National’s 2010 budget provided substantial tax cuts. But it also implemented an important tax switch at the same time. The government increased the GST while simultaneously cutting income taxes and increasing benefits to compensate. It is perhaps time to consider doing it again.

Oliver Hartwich’s column in this week’s NBR argued that growing government surpluses should be divided between tax cuts, debt repayment, and investment in infrastructure. So it is worth thinking through what tax changes would make the most sense in 2017.

2010’s tax cuts focused on reducing the top income tax rate. Future efforts might aim to reduce effective marginal tax rates. Taxpayers receiving Working for Families and combinations of other benefit programmes can wind up taking home less than $2 for every $10 earned from additional hours worked.

Putting in an extra ten hours per week but keeping the pay from less than two of them is not a particularly attractive proposition. There is room in the budget for tax cuts. Focusing on these kinds of cases is worthwhile, but is also fraught with difficult trade-offs.

2010’s tax changes provided other important lessons. The tax shift from income tax to GST left no one with lower after-tax incomes by design. The shift seems to have been effective. Simulation work by Treasury’s John Creedy and Penny Mok suggests that the switch helped encourage work. And the Tax Working Group had previously deemed the GST a more efficient way of raising taxes as well.

Shifting the tax base to rely a bit more heavily on GST then promotes efficiency. And, contrary to common critique, a GST increase does not make the tax system less progressive when it is combined with offsetting changes to income taxes and benefits.

Perhaps surprisingly, GST increases are really taxes on wealth. Those who had saved during times of higher income taxes find themselves subject to higher taxes when consuming the fruits of their investment.

But it also represented a tax on tourism from overseas. Tourists pay GST but do not pay NZ income tax.

Renewing 2010’s tax shift is worth considering. And if the government won’t consider charging fees to cover tourists’ costs in the national parks, a GST hike putting a greater share of the tax burden on tourists is not really a strike against it.