Note that point 5 in the original post is fundamentally flawed. Does no-one understand simple arithmetic these days? Removing GST would not reduce prices by 12.5%. Taking the GST off means reducing the price by 1/9th – or 11.11111%!

Are the authors of thestandard really “chaps”?

My suspicion is that they do not meet the official criteria…
http://www.thechap.net/content/section_epistolary/am-I-chap.html

http://www.nzherald.co.nz/category/story.cfm?c_id=77&objectid=10506943

This was in the mid-80′s and a lot of businesses couldn’t tell you if they were making a profit on a month by month basis. They didn’t have adequate accounting systems. Some of those businesses were reasonably large. A lot of them would only do their accounting when they had to – when they had to pay taxes. Otherwise they just looked at the state of their bank balances.

One of the major benefits of GST was that it forced businesses to be come more efficient and to start understanding what was happening.

Personally I’d hate to see some items become GST exempt. All that does is increase the complexity of running a business, and therefore the costs. Paradoxically it would happen the most in the businesses that have some exempt items in their range. They’d have to start putting extra systems in place to cope. They’d have to put prices up to cover the cost.

Bad idea. A better idea would be to look at the areas that are currently exempt and remove the exemption if possible. They were the areas that in 1986 were considered to not be cost-effective to collect from. Maybe they are now. Reduce the complexity – don’t increase it.

Adding GST to debt like credit cards and mortgages would go down really well

I just said there was a discrepancy – I didn’t say I had a solution. Although, it has been suggested that if we cut GST down to ~1% and applied it to everything we may be able to get rid of income tax.

Draco, are you suggesting process workers quit their jobs and set up their own mini factories in their back yards?

No, they would still work at the same place and for the same people but they would take care of their own taxes, ACC levies etc. When they do this work related expenses become tax deductible which they aren’t ATM for the average worker.

My nephew is a builder. He contracts his labour out and does his own (well, he has an accountant) taxes etc. Recently he has had to go on wages for the first time in his life and it’s costing him more. He cannot save anywhere near as much as he was when he was a contractor.

My advice to workers – get off wages and go on contract. Get a good accountant. I happen to think that the unions, to remain relevant, need to help their members do this.

While I can understand the sentiment, such a loophole would put us down the road to an Australian-style GST mess (you will get disputes over what counts as NZ-grown, and what counts as fruit and veges). Removing GST on food completely would be easier, but you would still get grey areas (pet food, for instance?).

The way to deal with GST is either cut it back to 10%, or scrap it entirely.

Personally, I think GST is better gone altogether, as expense taxes are terrible to manage and inherently regressive in some form or another.

It’s pretty vague in its regressive/progressive nature – these terms only fit well with income taxes, not those on expenditure.

Somebody selling their labour to move money doesn’t. This is, IMO, a fairly serious discrepancy. This is just one example.

Adding GST to debt like credit cards and mortgages would go down really well…

Basic economic theory say’s its regressive – those who can save (ie; NOT spend) pay less of their total income to GST. However, once you add in time horizons and stuff like drawing down savings (where you’re spending more than you’re earning in retirement) it balances out and we all end up paying pretty much the same rate.