Written By: notices and features - Date published: 3:33 pm, July 10th, 2014 - 47 comments
Categories: capital gains, Economy, gst, housing, national, Politics, public services, same old national, tax, welfare - Tags: inequality, msd, polity
Even the government’s own advisors think the “net tax” figures have been brandishing in recent years are a crock. Here’s an exact from page 20 of MSD’s Household Incomes Report out yesterday:
- For half of households with dependent children the amount received through welfare benefits and tax credits is greater than or equal to the amount they pay in income tax.
- For example, single-earner two-child families with less than around $60,000 from wages pay no net income tax. They receive more from WFF tax credits than they pay in income tax and ACC.
- Such households nevertheless pay GST on almost all the goods and services they purchase. A more comprehensive analysis needs to include tax paid through GST especially as lower-income households generally apply all or almost all their income to expenditure on GST-able goods and services, whereas higher-income households apply a lesser proportion of their income to GST-able expenditure, with a portion going to savings and interest payments which do not attract GST. GST outgoings are therefore generally a higher proportion of the income of lower-income households than for higher-income households.
(Emphasis added – RS)
MSD is, of course, absolutely right. I have been making this argument publicly for several years. (Here is my most recent.)The astonishing thing here is the government’s own advisors breaking ranks.
MSD has gone out of its way to criticise the misleading way that government Ministers are presenting information to New Zealanders about their tax system. That is a brave thing to do, in the best traditions of the public service. Good on MSD for doing it.
Rob Salmond also points out from the MSD report, the effect of:-