John Key on the coming tax money go round:
“it will make the bulk of New Zealanders either better off or a lot better off, and on a straight GST income tax no one will be worse off”
The tax changes leaked to the Sunday-Star Times:
Using these numbers, the IRD’s table of income distribution, and tables in the Tax Working Group’s report that shows how much of their income people pay on GST at different incomes, I’ve worked out the net reduction (or increase) in tax at different income levels:
While it’s good that the poor haven’t been ignored entirely (and I think the campaign by the Left can claim that victory) they’re getting the barest of compensation, a few cents a week assuming typical GST bills. Even up to $47,000, more than what 2.6 million taxpayers earn, the net tax cut is just $3 a week.
Higher income workers, from about $57,000 to $83,000 fare even worse – their increased GST bill outweighs their income tax cut because there’s no reduction to the 33% rate and they end up worse off.
So, are “bulk of New Zealanders either better off or a lot better off, and on a straight GST income tax [none] worse off”? No. 10% get a net tax increase and 80% of taxpayers get a net reduction of piddling size that will be overwhelmed for many by rent hikes.
Remember these numbers don’t (can’t) account for rent increases due to the changes in property tax. I support discouraging over-investment in housing but there needs to be compensation for renters, and less than $3 a week at best simply won’t cut it.
The real money, as was always National’s intention, goes to the rich. The total net tax cut for the 22,000 wealthiest taxpayers is over $200 million – more than the total for the poorest 2.5 million. Put it another way, for every dollar net tax cut the typical Kiwi gets the elite will get over $100. And they’re not likely to have to use that money (and more) to cover higher rent.
This is all nothing but a complicated way of taking money out of the pockets of working Kiwis and putting it in the pockets of the wealthy. No-one thinks that these tax changes will increase growth but they will increase inequality.
The whole idea of increasing GST should be scrapped and the housing tax reforms used to compensate low income New Zealanders first. But I don’t see that happening. The whole point of the exercise for National is to further enrich the wealthy at the cost of everyone else.