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Polity: Key: Pathological liar about tax

Written By: - Date published: 3:05 pm, May 18th, 2014 - 29 comments
Categories: gst, john key, tax - Tags:

polity_square_for_lynnHere’s Key on Radio New Zealand last evening:

But Prime Minister John Key said he categorically denied his Government was interested only in helping the rich, saying the Budget aimed to help a wide range of New Zealand families.

“I utterly reject those propositions. Twelve percent of households pay 76 percent of all net tax in New Zealand,” he said.

Get that: “all net tax in New Zealand.”

That claim is a complete lie.

The calculations Key is relying on exclude the over $15 billion that New Zealanders pay in GST, which is around 40% of the total tax taken from individuals in New Zealand. As I’ve said before:

Doing net tax calculations while excluding GST is like doing calorie counts while excluding nibbles, dessert, and drinks.

And, as I have noted both here at Polity and over at Pundit the other times National has tried to peddle this lie, GST is much more heavily loaded on lower income families, compared to income tax. That means including GST will markedly change how much “net tax” is estimated to come from various groups.

The Treasury has even warned English about the misleading effects of not including GST, and still the fibs keep showing up in National press releases.

When I did the correct calculations for National in 2011 – accounting for GST – I found that the top ~10% of households actually pay around 43% of the total net tax on individuals. They also earn around 30% of the income and have over 50% of the wealth.

That is a far cry from Key’s dishonest dog-whistle.

29 comments on “Polity: Key: Pathological liar about tax”

  1. Lanthanide 1

    Actually I believe this is a misquote of John Key by Radio NZ. I listened to him make this statement and I’m sure he said “76 percent of all net income tax”.

    I’m trying to find the actual audio on Radio NZ’s website but haven’t had any luck so far.

  2. Gosman 2

    It is no bigger lie than the view that poverty and inequality have increased dramatically under a National. These sorts of statements tend to be spin rather than outright lies.

    • felix 2.1

      Nope.

      “76 percent of all net tax” is an outright lie, not spin.

    • McFlock 2.2

      Child poverty has.
      Of course, that relies on the government not undercounting it (by accident, I’m sure /sarc)

      • Gosman 2.2.1

        Stats NZ is the main body that collects data in this area. Are you implying they have been politically compromised?

        • McFlock 2.2.1.1

          Fuck off, it was Treasury was involved too.
          Treasury have been politically compromised for at least 4 decades.

          Was it an intentional undercount to keep the nats in power? I don’t think so. I reckon the more likely explanation is that a randian superhero in treasury didn’t give a shit about the measure so phoned it in.

          Fuck, Treasury didn’t even give a shit they fucked up: “[T]here are no ‘real world’ impacts on New Zealanders from the miscalculations,” Treasury chief economist Girol Karacaoglu said in a statement.

          Apart from making it seem that national aren’t quite so cruel to children as they really are. If they’d undercounted 20,000 cases of child assault, heads would roll. But because we disguise it with the name “poverty”, they don’t care.

    • Actually National’s figures saying they’ve stayed still on inequality rely on excluding capital gains, so your comparison is a bit of a non-starter, given the very wealthiest people in our society don’t even have salaries.

    • Tracey 2.4

      so spinning is what, not a lie but not a truth? a mythical limbo planet where ethics dont matter.

      how much of the total income do those top folks earn?

  3. Melb 3

    They have 30% of the income, pay 43% of the tax, and you’re still complaining?

    • Colonial Viper 3.1

      The number 43% needs to be far higher, and needs to touch the net asset base of the country’s top 5%.

      The reason for this is the principle of progressive taxes – once you have enough to be financially secure week to week, say $1000 pw gross, you have to contribute far more in taxes as a proportion.

    • The Lone Haranguer 3.2

      Really? $1000 per week, then tax the “rich”

      Even with a few sproggs, you get tax credits on an income of only $52,000

    • mickysavage 3.3

      The sad thing is that 1% of the population has a huge disproportionate share of the income. They share some of their super profit so that society can survive and function and still kiwi kids suffer from third word diseases.

      Wouldn’t you prefer to live in a world where everyone had enough?

    • You seem not to get the concept of disposable income.

      When you have a $20,000.00 annual income, not much of it is disposable. Almost everything goes to bills and food, if not everything.

      When you have a $2,000,000.00 annual income from capital gains, very little of it is required to stay fed, healthy, and engaged with society, so you can afford to pay much more than an even share of tax. (although if all your income is from capital gains, you actually pay a below-average share given you’re not paying any tax on your income, just GST and other non-income taxes) You most likely have tens of thousands of times more disposable income than someone on 20k or even 50k a year, which is fine, but it means that it’s by no means unfair if you pay, say, 50% of your income as taxes.

      • Draco T Bastard 3.4.1

        You most likely have tens of thousands of times more disposable income than someone on 20k or even 50k a year, which is fine,

        No, it’s not. No one is worth thousands of time more than anyone else.

    • SpaceMonkey 3.5

      Wouldn’t it be a better indicator to express amount of tax paid as a percentage of income/revenue to get a better picture of who is paying what? Add GST and other sales taxes into the mix and lower income people are paying a disprotionately high amount of tax based on income.

    • DS 3.6

      They pay 43% of the tax, with 50% of the wealth.

  4. vto 4

    I think the rich are starting to get nervous actually.

    true

  5. Lloyd 5

    Its the rich or those who think they are rich that create recessions, playing with their assets.

    Tax the rich hard enough and recessions go away.

    (Of course there is a point where you tax the rich so hard there are no rich any more, then who do you blame? – I guess the state needs to leave the rich some pocket money, otherwise they would end up being on the benefit – shock horror)

    • Draco T Bastard 5.1

      No society can afford the rich. We can afford for everyone* to have a reasonable living standard with that encompassing a small spread of inequality.

      As long as we’re not over populated.

      • Chooky 5.1.1

        DTB +100…and as a bottom line there must be equality of opportunity..in:

        1) education(free state high quality education through to PhD level) special education for those with special needs

        2) equal health access ( free)

        3) high quality environment protection for all to enjoy…open access as far as possible ( no exploitation of rivers and no more population)

        4.) housing ( affordable and plentiful for New Zealanders only) ( no foreign investment which sucks off New Zealanders and undermines Nzer’s right to their own housing stock)..people who own rental properties should be taxed accordingly

        5) employment ( employment must be made available for all who want it….and in particular there must be no under 30s unemployed unless they are ill )

        6) UBI

        7) Financial Transaction Tax

        http://thedailyblog.co.nz/2014/05/16/hone-heke-financial-transaction-tax-now/

        That should do it…now what party do i vote for?

  6. Rosie 6

    Well said Chooky!

    As far as I am aware, Mana are the ONLY party who understands the immense burden GST has on households.

    I thought this was an eye popper:

    “The calculations Key is relying on exclude the over $15 billion that New Zealanders pay in GST, which is around 40% of the total tax taken from individuals in New Zealand…..”

    Have you ever worked out the average you pay each week in GST? I haven’t done a thorough account of it but I know it really puts the screws on our weekly budget. I resent it and I resent the immorality of it. Imagine if the burden on the poor, working poor and middle income earners was put rightly back on to financial speculators via a FTT. The relief on household budgets would be dramatic. You might even have a little money left over to do something nice, which helps the tills ring too. Every one would benefit.

    • Chooky 6.1

      Mana is increasingly sounding very attractive….GST hurts those at the bottom of the economic heap the most , with the least money to spare for essentials, let alone any left over for discretionary spending …it is a very unfair hidden tax imo

      ….i rather like the Financial Transaction Tax because it gets those at the other extreme end of wealth and there are big dividends to be squeezed out and some of the richest banks are so wealthy they would hardly notice it imo

      ..of course they would squeal but they would get over it…and they would live in a much nicer society

  7. Goon 7

    Typical Tories think their responsibility to their fellow man begins and ends with having a job.

  8. feijoa 8

    I remember the Social Credit Party talking about at FTT
    Does anyone here know much about it – do any counties use it and what sort of money does it raise?

    • Chooky 8.1

      (more on your question as to what countries use it )

      ……while quite a few countries support the global concept of FTT and many charities and organisations support it ( eg On 15 February 2010 a coalition of 50 charities and civil society organisations launched a campaign for a Robin Hood tax on global financial transactions. The proposal would affect a wide range of asset classes including the purchase and sale of stocks, bonds, commodities, unit trusts, mutual funds, and derivatives such as futures and options.[55])

      Most hedge funds managers fiercely oppose FTT.[129] So does the economist and former member of Bank of England Charles Goodhart.[149] The Financial Times,[150] the Asia-Pacific Economic Cooperation Business Advisory Council, the Confederation of British Industry, and the Adam Smith Institute have also spoken out against a global financial transaction tax.[151]

      IMF’s position[edit]
      In 2001, the IMF conducted considerable research that opposes a transaction tax.[152] On 11 December 2009, the Financial Times reported “Since the Nov 7 [2009] summit of the G20 Finance Ministers, the head of the International Monetary Fund, Mr Strauss-Kahn, seems to have softened his doubts, telling the CBI employers’ conference: ‘We have been asked by the G20 to look into financial sector taxes. … This is an interesting issue. … We will look at it from various angles and consider all proposals.'”[153] When the IMF presented its interim report[21][22] for the G20 on 16 April 2010, it laid out three options: a bank tax, a Financial Activities Tax (FAT), and a third option (which was not promoted but not ruled out), a financial transaction tax.[101] On 16 April 2011, the IMF stated, it does not endorse a financial transaction tax, believing it “does not appear well suited to the specific purposes set out in the mandate from the G-20 leaders”.[21] However, it concedes that “The FTT should not be dismissed on grounds of administrative practicality”.[21]

      http://en.wikipedia.org/wiki/Financial_transaction_tax

  9. Chooky 9

    @ feijoa …here is Martyn Bradbury on it :

    “If progressives in NZ want extra funding to combat inequality, the money has to come from somewhere. A Financial Transaction Tax forces those with the most to pay vast sums of revenue that can be ploughed into the social and economic infrastructure.”

    ( read more plus view clip from ‘The Banker’ on the FTT )

    http://thedailyblog.co.nz/2014/05/16/hone-heke-financial-transaction-tax-now/

    http://en.wikipedia.org/wiki/Financial_transaction_tax

  10. feijoa 10

    Great
    Thanks for the info. Based on who opposes it, it must be good!

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