Public: GST should pay for cuts to bottom rates

Written By: - Date published: 12:03 am, February 17th, 2010 - 16 comments
Categories: class war, gst, tax - Tags:

John Key has been very clear:

“it is an extremely complex calculation, but if one looks at the net effect of raising GST, lowering personal taxes right across the board—the top, lower, and middle end—and taking into consideration the other moves the Government is making, 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.”

A moment’s thought shows you that you can’t have a revenue neutral tax change and make everyone better off or at least no worse off. That’s national standards for 8 year olds stuff: ‘you have $2 billion in revenue and promise $4 billion in tax cuts, do you have enough money?’

Nonetheless, Key has made the promise and he has to keep it. That means cutting the bottom tax rate, something a new ShapeNZ survey shows people strongly support:



But the survey also shows that Kiwis know Key’s money pixies don’t exist. If GST is increased and most of the money goes to tax cuts for the rich few – Key and his mates – Kiwis know they will be left worse off:

16 comments on “Public: GST should pay for cuts to bottom rates ”

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  1. Zorr 1
    17 February 2010 at 1:27 am

    I have started going to sleep on all this stuff. It goes in one ear but the build up of shit is just making it seem like a horrible nightmare that I can’t wake up from – tomorrow I will probably walk off tge edge of the world and freefall for eternity or something.

    Honestly, if Goff keeps repeating one simple promise to the electorate he will have a very good shot at making this a single term government – and that promise is “I will reverse all of Nationals major policies instituted in their term, return the conservation estate to its former status and rejigger the tax cuts to benefit the many and not the few”

    If he says that, I get the feeling that Key will be fighting an uphill battle for popularity with unpopular policy.

  2. aj 2
    17 February 2010 at 7:14 am

    Don’t eliminate the possibility of them partially funding tax cuts from debt. {now that the books are better off than expected}

    captcha ‘form’ {National has it}

    • Lanthanide 2.1
      17 February 2010 at 10:10 am

      Or from the superannuation fund…

      • Jenny 2.1.1
        17 February 2010 at 8:34 pm

        Or from a Financial Transaction Tax, to finally net some tax from the $multibillion swindles by foreign exchange dealers, money launderers, speculators and banksters.

        (Yeah right.)

  3. Red Rosa 3
    17 February 2010 at 7:44 am

    Zorr has got it.

    ‘Fightback’ is not original, but effective all the same.

  4. mickysavage 4
    17 February 2010 at 9:34 am

    People are going to be upset. Key cannot do what he is promising unless he raises significant funds from other taxes or the change in rules on depreciation.

    Reminds me of George Bush who cut taxes and drove up deficits.

    Why do right wingers think they are better at economics?

  5. Scribe 5
    17 February 2010 at 9:41 am

    I would support the introduction of a tax-free threshold (say $10,000) and a smaller drop in the top tax rate (down to 35c, maybe) as a good use of the increased GST take. Not sure what the cost implications would be.

    captcha: utilitys (captcha needs national standards)

    • Lanthanide 5.1
      17 February 2010 at 10:12 am

      The problem with the top tax bracket is not the rate (38% is a good number), the problem is the threshold it kicks in at. It should be moved out to 150-180k, no other changes required in that area.

      Aligning company, trust and top rates is “tax cuts for tax cheats”. Punish the cheaters, don’t reward them.

      • Scribe 5.1.1
        17 February 2010 at 10:52 am

        Lanthanide,

        I’d be equally happy with that, too. I think too many Kiwis are paying too high a top rate, so either your suggestion or mine would work. And you’ve hit the nail on the head on aligning top rates, but I’d like to see something de-incentivise tax avoidance.

        • aj 5.1.1.1
          17 February 2010 at 6:24 pm

          Too many pay to high a top rate?

          From No Right Turn:

          “So, 78% of us don’t even pay the middle tax rate, and the top tax rate is utterly irrelevant to 91% of the population. Remember that next time the government or the media talk about “middle-income” tax cuts – they’re not talking about you, or most of New Zealand. Instead, they’re only talking about themselves”

          http://norightturn.blogspot.com/2010/02/some-facts-on-income-distribution-in.html

          • Herodotus 5.1.1.1.1
            17 February 2010 at 8:45 pm

            The graphics only cover gross income and do not convey full/part/passive income e.g. Interest only, of benfits (eg pension etc) or any government assistance (WFF or state housing) whilst it has some relavence, in isolation it is of very limited use. This is where commentary of such matters is all “them bad/ us good”. Perhaps of more relavence is household income or full time wage (as this is where some benefits eg pensions are sourced from). There is nothing to refer to disposable income. So a family 3 children 1 income earner on $95k on the top rate, 2 earners on $40 & $55k are $8k better off, and on this graph you would reward the double income family at the cost of ther single yet in all other aspects the family groups are the same. Anyone can put forward stats/”facts” to support their arguement yet we have for to long treated subjets like tax, govt spending,welfare as isolated topics or means to attract votes there is/was no overall plan for the country, just short term bribes to the voters.
            So when ” Remember that next time the government or the media talk about “middle-income” tax cuts – they’re not talking about you, or most of New Zealand. Instead, they’re only talking about themselves.” you are referring to the likes of teachers, the police?

  6. rainman 6
    17 February 2010 at 9:57 am

    The trick is in that woolly phrase “better off”. Could mean over time, trust us, the trickle down benefits will be coming your way soon now, honest… or several other variants of the same sort of lie.

  7. aj 7
    17 February 2010 at 7:06 pm

    I think most people understand what ‘better off’ means.
    They expect to have more $ in the had after it all shakes down than before hand, and it means $$ not % of $

  8. aj 8
    17 February 2010 at 8:12 pm

    had = hand