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What will you do with your tax cut?

Written By: - Date published: 9:46 am, September 29th, 2008 - 44 comments
Categories: Social issues, tax - Tags:

If your annual income is over $14,000, your tax will decrease by $12 to $28 a week from Wednesday. That’s a reduction of up to 26% on the income tax you pay. By 2011, people will be paying up to 31% less income tax (graphs here). With boosts to Working for Families, many people with children will be paying no net tax (already the average tax paid by a single earner family with two kids is only 2%).

Funny, then that the actual amount of cash seems a little underwhelming to those on comfortable middle-class incomes. Funny because we’ve had nearly a decade of National basing its entire political argument around the need for tax cuts. Yet, now we have tax cuts, no-one seriously thinks they will be the panacea that National has made them out to be. National’s argument, of course, is that we just need to cut more, specifically for the wealthy (they have ruled out cutting the bottom rate any further). But if $1.7 billion worth of tax cuts this year, rising to over $3 billion a year by 2011, isn’t the cure to all our woes why would more make all the difference? It wouldn’t, of course. Tax cuts are not a solution to low wages, they are not the difference between people leaving NZ and staying, they are not compensation for inflation, and they never can be. And every dollar spent on tax cuts is a dollar that can’t go on health or education or, in the case of National’s cuts, a dollar that has to be borrowed on the turbulent international credit market.

So, what will you do with your tax cut? I expect all our friends on the Right who claim we don’t need a public welfare system because that’s the role of private charity will be keen to donate to a worthy cause. The Anglican Church’s quirky ‘give it up’ site has a number of good ideas for organisations you can give your tax cut to. For something less Christian-based, how about an environmental group like Forest and Bird, or a local community organisation, or even a political party, so they don’t have to turn to secretive wealthy donors?

44 comments on “What will you do with your tax cut?”

  1. Matthew Pilott 1

    I’m buying 2800 grams of Mainland Cheddar first up, as a celebration.

    That’s 2755 more than National’s waste identified will get me thus far.

  2. Felix 2

    the actual amount of cash seems a little underwhelming

    That’s because it’s a Labour tax cut and Labour doesn’t believe in tax cuts.

    A National tax cut, with the magical power of belief, will make us all rich, richer than astronauts.

    An ACT tax cut and we’d never have to work again!

  3. vidiot 3

    I don’t really see it as a tax cut, after all it’s just an inflation adjustment of the tax brackets that should have happened every year for the last 9 years, just not now.

    And mine shall be going straight on to my credit card.

    Captcha: demands$51 – heh I guess it wants my tax correction.

  4. Stephen 4

    Might I suggest micro-credit.

    Though yes, it is an inflation adjustment for many.

  5. jaymam 5

    Can someone publish a graph of the overall tax rate including WFF and family benefit for a person with 1, 2 or 3 kids and a non-earning spouse, for say the last 40 years or more?
    I imagine that the tax rate is around zero for an average family at present, which is lower than it’s ever been.

  6. randal 6

    buy a harldly davison, take the exhaust pipe off and go on a pub crawl

  7. John Stevens 7

    Nah, us righties will use the small tax cut to invest/reduce debt and spend on my family. Most righties give more to charity than the left as we are taxed more anyway.

    You lefties now have a choice on which charity to give to with your tax cut as you are so more compasionate than us righties. Useless organisms such as F&B are in dire need of your compassion. Personally I wouln’t give them the steam off my piss.

  8. Matthew Pilott 8

    Sweet John, will you be speaking for The Right, From Now On?

    Most righties give more to charity than the left as we are taxed more anyway.” Does not compute.

  9. Bill 9

    I’ll be able to buy better quality pet food for my tea now! Whoopee.

  10. randal 10

    move to remuera, buy an outboard motor and rev it up in a 44 gallon drum on saturday mornings to wake everyone up

  11. rjs131 12

    I intend to give it all to Judith Tizard

  12. What infused said.

  13. Matthew Pilott 14

    Infused – that comment reminded me of some of the bloodhound gang’s finest lyrics: “Well, that night I lost myself to ruby red lips, milky white skin, and baby blue eyes. Name was Russell.

    Oh, and what randal said, the second time. Randal, did you know that on a Wellington City Council Excessive Noise Infringement Notice there’s specific mention of a jet engine. Just some food for thought. I mean, has anyone had their jet engine confiscated before?

  14. Santi 15

    I’m going to spend it on a few beers celebrating the impending demise of this socialist government, although the Tories themselves are no great cause for joy.

    Some of the Labour Chardonnay-sipping brigade will be looking for jobs, despite the fact most of them are unemployable: would you hire Tizard, Hawkins, Horomia, Moroney, Mahuta, etc?

  15. QoT 17

    Increase the share of household expenses I pay and actually get my savings account into four digits again for travel/massive student loan repayment purposes.

  16. Felix 18

    Mp,

    Don’t know about now, but 10 years or so ago the Auckland City ones had specific mention of trains and aircraft on the list of offending items which could be confiscated.

    Always made me want to lay some tracks in the backyard and run a noisy locomotive back and forth to see what would happen.

  17. Ianmac 19

    John Key has promised to give tax breaks upwards of $50 a week. This will be on top of the current Labour package. Wow! Maybe bring it up to $70 p.w. Because John Key is an honest man this promise will be honoured and you folk who fuss about borrowing for tax cuts are just trying to undermine the Key/English credibility. Shame on you! Trust Mr Key? Sure do.

  18. burt 20

    Matthew Pilott

    Randal, did you know that on a Wellington City Council Excessive Noise Infringement Notice there’s specific mention of a jet engine. Just some food for thought. I mean, has anyone had their jet engine confiscated before?

    Home made jet engine : youtube

    These people are among us.

  19. Ianmac. I am calling their credibility into question, yes. Well spotted. Asking questions of those who would rule us is vital.

  20. Phil 22

    Hookers and Blow

    Seeing as all our good drugs are imported (a connoisseur sneers at ‘P’) do you really want to be snorting up the current account deficit?

    And the hookers are probably illegal immigrants, so that doesn’t help either.

  21. Matthew Pilott 23

    Felix, I think the WCC one did mention a locomotive as well as a jet engine. Interesting that they would be specifically mentioned. My combine harvester is safe for the moment, it seems. Phew…

    Burt – I can’t check the link now, but do remember a story on 60 Minutes or Inside NZ about a fella who made a jet engine. He lived on a farm and was a good few ks away from the neighbours, maybe 3. Turns out you could hear it 5 ks away!

    I want to be one of these people. Well actually more interested in rockets… Hmm, maybe that would be better than buying large quantities of cheese on a weekly basis.

    SP – I think Ianmac was engaging in a form of parody..

  22. Matthew Pilott 24

    P.S Felix – please let me know if you ever do lay those tracks. In a similar fashion, I’ve always wanted to build a small private race track and have drunken races. As long as you have some serious safety gear, it could be quite a riot.

  23. Go The Right 25

    Fantastic result for National now with the TV3 poll out showing the right with 65 seats.

    This is without the Maori party but I’m sure John Key will run an inclusive government and invite them in. So say 72 seats would be pretty comprehensive.

    Now that the last 3 polls have shown that National is climbing again right when it needs to. Steve has been pretty quiet on this cant think why!!

    The Winston affair and Helen and Michael Cullen’s gutter Politics are definitely hurting Labour when you consider the last Election Labours vote fell away on polling day it could be even worse.
    http://www.3news.co.nz/Video/Politics/tabid/370/articleID/73495/cat/67/Default.aspx#video

  24. Phil 26

    small private race track

    So, is your last name a pun?

    That’s hardly environmentally friendly. Is your care for the environment a thin facade?

    🙂

  25. Phil. I’m sure MP would use electric cars.

    MP. ah, maybe it is parody. That’s the danger of good parody, it becomes indistingushable from the real thing.

  26. Matthew Pilott 28

    I suppose I’d have to plant a few trees or something. Maybe make my own biodiesel (before drinking – can’t be mixing methanol with sodium hydroxide after a tipple).

    Wow. Rob thinks National, with an outright majority, would make policy concessions in order to bring in another party. I suppose I can hardly accuse him of stealing that comment from someone else, like many of the others! I don’t know what’s worse – his comments or him stealing other poeples’. At least with the latter there’s something sensible to argue.

  27. sean 29

    I just found out from IRD that my tax rate is going down to 16cents in the dollar flat as a result of these cheese tax cuts. I’ll probably put it towards Body Corp rates on one of my properties.

  28. burt 30

    Matthew Pilott

    I suspect you would be less inclined to race anything while drunken if we didn’t have a no fault ACC system. However we do and I would be hypocritical to suggest we shouldn’t take full advantage of it.

    So, how about a home made rocket – modified quad bike beach race. Rocket propelled quad bike frame, wheels brakes etc. Points for top speed and overall distance traveled. 3am on a Sunday morning would seem like a nice quiet time when few people are likely to be on a beach.

    Perhaps if we have one successful sober race we could quickly graduate to 8 cans of beer in the three hours prior to racing. Cranking it up to tequila for the third race if the second hasn’t ended in tears.

    I’m picking that few beaches have already banned the use of rocket propelled quad bikes but there may be some other covering council bylaws. These are likely to change from district to district. Any ideas ?

  29. Matthew Pilott 31

    Hmm, I was thinking more like roll-cage modified Datsun 120y on a figure-8 track. Private property and all that…

    Yeah ACC may be nice to have but that doesn’t mean I’d intentionally go out to maim myself, because it wouldn’t be a large financial burden.

  30. Ianmac 32

    MP: It just seems to me that a great deal has been made of the Key Tax cuts, and if he keeps his word on this he will be rewarded with applause. However, should it be a much smaller offer, for whatever excuse, this would be a serious blow to the trust of the people.
    And if the exodus to Australia this year is even the 33,000 (rather than the John Keys claim of 88,000) could that be that those leaving are not seeking lower taxes, but fleeing from what Go t Right claim that National is onto a sure win. If the National prospects,tax cuts and all are significant, wouldn’t “they” stay???
    Go the Right: Interesting that the TV 3 showed only 13% the difference between the two parties. Not 28% or 24% or 18% ? And Duncans maths is not too hot. 6-7 Maori seats that he says they should win, does not equal 4 seats in his totals. Perhaps you are not being very accurate either.

  31. Stephen 33

    Ianmac, the 88,000 figure is outflow to the world not just NZ.

  32. MikeE 34

    Put it towards my increased power and fuel bills due to the ETS.

  33. 123 35

    I’d like to repeat the call that all of you who have been saying for 8 years we don’t need tax cuts, donate yours back to either
    * The IRD
    * Charity

  34. uroskin 36

    I’m going to have to give it to Infratil as its subsidiary Fullers is creaming off every Waiheke commuter’s tax cut. Plus we can look forward to higher residential rates and public spending since the ferries will be full of oldies who will be travelling free. Cheers, Winston, another reason to blow NZF out of parliament.

  35. Anita 37

    Go The Right,

    Now that the last 3 polls have shown that National is climbing again right when it needs to.

    Which last three polls? By my count you’re wrong, but you might about three different last polls.

    when you consider the last Election Labours vote fell away on polling day

    Reference? My memory is that the polls were all over the place just before election day so Labour’s vote would have been up on some and down on others.

  36. My Tax cut will be saved for a few months and invested in the share market, lots of Bargins!!! I don’t invest in the NZ market, thanks to Aunty Helen, but I do invest in the Aussie market.

    In terms of Charity donations, as the old say goes, “If you do charity work and then tell everybody about it, its not really charity”

  37. Disengaged 39

    Well I was planning on uping my contribution to Kiwisaver. However, after MPs comments above I am going to buy some jet engines and Datsuns so that I can drunkenly race jetpowered Datsuns around a figure 8 circuit in my back yard while enjoying hookers and blow.

  38. Vanilla Eis 40

    Brett: You don’t support NZ business because our elected leader is a woman? I’m struggling to find a correlation here…

  39. T-rex 41

    Matt – that specific reference to jet engines opens up some awesome possibilities.

    It makes me want one of these even more, and I already wanted one a lot. I mean if you had a slingshot launch system on your roof or something you could fire it up, and when noise control came to visit you’d have a real life honest to goodness opportunity to cackle “you’ll never catch me” as you light up and soar out over the harbour.

    Ok, so maybe i just want to soar out over the harbour. Or those mountains in the vid would be pretty sweet.

    I might spend my tax cut on one. Can you use cheese instead of resin in carbon fibre?

  40. Better still why not send your comments directly to http://www.giveitup.org.nz

  41. Draco T Bastard 43

    Burt and MP:

    These people are among us.

    Yes, Yes they are.

    There’s a reason pulse jets never made it in to the big time – they’re bloody noisy.

  42. Magnanomis 44

    Typical Socialist: can’t you do arithmetic? I pay over $25k pa in PAYE – by my carefully considered calculation, I’m not getting a “…reduction of up to 26% on the income tax [I] pay”. I’m putting my ‘tax cut’ towards air fares. I say ‘Ditch the Bitch’!

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