15% GST

[Pedrostt500]

So those on lower and fixed incomes will get assistance from the gubberment, I have no problem with that, but the high wage earners will get a Tax rate cut, and us Muggins in the Middle will have to pay the higher GST rate get no Gubberment relife, and no Tax rate cut, but yet have to pay higher ACC levies, and its not likley to see a wage rise this year, and there wasn't one last year.

Rant over.

[SMOKEU]

The cunts won't even give me a student allowance.

[Hitcher]

Rich people spend more than poor people. Rant over.

[mashman]

it worked last time... why not try it again!

[Toaster]

Moneygoround.

[sil3nt]

The cunts won't even give me a student allowance.This fucks me off! Just because my dad has a good job doesn't mean he is going to support me. Can't get a student allowance for trying to achieve something yet i can get the dole for sitting on my ass all day.

[98tls]

The cunts won't even give me a student allowance.

Get a fucking job,simple really."student allowance/working for famlies".Wake up there was a time when people studied and worked,as crazy as it sounds people used to work,study and even still manage to raise children without handouts.

[pc220]

Same old story, middle income nz getting fucked over.

[pc220]

Get a fucking job,simple really."student allowance/working for famlies".Wake up there was a time when people studied and worked,as crazy as it sounds people used to work,study and even still manage to raise children without handouts.

It still happens. My wife studies full time , has a job and is also the main caregiver to our kids. Mind you she is not part off the handout generation.

[FJRider]

Change of goverment was wanted ... change was made ... ENJOY ...


MAJORITY rules ... right ... ???

[pc220]

Change of goverment was needed. I am actually fairly happy that J Key is making the unpopular decisions and not just working to secure the next election.

[Motu]

I think securing the next election is exactly what he is doing.

[98tls]

It still happens. My wife studies full time , has a job and is also the main caregiver to our kids. Mind you she is not part off the handout generation.

Then she gets my respect,shes earned it.The bludger has become so prevalent in this country that it seems its acceptable to be one.

[pc220]

Then she gets my respect,shes earned it.The bludger has become so prevalent in this country that it seems its acceptable to be one.

Yip I think personal responsibility got turfed out along with common sense.

[Tank]

So those on lower and fixed incomes will get assistance from the gubberment, I have no problem with that, but the high wage earners will get a Tax rate cut, and us Muggins in the Middle will have to pay the higher GST rate get no Gubberment relife, and no Tax rate cut, but yet have to pay higher ACC levies, and its not likley to see a wage rise this year, and there wasn't one last year.

Rant over.

See thats why people like you should not be allowed to vote.

He very clearly said that there would be cuts across the board - so you will be getting a tax cut and should be nett better off.

[mashman]

but a change in government hasn't been for the better since the days of Oliver Cromwell... so it's not new... yup politicians were greedy back in the 17th century too...

[98tls]

;)Love these threads,theres many on here that talk of Muldoons madness but yet line up to support one or another of the current crop.Subsidies my arse .

[lostinflyz]

isn't national a right leaning party??? Decrease taxes, decrease benefits, decrease gov't control. Basic right wing principals??? Or was i high during my 3 years of political science classes

And i thought labour were a pack of wankers.

[Jonno.]

The more you earn the more you get back.
So if you're on a low income not on the benefit, without kids you're fucked.

[lostinflyz]

The more you earn the more you get back.
So if you're on a low income not on the benefit, without kids you're fucked.

and if you like spending all your income on bikes and racing, you basically being dp'd

[Tank]

The more you earn the more you get back.
So if you're on a low income not on the benefit, without kids you're fucked.

again - indications from what they have released is that everyone should be nett better off - sigh - do you people ever read the detail or do you simply take poor media commentary or opposition press releases.

[98tls]

The more you earn the more you get back.
So if you're on a low income not on the benefit, without kids you're fucked.

Should have stayed at school longer i guess.Once again simple really.

[nz_rider]

isn't national a right leaning party??? Decrease taxes, decrease benefits, decrease gov't control. Basic right wing principals??? Or was i high during my 3 years of political science classes

And i thought labour were a pack of wankers.

Chances are if you spent three years at uni doing political sciences you were high. HAHA. There work load also seemed so easy compared to what I was doing. You all had time to just get high. Lol

[lostinflyz]

again - indications from what they have released is that everyone should be nett better off - sigh - do you people ever read the detail or do you simply take poor media commentary or opposition press releases.

in order to actually acheive this for everyone they would need to drop the income tax brackets far enough to offset the 2.5% increase in GST, therefore negating the use of the rise, and obsoleting any additional funds that may be used for increased benefits.

There actual words were something closer to most people will be better off. Till they actually release details its impossible to know whether you'll be better off, but based on their statements of dropping upper tax brackets (im not really in them), increasing benefits (I can read, write and spell, and know how to use a condom (coupled to a bad case of mutherfucking ugli-itis), thus i dont get any of those) and something about property breaks being decreased (no propertyb anyway) so im quite certain to acheive those goals they will kinda have to shit on me.

did you read beyond the goverment press release???

[Tank]

did you read beyond the goverment press release???

Indeed I did.

You obviously didnt .

But you are right - we wont know until the full details are released.

Congrats on knowing how to use a condom tho' - admittedly that puts you ahead of a lot of the people moaning about it.

[Tank]

Should have stayed at school longer i guess.Once again simple really.

or worked harder. Either way - its not hard to get out of the lower wage bracket. FFS my daughters B/F is on 50k in his 20's - has no formal education - just hard work.

[Mully]

Shit.

Are they looking at putting GST up?

Fuck, they kept that quiet - I hadn't heard a dicky bird about that.

[lostinflyz]

Indeed I did.

You obviously didnt .

But you are right - we wont know until the full details are released.

Congrats on knowing how to use a condom tho' - admittedly that puts you ahead of a lot of the people moaning about it.

you are correct i did not read the gov't press release. will have to wait and see what actually goes to pariliment still either way as talk is just that.

But it does seem like a very labour thing to be doing.

and thank you for complimenting my condom education. Plenty of banana's and latex were lost in teaching this monkey.

[Mully]

I don't know why everyone's worried.

As far as I can tell, I'm going to be better off. Isn't that what really matters?

[Miscreant]

Shit.

Are they looking at putting GST up?

Fuck, they kept that quiet - I hadn't heard a dicky bird about that.

Maybe if your head wasn't stuck up your arse you'd hear better.





Just a thought.

[Mikkel]

It used to be "Mind the gap" now it seems this is turning into "Don't mind the gap"...


or worked harder. Either way - its not hard to get out of the lower wage bracket. FFS my daughters B/F is on 50k in his 20's - has no formal education - just hard work.

Let me think, you daughters boyfriend isn't a complete waster - otherwise you'd have scared him away a long time ago. As such he'll have an advantage over a lot of people...


NZ has got a fairly large disparity between rich and poor. If anything the government should be aiming at least not to widen this gap. Putting some taxes into place to reduce property speculation would be a good start - the country would be fairing better if not quite so much investment capital was put into properties where the is no real value production taking place.

[LBD]

The cunts won't even give me a student allowance. Sooz you can get all skilled up then move to Aussie and earn a decient wage?


Rich people spend more than poor people. Rant over. Correction...Rich peoples wives spend more than poor peoples wives


See thats why people like you should not be allowed to vote.. I have heard it said that less that 1/2 the population have the nouse to manage a household budget...begs the question..Should the majority have the vote?


Shit.Are they looking at putting GST up?Fuck, they kept that quiet - I hadn't heard a dicky bird about that. And I heard about it 1/2 the world away the minute it happened...???? Maybe I just get home sick and follow all the news huh?

[p.dath]

isn't national a right leaning party??? Decrease taxes, decrease benefits, decrease gov't control. Basic right wing principals??? Or was i high during my 3 years of political science classes

National is a centre right party, and Lanour is a centre left party - but they are both fundamentally centre parties.


and if you like spending all your income on bikes and racing, you basically being dp'd

This is what they are trying to target, consumption without saving. For the country to prosper we need more local investment, and we need more domestic investment for that to occur.

[nallac]

I don't know why everyone's worried.

As far as I can tell, I'm going to be better off. Isn't that what really matters?

me too.......

[Coldrider]

Increase on GST is a very cunning move due to fiscal drag.
Wages and salaries are not rising so the tax take proprtionally is not increasing, especially with many unemployed.
However with the cost of goods and services always rising (most all) the consumption tax take will always increase.

[Flip]

It used to be "Mind the gap" now it seems this is turning into "Don't mind the gap"...



Let me think, you daughters boyfriend isn't a complete waster - otherwise you'd have scared him away a long time ago. As such he'll have an advantage over a lot of people...


NZ has got a fairly large disparity between rich and poor. If anything the government should be aiming at least not to widen this gap. Putting some taxes into place to reduce property speculation would be a good start - the country would be fairing better if not quite so much investment capital was put into properties where the is no real value production taking place.

The thing is that there are too few new houses being built at the moment, simple supply and demand is holding house prices up. Also ma and pa investors have had a bad run recently with finance companies going bust and banks ripping off customers. As far as rentals go any significant changes in the rental property tax structure will reduce the availability of rental properties and result in the increased costs being passed onto the Tennant's. This beginning to happen rignt now, rents are going up as the supply of new investers into the rental property market drys.

Me I actually like GST going up as it pick up some tax from the capital rich who on paper have very low incomes and pay little income tax. As long as all the tax brackets drop by 2.5% I think it sounds very reasonable. (I don't believe I said that of a National Govt)

[Pixie]

It still happens. My wife studies full time , has a job and is also the main caregiver to our kids. Mind you she is not part off the handout generation.

I thought it was more an ethnic group

[rainman]

See thats why people like you should not be allowed to vote.

He very clearly said that there would be cuts across the board - so you will be getting a tax cut and should be nett better off.

Ah, wouldn't democracy be easier if we could just exclude people we disagreed with? I'd exclude all the gullible bastards that voted National last time.... (not really, but you get my point).

Tank, he also said he would not be raising GST, and he's a politician, so I'll wait for the details in the budget before getting all excited. To my mind though there is a simple question to answer:

- If the whole exercise is "revenue neutral" it's a redistribution rather than an increase or reduction (by definition). Taking less income tax and more GST and resulting in everyone being "better off" (whatever that lovely vague term means) is a fairly pointless exercise - why bother? Sure there are some minor incentive effects but they head in the direction of reducing consumption so are a mixed blessing for retailers servicing the local market. So there will be winners and losers.
- I honestly can't believe National will use a tax redistribution exercise to make the poor more better off and the rich less better off, so I'll exclude that from consideration. They never have before, and have no incentive to do so. (Perhaps the poor will get a small sop and the price of improvements for the rich will be extracted from the middle, though).
- If it is in fact an overall reduction in tax take (I would be most surprised) then here must be a corresponding reduction in government services - even assuming an absolutely efficient government, which ain't the case. Or an increase in debt. I'd like to know what I'm no longer buying before being happy about not paying for it - mainly because I am convinced that there are services that government can provide for cheaper than private enterprise. You may not share this view, of course - but whatever. Also think we need a more grown up discussion of debt, and pushing our excesses onto our kids to deal with for the sake of a tax cut now is not very moral.

So, most likely outcome? The relaively wealthy end up relatively wealthier, the rest of us get basically nothing (or shafted, again). Supplementary prediction - the explanation showing the rest of us will be "better off" will involve discussions of how things will improve over time, and if only we put National in for a second term the future will be bright and full of growth. lower taxes, ponies and fluffy bunnies. (It won't).

Bet you a beer I'm right.

[Pixie]

The thing is that there are too few new houses being built at the moment, simple supply and demand is holding house prices up. Also ma and pa investors have had a bad run recently with finance companies going bust and banks ripping off customers. As far as rentals go any significant changes in the rental property tax structure will reduce the availability of rental properties and result in the increased costs being passed onto the Tennant's. This beginning to happen rignt now, rents are going up as the supply of new investers into the rental property market drys.



Me I actually like GST going up as it pick up some tax from the capital rich who on paper have very low incomes and pay little income tax. As long as all the tax brackets drop by 2.5% I think it sounds very reasonable. (I don't believe I said that of a National Govt)

I object to my taxes paying for bludger lifestyles.Both the unemployable and the 50% of property investors that pay no tax on their rental income.
And I don't suck on the taxpayer teat via Kiwisaver either

[pc220]

I thought it was more an ethnic group

Na she also of that ethnic group.

[Flip]

I object to my taxes paying for bludger lifestyles.Both the unemployable and the 50% of property investors that pay no tax on their rental income.
And I don't suck on the taxpayer teat via Kiwisaver either

Thing is the country needs a good stock of rental housing. Without LAQC status rentals would be about 11% of the property valve, they are not they are only 7%. Pull say 20% of the rentals and put them on the market, the housing market would almost absorb 5% at the moment and everybody's rent goes up 20% and there would shortly be a hell of a lot of people with no place to live. I don't think the goverment is going to build 20 thosand new state houses in the next couple of years.

[p.dath]

I object to my taxes paying for bludger lifestyles.Both the unemployable and the 50% of property investors that pay no tax on their rental income.
And I don't suck on the taxpayer teat via Kiwisaver either

Rental income is taxable. However the profit from buying a rental and then selling it 10 years later for a higher price is not. And that is the issue, the income from the capital gain on the property has 0% tax. And so people say why should people doing this pay no tax.

The other big issue is it attracts a lot of people into the market because of this 0% taxation. Suddenly a lot of investment is done in housing and not done in the share market, private companies, mum and dad businesses, and the like.

Residential housing going up in value does nothing for the country. Enterprises and mum and dad business improve the economy of NZ. They employ people. They pay tax. They may be able to export products, which really improves the NZ economy.

A lot of the recession we have now is purely related to the fact that NZ has a distorted balance sheet. Far too much investment in domestic property (which generates no income for NZ), and not enough in business.

[paturoa]

Here is a big thanks to the top 10% of wage and salary earners who've been paying 42% of the income tax. (source: http://blog.labour.org.nz/index.php/tag/tax-myths/)

Clearly thats not fair.

THANK YOU

[freedom-wedge]

Rental income is taxable. However the profit from buying a rental and then selling it 10 years later for a higher price is not. And that is the issue, the income from the capital gain on the property has 0% tax. And so people say why should people doing this pay no tax.

The other big issue is it attracts a lot of people into the market because of this 0% taxation. Suddenly a lot of investment is done in housing and not done in the share market, private companies, mum and dad businesses, and the like.

Residential housing going up in value does nothing for the country. Enterprises and mum and dad business improve the economy of NZ. They employ people. They pay tax. They may be able to export products, which really improves the NZ economy.

A lot of the recession we have now is purely related to the fact that NZ has a distorted balance sheet. Far too much investment in domestic property (which generates no income for NZ), and not enough in business.

agrees in principle, however there is somthing to be said for home ownership, we are infact encouraged to do so, individuals who work hard to gather lets say two rental properties cannot be likened to a commercial property investors, there has to be allowances made, not examples, blanket tax smothers

pedro

[SPman]

again - indications from what they have released is that everyone should be nett better off - sigh - do you people ever read the detail or do you simply take poor media commentary or opposition press releases.
What planet are you on? You believe the moon is made of green cheese as well, do you? And yes, I've read the detail!

[Mully]

agrees in principle, however there is somthing to be said for home ownership, we are infact encouraged to do so, individuals who work hard to gather lets say two rental properties cannot be likened to a commercial property investors, there has to be allowances made, not examples, blanket tax smothers

The way the system is set up at the moment, you're actually financially better off owning a rental and not your residence.

I know a bloke who has two rentals and rents the house he lives in. (He's probably not that happy about the new situation - I must ask him).

[Oscar]

I object to my taxes paying for bludger lifestyles.Both the unemployable and the 50% of property investors that pay no tax on their rental income.
And I don't suck on the taxpayer teat via Kiwisaver either

What about the 50% of NZ Families that pay no tax?

[sinned]

What about the 50% of NZ Families that pay no tax?

And the 10% who pay 44% of all personal tax - yes it needs some rebalancing

[freedom-wedge]

The way the system is set up at the moment, you're actually financially better off owning a rental and not your residence.

I know a bloke who has two rentals and rents the house he lives in. (He's probably not that happy about the new situation - I must ask him).

I see your point, however its ok for they in power to feather their own nest and creat new loophols for themselves. housing allowances etc and all that blubber from they who were snapped abusing it, they walked away better off in the end, after selling the public a truck load shit in laymans terms, they would of been hung for theft in Cromwells time, we encourage them to tax, infact we help them do it, instead of taking them to task, if you found out that the local dairy owner was dipping into your account, would you trust them ever again, even if they payed it back, sorry about the rant, its the truth and whos not telling it thats the problem in NZ. Non of these proposed changes will lessen the amount of people die,ing on our hospital waiting lists,

pedro

[mashman]

Non of these proposed changes will lessen the amount of people die,ing on our hospital waiting lists

probably categorised as population control. If you're too sick to work then you're no use in a financial economy!

[Oscar]

I see your point, however its ok for they in power to feather their own nest and creat new loophols for themselves. housing allowances etc and all that blubber from they who were snapped abusing it, they walked away better off in the end, after selling the public a truck load shit in laymans terms, they would of been hung for theft in Cromwells time, we encourage them to tax, infact we help them do it, instead of taking them to task, if you found out that the local dairy owner was dipping into your account, would you trust them ever again, even if they payed it back, sorry about the rant, its the truth and whos not telling it thats the problem in NZ. Non of these proposed changes will lessen the amount of people die,ing on our hospital waiting lists,

pedro

So do you have any examples of nest feathering or "loophol" creating or is this just the aliens communicating via your tin foil helmet?

[p.dath]

agrees in principle, however there is somthing to be said for home ownership, we are infact encouraged to do so, individuals who work hard to gather lets say two rental properties cannot be likened to a commercial property investors, there has to be allowances made, not examples, blanket tax smothers

pedro

Why should there not be the same encouragement to invest in businesses? I have nothing against rental investment - but the tax rules for one kind of investment should be the same as for the other.

[p.dath]

agrees in principle, however there is somthing to be said for home ownership, we are infact encouraged to do so, individuals who work hard to gather lets say two rental properties cannot be likened to a commercial property investors, there has to be allowances made, not examples, blanket tax smothers

pedro


What about the 50% of NZ Families that pay no tax?

I don't believe that 50% of families pay no tax at all.

Do they buy anything, anything at all? If so, they pay GST. That's why GST is good. It's simple, and almost impossible to avoid. Income tax on the other hand provides incentives for shift your income around to minimise what you pay. People who do cashies can easily avoid it.

[p.dath]

I see your point, however its ok for they in power to feather their own nest and creat new loophols for themselves. housing allowances etc and all that blubber from they who were snapped abusing it, they walked away better off in the end, after selling the public a truck load shit in laymans terms, they would of been hung for theft in Cromwells time, we encourage them to tax, infact we help them do it, instead of taking them to task, if you found out that the local dairy owner was dipping into your account, would you trust them ever again, even if they payed it back, sorry about the rant, its the truth and whos not telling it thats the problem in NZ. Non of these proposed changes will lessen the amount of people die,ing on our hospital waiting lists,

pedro

You do have the power of your vote ...

[Oscar]

I don't believe that 50% of families pay no tax at all.

Do they buy anything, anything at all? If so, they pay GST. That's why GST is good. It's simple, and almost impossible to avoid. Income tax on the other hand provides incentives for shift your income around to minimise what you pay. People who do cashies can easily avoid it.

My apologies - I should have said 50% of Families in NZ pay no income tax.
My problem with that is that some of these people are manipulating (family trusts etc) their incomes to qualify for "Working for Families". It is also inherently unfair in a day and age where having a family is a choice.

[kwaka_crasher]

or worked harder. Either way - its not hard to get out of the lower wage bracket. FFS my daughters B/F is on 50k in his 20's - has no formal education - just hard work.

I was on $55k in my mid-twenties... no hard work just formal education... and that was 15 years ago...

[Swoop]

do you people ever read the detail or do you simply take poor media commentary or opposition press releases.
They wouldn't lie to the public... surely!

Correction...Rich peoples wives spend more than poor peoples wives
Corrected correction: "Rich peoples wives spend more than poor peoples wives & husbands combined".:blip:

[Skyryder]

I think securing the next election is exactly what he is doing.

My thoughts too. I could get into a long diatribe on this but Key needs the Maori Party more than he needs ACT.

Labour via Shane Jones will make a serious effort to win Maori support. Neither of the Maori co-leaders are any =match for Jones.

I'm gonna stick my neck on this but I think Jones will be the make or break of Labour in the next election. It realy depends how much rope Goff and King give the man. With the Progressives having dual membership you may see more of Anderton in a supporting role for Labour more so than as an alternitive Party as they now stand. I've always said an Anderton/Jones leadership will blow Kkey and the Nats off the planet. Problem is not many in Labour see this and Labour does have a history of giving away elections.

Skyryder

[Miscreant]

Shit.

Are they looking at putting GST up?

Fuck, they kept that quiet - I hadn't heard a dicky bird about that.

Silly boy, of course I get it.
It's you who miss the point. You put me on ignore, yet respond to my posts with rep.
Just admit it sweetie, you find me irresistable don't ya.

I'm betting you ride a Honda, or wish you did.

[The Stranger]

Rental income is taxable. However the profit from buying a rental and then selling it 10 years later for a higher price is not. And that is the issue, the income from the capital gain on the property has 0% tax. And so people say why should people doing this pay no tax.

The other big issue is it attracts a lot of people into the market because of this 0% taxation. Suddenly a lot of investment is done in housing and not done in the share market, private companies, mum and dad businesses, and the like.

Residential housing going up in value does nothing for the country. Enterprises and mum and dad business improve the economy of NZ. They employ people. They pay tax. They may be able to export products, which really improves the NZ economy.

A lot of the recession we have now is purely related to the fact that NZ has a distorted balance sheet. Far too much investment in domestic property (which generates no income for NZ), and not enough in business.

Ah, do you own a business, shares or a rental property?
You do realise that the profit from buying shares and selling them 10yrs later is not taxable either.
Or your mom and pop business either.

35% of our housing stock is rental. Who's going to supply the housing for the me now generation?
As I've previously noted, you take away the investor's return on investment, you know where they'll be seeking to recover it don't you? That's right, from those that can least afford it.

It's not the 0% interest capital gains tax that attracts people into the market, this is available to business and share owners too, it's the ease with which you can borrow (among other things)
Can you borrow 100% to fund a business? Could you afford to? The banks know damn well that business failure rates are HUGE, this is reflected in their lending.

Mum and pop can go out and get a rental or 2 with $0 deposit easy enough with minimal effort, low risk and a fraction of the compliance costs of running a business.
How many shares or businesses could they purchase with $0 dollars? How would these $0 dollar businesses help NZ?

Far more of our recession is related to a recession that started in the states, actually I think NZ has held up tremendously well compared to many other countries, perhaps because of the heavy investment in domestic property - which doesn't go broke and put people out of work.

Please stop regurgitating the petty jealousies of others and think for yourself.

[MisterD]

I've always said an Anderton/Jones leadership will blow Kkey and the Nats off the planet. Problem is not many in Labour see this and Labour does have a history of giving away elections.

Skyryder

Anderton and Five Chins? Sounds like a right-winger's wet dream...Kelvin Davis would worry me as a front man for the Union movement but neither of those names do.

Labour also has a history of buying elections...

[mashman]

Anderton and Five Chins? Sounds like a right-winger's wet dream...Kelvin Davis would worry me as a front man for the Union movement but neither of those names do.

Labour also has a history of buying elections...

and the "right wing" has a history of killing off unions... wonder how hard it is for Labour to buy elections... I don't vote, never have in my 21 years of being allowed to... I don't porescribe to anyones politics as they always seem half arsed and the opposite of what the opposition say... ergo no common ground, not for the people, they're all the same with slightly different agendas, nothing changes, nothing gets better...

[Pascal]

in order to actually acheive this for everyone they would need to drop the income tax brackets far enough to offset the 2.5% increase in GST, therefore negating the use of the rise, and obsoleting any additional funds that may be used for increased benefits.

So let's read that correctly. The government is aiming at changing WHERE the tax take comes from. What is the benefit here? It's simple really.

You are no longer punished for working harder and improving yourself and your family's income.
You are punished for spending more.

So what do you do? Upskill. Earn more. More money in hand. More savings. A better retirement. More ability to have a holiday. And more incentive to reduce needless consumption. The choice and the benefit will be up to each individual. If you're one of those that needs a new mobile phone / iPod every three months yeah, you're fucked. If you're sensible and start considering your financial future you're in a way better position.

[Skyryder]

Anderton and Five Chins? Sounds like a right-winger's wet dream...Kelvin Davis would worry me as a front man for the Union movement but neither of those names do.

Labour also has a history of buying elections...


Keys tax package at the last election was just that. Buying votes. He4 also knew that the country could not afford them.

Theother interesting thing than many have no noticed is that when Anderton started weighing in on Westpac and their tax evasion Key shut up. I have it on good authority that Key was advised to back off with Anderton on this issue.

On the Sharples and his co leader.................neither can come close to taking on Shane Jones and they know it. Actually Jones could take on all three.............with ease. There is still a lot of disquet within the Maori Party..............not too mention maori in general over the direction that the Maori Party is heading. The split will come when some will want to go back to Labour. When that will happen is anybodys guess...............but happen it will.


Skyryder

[Pascal]

On the Sharples and his co leader.................neither can come close to taking on Shane Jones and they know it. Actually Jones could take on all three.............with ease. There is still a lot of disquet within the Maori Party..............not too mention maori in general over the direction that the Maori Party is heading. The split will come when some will want to go back to Labour. When that will happen is anybodys guess...............but happen it will.

ORLY (http://curiablog.wordpress.com/2010/02/01/te-karere-digipoll-january-2010/)?

/10chars

[The Stranger]

Keys tax package at the last election was just that. Buying votes.

Lets face it, he couldn't beat the system used so effectively by herr klark and swallowed by the gullible fools (women, maori, students, fags, grey power and skyryder) for so long that he had to join it.

[mashman]

Lets face it, he couldn't beat the system used so effectively by herr klark and swallowed by the gullible fools (women, maori, students, fags, grey power and skyryder) for so long that he had to join it.

if ya can't be 'em... buy the votes of the business world (15% GST would sound nice to me if i was selling stuff)!!!

[The Stranger]

if ya can't be 'em... buy the votes of the business world (15% GST would sound nice to me if i was selling stuff)!!!

Ok, this is likely a piss take, but on the extremely remote chance that anyone really is stupid enough you actually believe what you wrote, I'll give you the benefit of the doubt this once.
You do realise that the govt takes that 15% don't you. The clue is that it's called a Goods and Services Tax. You will note it's not called GSP.
So it (the GST increase) puts the price of goods and services up thus reducing people's ability to afford goods and services.

[Ixion]

Business has to fund the extra cash flow for the increase too. Not too major unless you're a machinery importer or car dealer .

[Mully]

Business has to fund the extra cash flow for the increase too. Not too major unless you're a machinery importer or car dealer .

Mmm, that's very true.

2.5% extra could be an issue for them to carry. Particularly car dealers holding stock.

[MisterD]

Keys tax package at the last election was just that. Buying votes. He4 also knew that the country could not afford them.

Buyiing votes by letting people keep their own money...gotta love that McCarten-esque spin. It's the spend, spend, spend, policies of Clark & Cullen that the country can't afford and that JK hasbeen scared to touch.

[p.dath]

Ah, do you own a business, shares or a rental property?

I've owned all three, but at the moment I'm sitting out of the share market and the rental market.


You do realise that the profit from buying shares and selling them 10yrs later is not taxable either.
Or your mom and pop business either.

You are correct. I was wrong. Only trading is a taxable activity, and if you sit on something for 10 years you would be regarded as an investor.


35% of our housing stock is rental. Who's going to supply the housing for the me now generation?
As I've previously noted, you take away the investor's return on investment, you know where they'll be seeking to recover it don't you? That's right, from those that can least afford it.

As demand increases and supply remains static prices will naturaly rise. As prices rise, supply will increase until equilibrium is reached again. We have an under utilised building sector, so adding supply would be particularly easy at the moment if the demand existed ...


It's not the 0% interest capital gains tax that attracts people into the market, this is available to business and share owners too, it's the ease with which you can borrow (among other things)
Can you borrow 100% to fund a business? Could you afford to? The banks know damn well that business failure rates are HUGE, this is reflected in their lending.

I agree about the ease of borrowing. However the "rules" for rental property borrowing have somewhat changed in the current climate. I think less people will be getting 100% equity loans approved at the moment for residential property. Of course, if you have other equity to offer as security you can still achieve 100% finance on the equity in a single property.


Mum and pop can go out and get a rental or 2 with $0 deposit easy enough with minimal effort, low risk and a fraction of the compliance costs of running a business.
How many shares or businesses could they purchase with $0 dollars? How would these $0 dollar businesses help NZ?

I read a book late last year where Brad Sugars talks about one of his most profitable activities - where he buys businesses for nothing down, and takes over the debt (such as the remainder of a lease for a shop). He targets business owners who have had enough of the stress and just want to quit. Then he fixes up the business and sells it 3 to 12 months later.


Far more of our recession is related to a recession that started in the states, actually I think NZ has held up tremendously well compared to many other countries, perhaps because of the heavy investment in domestic property - which doesn't go broke and put people out of work.

I agree that a lot of what NZ has felt is due to foreign entities. I disagree that our residential property market has softened the blow. A strong export lead recovery which is created by businesses would have put NZ in a far better position.


Please stop regurgitating the petty jealousies of others and think for yourself.

Ouch. Always with the personal attacks.

Are you taking RRRS in March? I would very much like to meet you in person. :)

[mashman]

Ok, this is likely a piss take, but on the extremely remote chance that anyone really is stupid enough you actually believe what you wrote, I'll give you the benefit of the doubt this once.
You do realise that the govt takes that 15% don't you. The clue is that it's called a Goods and Services Tax. You will note it's not called GSP.
So it (the GST increase) puts the price of goods and services up thus reducing people's ability to afford goods and services.

the first bit was kinda tongue in cheek.

I thought you could claim GST back? Put that in with the knowledge that there are likely to be personal tax cuts also. People will go out and spend it. Call them what you like... but if there's extra cash in the pockets of some people, they will go and buy things. Goods prices are over-inflated anyway people will pay the same price, but they'll be shifting more units. I'm just saying it's a possibility. whether i believe it or not is neither hear nor there. I'm just guessing because i don't know. But if i was in business, i'd be rubbing my hands around about now in anticipation... national, you have my vote. Economy stimulated blah blah blah...

[p.dath]

Business has to fund the extra cash flow for the increase too. Not too major unless you're a machinery importer or car dealer .

Generally a business should be selling more than they buy, so should be collecting more GST than they pay, so only need to pay the surplus to the Government.

[bogan]

Buyiing votes by letting people keep their own money...gotta love that McCarten-esque spin. It's the spend, spend, spend, policies of Clark & Cullen that the country can't afford and that JK hasbeen scared to touch.

Think he meant buying votes by making promises that he knew couldnt be kept, or at least would be detremental to NZ'rs to keep. TBH the govt should lead by example, how bout trimming thier massive wages down a bit, say to 80k a year, If you cant live on that then get fucked, hell if a party wanted to buy my vote that policy would probably do it!

[Ixion]

Generally a business should be selling more than they buy, so should be collecting more GST than they pay, so only need to pay the surplus to the Government.

Yes, but they've often got to pay the GST on purchases to the government, before they have sold the goods and collect the input GST (more applicable to capital goods, not a corner shop). So they have to fund the GST content in between. Funding 12.5% is easier than funding 15%.

[Mully]

Generally a business should be selling more than they buy, so should be collecting more GST than they pay, so only need to pay the surplus to the Government.

True - but it's a cashflow issue if they're importing (unless they have a NZ Customs' 20th of following account, they have to pay GST on importation). Particularly with high-value stuff.

EDIT: Damn you Ixion with your fast typing.


TBH the govt should lead by example, how bout trimming thier massive wages down a bit, say to 80k a year, If you cant live on that then get fucked, hell if a party wanted to buy my vote that policy would probably do it!

I've thought for a while that all politicians should be paid the "average" wage (assesed annually) - betchya that would get the economy moving and the average wage increased quick-smart.

[p.dath]

I've thought for a while that all politicians should be paid the "average" wage (assesed annually) - betchya that would get the economy moving and the average wage increased quick-smart.

Betcha that would mean lots of talented people with experience wouldn't put their hand up to work in Government. Better to take an easier higher paid job in the private sector.

I would not want the job of being a politician. No matter what you do someone is going to be pouring scorn on you. The media always want to hang you out to dry. And there is always someone wanting your job.
What a shit package.

[Mully]

Betcha that would mean lots of talented people with experience wouldn't put their hand up to work in Government. Better to take an easier higher paid job in the private sector.

I would not want the job of being a politician. No matter what you do someone is going to be pouring scorn on you. The media always want to hang you out to dry. And there is always someone wanting your job.
What a shit package.

Yeah, that's true.

I've always thought I'd prefer the job of an MP (preferably list) rather than a Minister. Rather be an unknown MP than an attention seeking minister.

[The Stranger]

I've owned all three, but at the moment I'm sitting out of the share market and the rental market.

You are correct. I was wrong. Only trading is a taxable activity, and if you sit on something for 10 years you would be regarded as an investor.

Surprising how quickly you forget then isn't it? Very surprising i would have thought given your profession.


As demand increases and supply remains static prices will naturaly rise. As prices rise, supply will increase until equilibrium is reached again. We have an under utilised building sector, so adding supply would be particularly easy at the moment if the demand existed ...

Why will demand increase. Unless you anticipate population increases for some reason at the same time perhaps. I'm simply talking about return on investment. Landlords will seek to recover the "loss" from tenants.

I agree about the ease of borrowing. However the "rules" for rental property borrowing have somewhat changed in the current climate. I think less people will be getting 100% equity loans approved at the moment for residential property. Of course, if you have other equity to offer as security you can still achieve 100% finance on the equity in a single property.

Hence my reference to mum and pop, who frequently have at least some equity in their own home.



I read a book late last year where Brad Sugars talks about one of his most profitable activities - where he buys businesses for nothing down, and takes over the debt (such as the remainder of a lease for a shop). He targets business owners who have had enough of the stress and just want to quit. Then he fixes up the business and sells it 3 to 12 months later.

So what? There is money to be made in any industry, if you have the right stuff etc for that industry. I guess the fact that many don't is a good reason why more don't do this, however I fail to see what good will come of pushing people into an area where they lack expertise, confidence or experience. Business failures are frequent enough already thanks.
America comes out with some pretty cool innovation. There are those with so much money they are prepared to take a punt on a project, stump up a few mil on a wing and a prayer (amazon.com anyone?) Many of these projects fail, a few succeed. Hence we see a lot of progress come out of America. We can't replace these people with mum and pop, they are ill equipped to handle it.


I agree that a lot of what NZ has felt is due to foreign entities. I disagree that our residential property market has softened the blow. A strong export lead recovery which is created by businesses would have put NZ in a far better position.

A strong export led recovery requires markets to sell into. Hello, the markets dried up, there is a global recession you realise.

Ouch. Always with the personal attacks.

FFS harden up - and think before you post. Even your replies are other peoples thoughts regurgitated, come on man, give me an original thought.

Are you taking RRRS in March? I would very much like to meet you in person. :)

At this point I shall attend RRRS in March. I'm sure we'll meet. Given the circumstances I will of course be on my best behaviour as my role changes somewhat as I will be working for you.
That said, silly comments etc will still be met with some disdain.

[p.dath]

At this point I shall attend RRRS in March. I'm sure we'll meet. Given the circumstances I will of course be on my best behaviour as my role changes somewhat as I will be working for you.
That said, silly comments etc will still be met with some disdain.

I shall be carefull to listen.

[The Stranger]

the first bit was kinda tongue in cheek.

I thought you could claim GST back? Put that in with the knowledge that there are likely to be personal tax cuts also. People will go out and spend it. Call them what you like... but if there's extra cash in the pockets of some people, they will go and buy things. Goods prices are over-inflated anyway people will pay the same price, but they'll be shifting more units. I'm just saying it's a possibility. whether i believe it or not is neither hear nor there. I'm just guessing because i don't know. But if i was in business, i'd be rubbing my hands around about now in anticipation... national, you have my vote. Economy stimulated blah blah blah...



Generally a business should be selling more than they buy, so should be collecting more GST than they pay, so only need to pay the surplus to the Government.

Ok, to keep it simple, regardless of claiming back some and paying some, you only pay the GST on the portion of value you add or the margin you add. You DON"T make anything on the GST. Nada, nothing.
Do you really think that the IRD is in the business of giving money away? Take you meds!

Re the cash flow issue. yes it can be somewhat positive, however for the most part you can forget it. No business is being paid by the IRD to collect tax for them. It takes time and money and there are compliance costs.

Now sure, there are exceptions to all of this, there is to any bloody thing, but by and large that's the way it works!

[Winston001]

NZ has got a fairly large disparity between rich and poor.



If anything the government should be aiming at least not to widen this gap. Putting some taxes into place to reduce property speculation would be a good start...

Who are these rich people that are often referred to? I don't know them. Certainly I know people who have assets but not much cash or income. I know people with good incomes but don't think of them as rich.

3% of New Zealanders earn over $100,000. This 3% pays 27% of the total tax take. That fact alone makes it very difficult to say the "rich" aren't contributing to our society in a major way.

Check this out http://www.treasury.govt.nz/budget/2007/taxpayers/01.htm

As for property speculation, it leaves me cold too. However the Australians have Capital Gains Tax, Land Tax, and high Stamp Duty. In spite of all of those barriers the Aussie property market continues to leap ahead. Property speculation isn't halted.

[Virago]

The misconceptions around GST astound me.

Businesses do not benefit from (or suffer loss from) GST. Businesses are just unpaid tax collectors. They collect the GST charged on their sales, and pass it on to the government.

Sure, businesses claim back the GST on their material costs (i.e. costs that have a GST cost content). Without that, the GST would compound on each transaction, becoming GST on GST on GST ad nauseum.

Take a very simple case:
Someone makes an article and sells it to a wholesaler for $100 plus GST ($112.50). Assuming they have no GST costs to claim back, the manufacturer pays the $12.50 of GST to IRD.

The wholesaler sells the item to a retailer for $150 plus GST ($168.75). Wholesaler owes the $18.75 GST to the government, but can claim back the $12.50 GST already paid, so pays the balance of $6.25 GST to IRD.

The retailer sells the item to Joe Public for $200 plus GST ($225.00). Retailer owes the $25.00 GST to the government, but can claim back the $18.75 GST already paid, so pays the balance of $6.25 GST to IRD.

At the end of the chain, Joe Public has paid $25.00 of GST on his purchase. That $25.00 was paid by the manufacture ($12.50), wholesaler ($6.25), and retailer ($6.25) - total of $25.00.

The IRD have their $25.00. The businesses have gained (and lost) nothing - aside from the cost of processing the bloody GST returns...

[The Stranger]

The misconceptions around GST astound me.


Really?
How long have you been on KB noob?

[p.dath]

FFS harden up - and think before you post. Even your replies are other peoples thoughts regurgitated, come on man, give me an original thought.

Its funny how the thoughts of many with the same beliefs sound the same. Sometimes they even form the largest minority, and then we call it Government. :lol:

[The Stranger]

Its funny how the thoughts of many with the same beliefs sound the same. Sometimes they even form the largest minority, and then we call it Government. :lol:

Took you a while. I'll give you 7/10 for originality and 3/10 for content. Still it's a start.
So how did feel? Empowering?

[mashman]

Ok, to keep it simple, regardless of claiming back some and paying some, you only pay the GST on the portion of value you add or the margin you add. You DON"T make anything on the GST. Nada, nothing.
Do you really think that the IRD is in the business of giving money away? Take you meds!

So you don't take the total GST of sales/services and remove total GST purchases/costs and the resultant GST is paid/refunded by the government? Same asVirago's example... Sorry, only been here 3 years and haven't read everything yet! happy to be educated if i'm missing something. I was saying, however, with the currently inflated prices, businesses could take the 2.5% hit without sending it to the end user. and people getting an income tax cut will go out and spend it.

[p.dath]

So you don't take the total GST of sales/services and remove total GST purchases/costs and the resultant GST is paid/refunded by the government?

This is effectively what he said. The difference is effectively the margin or mark up.


I was saying, however, with the currently inflated prices, businesses could take the 2.5% hit without sending it to the end user. and people getting an income tax cut will go out and spend it.

I can really see business's wanting to take a reduction in income following a recession. How about they just lay people off until they recover the loss? I'm being sarcastic. :)

The GST is a Government tax, not an expense imposed by the business. Businesses will be charging customers at the rate prescribed by the Government.

[The Stranger]

So you don't take the total GST of sales/services and remove total GST purchases/costs and the resultant GST is paid/refunded by the government? Same asVirago's example... Sorry, only been here 3 years and haven't read everything yet! happy to be educated if i'm missing something. I was saying, however, with the currently inflated prices, businesses could take the 2.5% hit without sending it to the end user. and people getting an income tax cut will go out and spend it.

Look, I know everyone accuses me of getting personal.
Hey, sure, I like to add that personal touch to the services I provide.
But I got to ask, why the fuck do you comment authoritatively on shit you know fuck all about? You have been in the country for 3 years, ok, you can't be expected to know everything about how everything works over here can you. So by all means ask.
But for fuck sake, don't go saying shit as if you know what the fuck you are talking about when clearly you don't.

Now to be sure, I can dig the post I quoted is you is seeking clarification, and our esteemed colleague p.dath has clarified. But I am referring to your earlier posts.

Ok, scratch that, no need to reply. I just noticed your user title and note that you are a self confessed idiot. That pretty much explains it.

[avgas]

http://upload.wikimedia.org/wikipedia/commons/7/7a/Guy_Fawkes.jpg
I'd vote for him and no one else

[MikeL]

Bringing the discussion back to the topic...
There's no doubt that a 2.5% rise in GST will affect different groups in different ways. Vague assurances about fairness and equity conceal the brutal fact that any economic system has winners and losers, and that any changes to taxation and social benefit policies merely alter the variables in a zero-sum equation. Shuffling the deck-chairs on the Titanic doesn't change the total number of chairs - it's just that some now get a little more sun or a little less wind. Politics being the art of the possible, and the possible always equating to what will piss off the smallest number of important voters (the unimportant ones being those who would always vote for the other side anyway), it is not surprising that in the reshuffling of the deck chairs the first-class passengers will always be advantaged.
Now here's a radical thought: how about introducing differential GST rates? Basic foods at 0%, everything else at 15%. And before you all rise up in a chorus of horrified protests, trotting out the usual arguments about complexity and compliance costs, just stop and think about the following:
1. Differential rates are still used in the VAT or GST systems of many overseas countries. Obviously the trade-off between complexity/compliance costs and social equity is acceptable in these countries.
2. The efficiency of a single-rated GST is undeniable; but efficiency is an accounting concept whose connexion with fairness and equity (moral concepts) is at best tenuous. We worship efficiency almost as if it were an end, not a means, and in doing so we lose sight of the end.
3. When GST was introduced much publicity was given to the simplicity of the system - the single rate of 10% was easy to calculate and there would be no exemptions. Of course 10% was soon raised to 12.5% and the only people who complained were those whose calculator batteries were flat. From an accountant's point of view the numerical rate is immaterial. Nobody works it out with pencil and paper. More insidiously, this whole "simple, straightforward, easy" argument was used to sell the tax to the public, with the posssibility of differential rates discarded virtually from the start, effectively stifling debate on the topic. There are sound social reasons why basic food items should be zero-rated, and the difficulties involved in determining which rate to apply for particular products were deliberately exaggerated because the mindset of those involved in the introduction of GST was firmly set on the great goal of efficiency.
4. Raising GST will require substantial tinkering with social welfare policies. There will be complexity/compliance costs here but these will be accepted as necessary - no one will complain about inefficiency here.

[Mully]

Now here's a radical thought: how about introducing differential GST rates? Basic foods at 0%, everything else at 15%.

I agree with this.

I think Australia made it too complicated when they tried differential rates - but the idea has merit.

It's pretty hard for anyone to complain (with a straight face) if fruit and veg are GST exempt and McDonalds is 15%

[Mully]

http://www.stuff.co.nz/sunday-star-times/news/152992


Statistics NZ figures collated for the Sunday Star-Times show the government got just under $51 million in GST revenue on fruit and veges in the year to June

Presumably, that's just fresh F&V - dunno.

[Pascal]

2. The efficiency of a single-rated GST is undeniable; but efficiency is an accounting concept whose connexion with fairness and equity (moral concepts) is at best tenuous. We worship efficiency almost as if it were an end, not a means, and in doing so we lose sight of the end.

We're also dealing with a computerised world. Efficiency is mostly only required at a developer level for that.

[The Stranger]

Basic foods at 0%, everything else at 15%.
Is water basic food? - one would assume so.
So what about bottled water? - surely as not everyone has access to safe town supply.
So how about say evian water? - it is water after all.
What if a product is substantially water, but include gurana (sp), caffeine, sugar and bubbles?
Is milk basic food?
How about soy milk or rice milk (although they contain no milk as such)?
Chocolate or banana milk? after all they are substantially milk.
What about a milkshake?

[p.dath]

Please no differential GST! It is confusing and difficult to administer in Australia.

Just like with company, trust and top income brackets - as soon as you introduce a differential you introduce financial motive for people to find loopholes and exploit it.

When you keep it simple with the same rate you remove that motive. It's simple to work out. It's almost impossible to avoid. It targets everyone evenly.

[davereid]

It's pretty hard for anyone to complain (with a straight face) if fruit and veg are GST exempt and McDonalds is 15%

Hmm not sure I agree with you there. Why would you tax McDonalds differently to other food items ?

A Big Mac is bread, meat, salad, mayo... why does that justify a higher rate of GST ?

Is your assumption based on fat content ? Then where would you rate an avocado ?

[Tank]

Hmm not sure I agree with you there. Why would you tax McDonalds differently to other food items ?

A Big Mac is bread, meat, salad, mayo... why does that justify a higher rate of GST ?

Is your assumption based on fat content ? Then where would you rate an avocado ?

and whats a potato chip?

Seriously - this has been a huge argument in the UK over Pringles.

They said that because they were only 42% potato that they were not chips - thus not subject to VAT - tax man disagreed.

Outcome a 100 million pound back payment on taxes and then 20 million pound a year moving forward.

http://news.bbc.co.uk/2/hi/8060204.stm

[Virago]

I agree that a differential rate creates too many loopholes and inequities.

When the UK introduced VAT, basic food items were exempt, takeaway foods were all taxed. The chippy shops were avoiding the tax by selling "a dollop of tomato sauce for a quid, with fish and chips thrown in for free".

[MikeL]

Is water basic food? - one would assume so.
So what about bottled water? - surely as not everyone has access to safe town supply.
So how about say evian water? - it is water after all.
Bottled water is an abomination. We got along just fine without it in the past. It is an unnecessary product and should be taxed at 15%.
What if a product is substantially water, but include gurana (sp), caffeine, sugar and bubbles? Not a basic food.
Is milk basic food? Yes.
How about soy milk or rice milk (although they contain no milk as such)? No, but it wouldn't be a big deal if they were included.
Chocolate or banana milk? after all they are substantially milk. Obviously not a basic product.
What about a milkshake? No.

You may well disagree with my interpretation, but that's no reason to put the whole idea into the too hard basket. The fact is that a definition of basic food could be arrived at that would work well enough in practice and not cause too many grumbles. I personally would simply define it as fruit, vegetables, milk, meat, poultry and fish in their raw, unprocessed state, plus plain bread. I know that all the smart arses will trot out their standard questions ("if bread is zero-rated, what about croissants?" "If fish is exempt, what about crayfish?"). I maintain that if the political will is there, solutions can be found, and I suggest that the insistence on simplicity and efficiency in this case is the victory of convenience for the accountant over the needs of the people.

[Skyryder]

Nothing too hard on this. 'If you can eat it or drink it...................exempt it.' Now all I gota do is sell the slogan to Labour and they will shoe in.


Skyryder

[Mully]

Hmm not sure I agree with you there. Why would you tax McDonalds differently to other food items ?

A Big Mac is bread, meat, salad, mayo... why does that justify a higher rate of GST ?

Is your assumption based on fat content ? Then where would you rate an avocado ?

Well, no - a Big Mac (for example, have you noticed how everyone goes McDs?) is processed

My thoughts were:
Fresh fruit
Fresh Veg
Fresh Meat/Fish
Fresh milk
Maybe fresh bread

GST exempt - everything else 15%.

Just as a starting point.

I wonder if it's possible to do a cost/benefit analysis on that....

[MisterD]

Well, no - a Big Mac (for example, have you noticed how everyone goes McDs?) is processed

My thoughts were:
Fresh fruit
Fresh Veg
Fresh Meat/Fish
Fresh milk
Maybe fresh bread

GST exempt - everything else 15%.

Just as a starting point.

I wonder if it's possible to do a cost/benefit analysis on that....

Yeah but "calci-trim" and whatever else...are they fresh milk? Because they can't actually be called milk because they're processed....

[Mully]

Yeah but "calci-trim" and whatever else...are they fresh milk? Because they can't actually be called milk because they're processed....

What is that, fortified?

I'm just saying that Australia made it too complicated - if this ever became a potential option, you'd want to make it as simple as possible.

[Winston001]

None of us like any tax but the one thing that can be said when GST was introduced in NZ, the govt got it right. No exemptions.

The moment you introduce exceptions to any rule, people start looking for ways out. That leads to arguments, prosecutions, court cases and a whole lot of misery. The Pringles case is a good illustration. None of which helps anybody in the long term.

GST in NZ (as compared with other nations) is very simple - and it works.

[nallac]

Well, no - a Big Mac (for example, have you noticed how everyone goes McDs?) is processed

My thoughts were:
Fresh fruit
Fresh Veg
Fresh Meat/Fish
Fresh milk
Maybe fresh bread

GST exempt - everything else 15%.

Just as a starting point.




I'm just saying that Australia made it too complicated - if this ever became a potential option, you'd want to make it as simple as possible.

While it is a bloody good Idea, it would be a nightmare to bring in to practise.

what about cereals..
tinned food ,fruit,tuna etc..
Pastas..
the above mentioned Rice milk for lactose intolerent...

just too much to go thru...
Either all or none.....

[Mully]

While it is a bloody good Idea, it would be a nightmare to bring in to practise.

what about cereals..
tinned food ,fruit,tuna etc..
Pastas..
the above mentioned Rice milk for lactose intolerent...

just too much to go thru...
Either all or none.....

Yeah - which is probably why they've never bothered trying.

[The Stranger]

Bottled water is an abomination. We got along just fine without it in the past. It is an unnecessary product and should be taxed at 15%.

Thank you for demonstrating in such a clear an unequivocal manner exactly why your idea sucks.

Just back from buying my bottled water for the weekend.
we could boil it, but I'm not so sure that would be any better environmentally anyway.
Sure we used to get along fine in the past, however whilst you were stuck in the past mother nature kept right on trucking and gave us the wonderful gift of giardia. Try it some time, I'm sure you'll enjoy it.

Anyway, just look at the comments in this thread then imagine how your idea is going to go down. Personally I have no doubt Roger Douglas got it right in this case.

[MikeL]

Thank you for demonstrating in such a clear an unequivocal manner exactly why your idea sucks.

Just back from buying my bottled water for the weekend.
we could boil it, but I'm not so sure that would be any better environmentally anyway.
Sure we used to get along fine in the past, however whilst you were stuck in the past mother nature kept right on trucking and gave us the wonderful gift of giardia. Try it some time, I'm sure you'll enjoy it.

Anyway, just look at the comments in this thread then imagine how your idea is going to go down. Personally I have no doubt Roger Douglas got it right in this case.

You fail to grasp my point. Nobody would stop you buying bottled water - you would just have to pay GST on it, just as you would on pate de foie gras and McDonalds and other non-essential products.
I presume you are heading off to the wilderness, and bottled water is no doubt a necessity. But you don't have to buy it - why not fill up some containers from your tap before you go??

The notion that bought water is a necessity nowadays is the result of relentless clever advertising, just as the notion that differential GST rates is too complex is the result of insidious publicity by those who place business "efficiency" above the interests of the common people. If more people started to question the messages that they receive, perhaps they would start to live their own lives, not those pre-programmed for them by the wealthy and powerful.

[Skyryder]

You fail to grasp my point. Nobody would stop you buying bottled water - you would just have to pay GST on it, just as you would on pate de foie gras and McDonalds and other non-essential products.
I presume you are heading off to the wilderness, and bottled water is no doubt a necessity. But you don't have to buy it - why not fill up some containers from your tap before you go??

The notion that bought water is a necessity nowadays is the result of relentless clever advertising, just as the notion that differential GST rates is too complex is the result of insidious publicity by those who place business "efficiency" above the interests of the common people. If more people started to question the messages that they receive, perhaps they would start to live their own lives, not those pre-programmed for them by the wealthy and powerful.

You do have a way of saying things just right.


Skyryder

[Oscar]

The notion that bought water is a necessity nowadays is the result of relentless clever advertising, just as the notion that differential GST rates is too complex is the result of insidious publicity by those who place business "efficiency" above the interests of the common people. If more people started to question the messages that they receive, perhaps they would start to live their own lives, not those pre-programmed for them by the wealthy and powerful.


This is an interesting concept - the notion that a taste for bottled water is a conspiracy against the common man and that we're being brain washed into drinking it. Maybe they just like the taste.

Perhaps you should have your own water tested...

[The Stranger]

I presume you are heading off to the wilderness, and bottled water is no doubt a necessity. But you don't have to buy it - why not fill up some containers from your tap before you go??

The notion that bought water is a necessity nowadays is the result of relentless clever advertising, just as the notion that differential GST rates is too complex is the result of insidious publicity by those who place business "efficiency" above the interests of the common people. If more people started to question the messages that they receive, perhaps they would start to live their own lives, not those pre-programmed for them by the wealthy and powerful.

So how do you get your water? Not from the town supply I hope. The notion that town supply water is a necessity nowadays is the result of laziness. Why is one method of collection and distribution more deserving of GST than another? Water is water, pure and simple.

What are you proposing the good or service is that you are placing GST on, if it be water or distribution it should be consistent.

Your rant over my conditioning is total codswallop. I'm going shopping anyway, I can do this at ten oclock at night instead of taking time off work for a trip to a camping store or wherever to locate a suitable water container (which is going to cost me anyway). You need to stop getting all emotional about bottled water. It's only water in a bottle for fuck sake, it wont hurt you. Look, I'll even see if I can get someone down that way to hold your hand whilst you try some if you like.

[Pascal]

So how do you get your water? Not from the town supply I hope. The notion that town supply water is a necessity nowadays is the result of laziness. Why is one method of collection and distribution more deserving of GST than another? Water is water, pure and simple.

What are you proposing the good or service is that you are placing GST on, if it be water or distribution it should be consistent.

Your rant over my conditioning is total codswallop. I'm going shopping anyway, I can do this at ten oclock at night instead of taking time off work for a trip to a camping store or wherever to locate a suitable water container (which is going to cost me anyway). You need to stop getting all emotional about bottled water. It's only water in a bottle for fuck sake, it wont hurt you. Look, I'll even see if I can get someone down that way to hold your hand whilst you try some if you like.

Exactly. Why should anybody get to decide what you pay for your water? If you want to pay almost the same for your water as you do for your petrol, that is your choice. It should attract the same taxation rate, no matter where it is sourced from or how much it costs.

But I still like the idea of having "essential" food items, staples effectively, being GST free. Water, bread, rice, fresh fruit and vegetables, milk, fresh meat, fish, fowl and so forth. Leave processed and deli foods off the list, but leave specialist foods like soy milk, etc. on. I'm pretty sure if somebody sat down and spent some time on it they could make a list of what would be essential items. I understand it is difficult to manage though and that the more rules you put around something the more complex and confusing it becomes and the more loopholes you create.

So, guess I'm saying - like the idea, but after seeing some comments don't think it is entirely feasible.

[p.dath]

But I still like the idea of having "essential" food items, staples effectively, being GST free. Water, bread, rice, fresh fruit and vegetables, milk, fresh meat, fish, fowl and so forth. Leave processed and deli foods off the list, but leave specialist foods like soy milk, etc. on. I'm pretty sure if somebody sat down and spent some time on it they could make a list of what would be essential items. I understand it is difficult to manage though and that the more rules you put around something the more complex and confusing it becomes and the more loopholes you create.

So, guess I'm saying - like the idea, but after seeing some comments don't think it is entirely feasible.

Paying everyone a universal benefit would be easier than discounting GST on specific product types ...

[Pascal]

Paying everyone a universal benefit would be easier than discounting GST on specific product types ...

I'm not a big fan of paying people simply for them existing though. It would be nice if you could say $500 of expenses are GST free and leave it up to the invidual to spend that on food or beer and babes, but that would be ludicrously complex.

Nah, at the end of the day flat rate seems to be the simplest, most manageable solution.

[Oscar]

Paying everyone a universal benefit would be easier than discounting GST on specific product types ...

Like $35 a month for each child?
Family Benefit.

[Winston001]

The notion that bought water is a necessity nowadays is the result of relentless clever advertising, just as the notion that differential GST rates is too complex is the result of insidious publicity by those who place business "efficiency" above the interests of the common people.




But I still like the idea of having "essential" food items, staples effectively, being GST free. Water, bread, rice, fresh fruit and vegetables, milk, fresh meat, fish, fowl and so forth. Leave processed and deli foods off the list, but leave specialist foods like soy milk, etc. on. I'm pretty sure if somebody sat down and spent some time on it they could make a list of what would be essential items.


I don't buy bottled water being content with the stuff from the tap, but my children and everyone else seem to be happy consumers. Fair enough, I get to use their bottles. :D

As for GST exceptions, it sounds lovely. However if the combined legal minds of the Europeans and the British cannot come up with a fool-proof definition for exceptions, there is little chance NZ can do so. The Americans have the same problems with their state sales tax.

As for dealing with exceptions, I have prepared and filed many GST returns. These have required various adjustments eg. a percentage of mileage costs, staff food (you have to exclude your own food!) etc and I can say that if there were exceptions on top of that which I also had to factor in - I'd go spare. It always sounds easy when someone else has to do the job......

[MikeL]

So how do you get your water? Not from the town supply I hope. The notion that town supply water is a necessity nowadays is the result of laziness. Why is one method of collection and distribution more deserving of GST than another? Water is water, pure and simple. Because it's not simply a method of collection and distribution. A reticulated water supply is a public good as well as a private one: it is in the interests of the whole community that we should have a safe, reasonably priced water supply. Essentially it is a necessity. Bottled water is a discretionary item. You may think it a necessity (as the advertisers want you to do) but your grounds for believing are not based on objective arguments.



Your rant over my conditioning is total codswallop. I'm going shopping anyway, I can do this at ten oclock at night instead of taking time off work for a trip to a camping store or wherever to locate a suitable water container (which is going to cost me anyway). You need to stop getting all emotional about bottled water. It's only water in a bottle for fuck sake, it wont hurt you. Look, I'll even see if I can get someone down that way to hold your hand whilst you try some if you like. My description of bottled water as an "abomination" may conjure up pictures in your mind of someone jumping up and down, ranting and foaming at the mouth, but that's your over-active imagination. I think I'm being quite calm and rational. I am.

[MikeL]

This is an interesting concept - the notion that a taste for bottled water is a conspiracy against the common man
I think I would prefer to call it a triumph of marketing over common sense
and that we're being brain washed into drinking it. Maybe they just like the taste. Indeed. the techniques of persuasion used in the advertising industry have a lot in common with brainwashing.

Perhaps you should have your own water tested...
I don't need to. I'm fortunate to live in Onehunga, which has some of the best tap water in Auckland. But no matter where you live, the water here is of excellent quality compared to many overseas countries. I lived in Europe for several years, and in the south of France nobody drinks the tap water, because it is very hard and although safe, has an unpleasant taste. But if you take Auckland tap water, leave it to stand until the chlorine dissipates, then put it into a bottle, you will be unlikely to be able to distinguish it from bought bottled water. Carbonate it in a SodaStream and serve it in a Perrier bottle and you will fool almost everyone (except possibly the French...)

People who complain that they never have enough money and yet are willing to spend $2 on bottled water need to examine their priorities.

[The Stranger]

My description of bottled water as an "abomination" may conjure up pictures in your mind of someone jumping up and down, ranting and foaming at the mouth, but that's your over-active imagination. I think I'm being quite calm and rational. I am.

It may, I guess. Or it may simply be that you think that I think you may be "jumping up and down, ranting and foaming at the mouth" but that's just your over-active imagination. Dude, go have a drink, I think you're dehydrated and getting delusional - again.

[The Stranger]

People who complain that they never have enough money and yet are willing to spend $2 on bottled water need to examine their priorities.

Is anyone here complaining about insufficient funds whilst drinking $2.00 bottled water?
Perhaps their priorities are health related. If I'm out riding and feel myself becoming dehydrated I will happily spend $3.00 on a bottle of water at the gassy, it has the potential to save my life. Apparently that could save you all a couple of mil.

Oh hey, almost forgot. Due to any under seat storage being taken up with important things like power commanders etc I usually just biff half the bottle too - straight in the trash. Yep the marketing has me completely fucked.

[Pascal]

As for GST exceptions, it sounds lovely. However if the combined legal minds of the Europeans and the British cannot come up with a fool-proof definition for exceptions, there is little chance NZ can do so. The Americans have the same problems with their state sales tax.

Random curiosity here. But why did you stop quoting at the point where I said I think it's a nice idea but unfeasable?

[Clockwork]

Paying everyone a universal benefit would be easier than discounting GST on specific product types ...


Random curiosity here. But why did you stop quoting at the point where I said I think it's a nice idea but unfeasable?

Instead of a universal benifit why not allow everyone to earn the first $1,000 - $10,000 tax free. Does anyone know what the justification was for ending that or what arguments are used to prevent its return?

[The Stranger]

As for GST exceptions, it sounds lovely. However if the combined legal minds of the Europeans and the British cannot come up with a fool-proof definition for exceptions, there is little chance NZ can do so.

Yes, but they don't have MikeL now do they?

[davereid]

Instead of a universal benifit why not allow everyone to earn the first $1,000 - $10,000 tax free. Does anyone know what the justification was for ending that or what arguments are used to prevent its return?

I think the universal benefit was one of Gareth Morgans ideas.

He floated the concept of giving everyone a universal benefit of $10,000 ish a year which you get even if you are working.

The idea was that there would be no dole or sickness benefits. Not bad, as they are below this threshold anyway.

Other benefits like the DPB would be reduced by $10,000 PA.

Gareth showed that it would not be terribly expensive, as managing welfare gobbles up a massive percentage of its budget, and this would reduce that substantially.

The other advantage would be a $10,000 P.A. pay rise for all workers, which virtually overnight puts us on a footing with Australia.

Lots of things throw it off track though.

How do you deal with pensioners ? They are paid out of welfare, but many have a legitimate claim thats its their own money. (Superann was orginally taken out of wages separately, until it was flogged in the 80s.)

What if $10,000 isnt enough ? Can we stay hard, or will we operate a "dole top up office" unravelling the whole thing ?

Will it increase the gap between rich and poor ?

Plus, Gareth may now be the only person on the planet that thinks its warming up. !

[Clockwork]

Thanks for the reply. I'm unfamilier with the term universal benefit. In the UK this is/was called a "Personal Allowance" but I understood that such an allowance used to exist in NZ too and was ended in the 70's or 80's.

As I understand it, tax is deducted from the dole but not for Pensioners ie National Super is paid tax free. (Not yet been in either category) but by continuing to tax the dole but providing a such a personal allownace on "earned" income there could be your incentive to get out to work!

[Oscar]

People who complain that they never have enough money and yet are willing to spend $2 on bottled water need to examine their priorities.

Or booze, lotto, fags, soft drinks...where do you stop?

[MisterD]

The other advantage would be a $10,000 P.A. pay rise for all workers, which virtually overnight puts us on a footing with Australia.

Erm, how exactly do you calculate that? We currently pay (source (http://www.ird.govt.nz/how-to/taxrates-codes/itaxsalaryandwage-incometaxrates.html)) 12.5c in the $ on the first $14k of income. So if the first $10k becomes tax free then that's a pay rise of $1250 for every worker.

[davereid]

Erm, how exactly do you calculate that? We currently pay (source (http://www.ird.govt.nz/how-to/taxrates-codes/itaxsalaryandwage-incometaxrates.html)) 12.5c in the $ on the first $14k of income. So if the first $10k becomes tax free then that's a pay rise of $1250 for every worker.

Gareth Morgans proposal was to give everyone $10,000. P.A., not to remove tax on the $10,000.

So you would get $10,000 although you would pay tax on it. Depending on your marginal tax rate you would take home more or less of the $10k.

[Clockwork]

Gareth Morgans proposal was to give everyone $10,000. P.A., not to remove tax on the $10,000.

So you would get $10,000 although you would pay tax on it. Depending on your marginal tax rate you would take home more or less of the $10k.

Whooo, that's a whole other ball game! Where's the $10,000 supposed to come from?

[davereid]

Whooo, that's a whole other ball game! Where's the $10,000 supposed to come from?

From a 1.5% tax on capital stock, coupled with the second part of his idea, which was to reduce all income tax to a flat 25%. If you consider the idea that you get $10,000 just for being alive, you would not effectively pay any tax until you reached $40k.

[Clockwork]

*ducks*

Sorry, that one's gone straight over my head. I suspect the fine details of his plan are too many to effectively pass on in an internet forum such as this.

[MikeL]

Is anyone here complaining about insufficient funds whilst drinking $2.00 bottled water?
Perhaps their priorities are health related. If I'm out riding and feel myself becoming dehydrated I will happily spend $3.00 on a bottle of water at the gassy, it has the potential to save my life. Apparently that could save you all a couple of mil.

Oh hey, almost forgot. Due to any under seat storage being taken up with important things like power commanders etc I usually just biff half the bottle too - straight in the trash. Yep the marketing has me completely fucked.

Since we obviously have completely different perspectives on this (and no doubt other matters), we should agree to disagree, and both of us can happily go off riding with a clear conscience, you feeling smug that your half-consumed $3 bottle of bought water now thrown in the rubbish bin is helping to keep the wheels of commerce turning, me with a bottle of Onehunga tap water in my pack rack knowing that I have saved myself $3 and helped the environment in a small but satisfying way. Each to his own.

[p.dath]

I'm so enjoying myself at the moment. But now I have stopped laughing I can respond.

I spoke of the universal benefit more in jest that as a serious alternative.

But as has been mentioned, it has been noticed that social welfare is incredibly expensive to run. Some study found that it would be no more expensive than to just give everyone a benefit. Doesn't matter if you have a job or not, sick or not, etc. Everyone gets it. In return, the majority of benefits we have now would be scraped.
Suddenly we don't need all the people to process applications, review them, investigate them. There is no more benefit fraud. There is nothing to apply for.

[The Stranger]

Each to his own.

Thank you, I graciously accept your capitulation, that was exactly my point from the very start. To each his own, it's not up to you to decide which way is best or the most appropriate way to distribute, package or consume water, so don't try and engineer "your" result with selective taxation.

It's been a pleasure.

[Pascal]

Suddenly we don't need all the people to process applications, review them, investigate them. There is no more benefit fraud. There is nothing to apply for.

Yes ... but ... but ... what is that going to do to unemployment numbers? ;)

[p.dath]

Yes ... but ... but ... what is that going to do to unemployment numbers? ;)

Haha. What your comparing is the tax payer paying Government employees on a good income versus the cost of paying those same people the dole.

I know which one is going to be cheaper for the tax payer ...

[MisterD]

Gareth Morgans proposal was to give everyone $10,000. P.A., not to remove tax on the $10,000.


Are you sure? I thought the plan was a guaranteed minimum income of $10k pa. So if you're working you get your first $10k with no deductions and if you're not the state gives you $10k type of thing...

[Winston001]

Random curiosity here. But why did you stop quoting at the point where I said I think it's a nice idea but unfeasable?

Cos I'm a clot??!! :D

My apologies, I was focused on the point that GST exceptions don't work. Which you know.

[MikeL]

Returning to my point about differential rates of GST...
I happened to have dinner the other night with some Europeans (a French couple, an Italian and a Brit). Although they could see that a that single-rate GST is attractive from the accounting point of view, they said that there has been little or no debate in their countries about switching to a NZ-type system. When I asked them why, they said that it was almost universally accepted that the social advantages of their schemes outweighed the disadvantages.
Not only do they differentiate luxuries from necessities, but they use the system to further cultural and educational aspirations. So the French have a low GST rate on books, for example.
Their perspective is completely different from the opinion that prevails in NZ. If you analyse the reasons, it comes back to what I said initially: our system was engineered for the convenience of business by people in thrall to the great god Efficiency. If we smugly proclaim that we have the "best" GST system in the world, it merely shows that we have the mentality of accountants.

[Coldrider]

Returning to my point about differential rates of GST...
I happened to have dinner the other night with some Europeans (a French couple, an Italian and a Brit). Although they could see that a that single-rate GST is attractive from the accounting point of view, they said that there has been little or no debate in their countries about switching to a NZ-type system. When I asked them why, they said that it was almost universally accepted that the social advantages of their schemes outweighed the disadvantages.
Not only do they differentiate luxuries from necessities, but they use the system to further cultural and educational aspirations. So the French have a low GST rate on books, for example.
Their perspective is completely different from the opinion that prevails in NZ. If you analyse the reasons, it comes back to what I said initially: our system was engineered for the convenience of business by people in thrall to the great god Efficiency. If we smugly proclaim that we have the "best" GST system in the world, it merely shows that we have the mentality of accountants.So where is the mentality of Accountants ranked along side the mentality of the average New Zealander?

[Pascal]

If you analyse the reasons, it comes back to what I said initially: our system was engineered for the convenience of business by people in thrall to the great god Efficiency. If we smugly proclaim that we have the "best" GST system in the world, it merely shows that we have the mentality of accountants.

Or that we're a bit more libertarian in that our GST rate does not punish people for their choices?

[MikeL]

Or that we're a bit more libertarian in that our GST rate does not punish people for their choices?

An interesting choice of words. If everything is taxed at 15% except basic foods, the person who chooses to eat a McDonalds hamburger is being "punished" because he doesn't buy the raw ingredients and cook them himself at home? But if 15% is the rule, and the zero-rated basic foods are the exception, where does the idea of punishment come in? It's a reward for thrift for those on low incomes while the rest of us are no worse off.

If I choose to ride a BMW instead of my humble Honda will I be "punished" by having to pay a higher price?

I have the uncomfortable feeling that many people on this forum, contemplating a zero-rated bottle of milk and a magnum of Dom Perignon with 15% GST would only see the injustice of being "punished for their choice". How blind is that?

[davereid]

they said that it was almost universally accepted that the social advantages of their schemes outweighed the disadvantages.
Not only do they differentiate luxuries from necessities, but they use the system to further cultural and educational aspirations.

So some "official" is employed to decide whats a luxury and whats a necessity ? Whats cultural and whats not ?

God help us all..... wood for my deck will be taxed, but if I promise to make a marae it wont be.

[Coldrider]

Oh shall we feed the pleebes tonight?
Yes please, do open a bottle of Dom Perignon with Gst 15% darling.
Oh dear my fair Lady, this is tax deductible* though, and we claim the gst back.
Oh well, we shall just have to chuck out some crumbs.

* 50% entertainment tax

[Oscar]

Oh shall we feed the pleebes tonight?
Yes please, do open a bottle of Dom Perignon with Gst 15% darling.
Oh dear my fair Lady, this is tax deductible* though, and we claim the gst back.
Oh well, we shall just have to chuck out some crumbs.

* 50% entertainment tax

Unless he can show he was entertaining clients, there are no deductions available.

[Coldrider]

Unless he can show he was entertaining clients, there are no deductions available.And how many IRD inspectors are invited out to dinner?

[MikeL]

So some "official" is employed to decide whats a luxury and whats a necessity ? Whats cultural and whats not ?

God help us all..... wood for my deck will be taxed, but if I promise to make a marae it wont be.

Of course in our super-efficient economy we don't employ any "officials" to decide what's legal or illegal, what's a biosecurity risk or safe, who's a suitable immigrant, what's a deductible expense or not...?
What's the difference?

Interesting interpretation of the word "cultural", btw. The example I gave was books.

[Coldrider]

Speaking of entertainment, can someone tell are sex workers GST registered?

[Oscar]

And how many IRD inspectors are invited out to dinner?

He has to record the name of the person he is entertaining and the name of their company.
I wouldn't fuck with the IRD, they don't take prisoners...

[Coldrider]

He has to record the name of the person he is entertaining and the name of their company.
I wouldn't fuck with the IRD, they don't take prisoners...er OK, internal/external audits can be just as bad, but what was that post actually highlighting to the average tax payer?

Hint hint, the IRD lost a big court case this week.

[Oscar]

er OK, internal/external audits can be just as bad, but what was that post actually highlighting to the average tax payer?

Hint hint, the IRD lost a big court case this week.

What are you on about?

[Coldrider]

What are you on about?Wealthy people (earners) structure their income so they pay as least tax as possible. When a reasonable amount of tax is deducted people don't give a fuck.
When it becomes unfair and economic to restructure their finances they do.

[Coldrider]

If someone earns $26 K pa how much tax should they pay?
If someone earns $200K pa how much Tax should they pay?

[Oscar]

Wealthy people (earners) structure their income so they pay as least tax as possible. When a reasonable amount of tax is deducted people don't give a fuck.
When it becomes unfair and economic to restructure their finances they do.

So what?
Most of them didn't get rich by being stupid - why would they pay more tax than they are required to?
However what you were referring to earlier was illegal.

[p.dath]

Speaking of entertainment, can someone tell are sex workers GST registered?

Ask for a GST receipt. :lol:

[Coldrider]

So what?
Most of them didn't get rich by being stupid - why would they pay more tax than they are required to?
However what you were referring to earlier was illegal.What is illegal ? Are they a couple, clients, employees ?

[Oscar]

What is illegal ? Are they a couple, clients, employees ?

Your original post inferred that they were cheating.

[Coldrider]

Your original post inferred that they were cheating.The original post is sarcasim, there is not enough facts in the story for anything else.
It is tongue & cheek post for those quibbling about gst fairness when they are missing the greater picture.

[Winston001]

What are you on about?

Probably the Christchurch case where two surgeons structured themselves as working for a service company. Paid themselves a salary and the company billed for their work. The decision is being appealed by IRD.

However the reasons for the structure were to limit personal liability rather than avoid tax. Perfectly understandable and so far successful.

[Mully]

Probably the Christchurch case where two surgeons structured themselves as working for a service company. Paid themselves a salary and the company billed for their work. The decision is being appealed by IRD.

However the reasons for the structure were to limit personal liability rather than avoid tax. Perfectly understandable and so far successful.

That looks interesting - got any links to the story? Keen on reading that.

[Winston001]

[QUOTE=Mully;1129658103]That looks interesting - got any links to the story? Keen on reading that.[/QUOTE

Penny and Hooper v IRD. http://www.nbr.co.nz/article/ird-loses-landmark-tax-case-85909

[davereid]

Thats an interesting link. I was suprised to see that the IRD lost, particularly with regard to "market value" for the job being done.

Any time there is a big difference between company and personal tax rates, its human nature to leave the money in the low tax account.

Aligning company and personal tax rates would be the only effective way to stop this kind of thing.

I expect "working for families" is suffering the same fate, with high income earners paying them selves low wages and leaving the balance in the company, to ensure they qualify.

[Coldrider]

You are on to it Winston.

[Winston001]

Thats an interesting link. I was suprised to see that the IRD lost, particularly with regard to "market value" for the job being done.



Aligning company and personal tax rates would be the only effective way to stop this kind of thing.



The surgeons structure using a service company was set up in the 1990s when the tax rates were the same. It wasn't for the purpose of avoiding tax. Instead the surgeons aimed at reducing their personal liability if they were ever sued - unlikely but still possible under ACC. Tax rates changed and IRD took a dim view.

There is an earlier case of a dentist with a service company who paid himself $80,000pa. The Court decided the market rate was $120,000pa so he was done for avoiding tax. The two cases appear to be directly opposed and need to be read to understand the differences. Anyway the Court of Appeal will sort it out.

[Coldrider]

Comes down to the point of law the IRD are challenging.
The IRD cannot determine the business entity that must be used by an individual, sole proprieter or other.

[Mully]

Probably also comes down to "intent" (there's that word again) as well, I would think.

If the company was set up when the tax rates were the same, then the intent can't have been tax avoidance.

How does that work with IRD? I know if you intend making money, you should pay tax. If you set up your situation as a liability issue, but end up paying less tax as a consequence, what's the legal standpoint?

[Winston001]

There is a nice legal axiom somewhere, actually it might be American, but this will do:

In the words of Lord Tomlin, in the UK House of Lords (http://www.economicexpert.com/a/House:of:Lords.htm) case, IRC v. Duke of Westminster (1936) 19 TC 490, [1936] AC 1:
<dl><dd>Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.</dd></dl>
Our parliamentarians have recently corrupted the long understood meaning of tax avoidance. It is now unlawful in NZ. It used to be (and still is overseas) that avoidance was lawful and evasion was unlawful.

According to Denis Healey (http://www.economicexpert.com/a/Denis:Healey.htm), former UK Chancellor of the Exchequer (http://www.economicexpert.com/a/Chancellor:of:the:Exchequer.htm):
<dl><dd>The difference between tax avoidance and tax evasion is the thickness of a prison wall. </dd></dl>

[Ixion]

I have taken money out of term deposits (in which the interest pays 39% tax), and put it into those PIE things (where it pays 30% tax (I think - less, anyway).

I did this solely because it meant I paid less tax.

So, is that illegal tax aviodance. I have " ordered myaffairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be"

I am sure that I am safe (the banks even advertise the PIE things on that basis). But, strictly speaking .....

[Coldrider]

Probably also comes down to "intent" (there's that word again) as well, I would think.

If the company was set up when the tax rates were the same, then the intent can't have been tax avoidance.

How does that work with IRD? I know if you intend making money, you should pay tax. If you set up your situation as a liability issue, but end up paying less tax as a consequence, what's the legal standpoint?It is called 'Tax Planning". Taxation is given thorough consideration along with all other financial and non financial objectives and outcomes.

[Coldrider]

I have taken money out of term deposits (in which the interest pays 39% tax), and put it into those PIE things (where it pays 30% tax (I think - less, anyway).

I did this solely because it meant I paid less tax.

So, is that illegal tax aviodance. I have " ordered myaffairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be"

I am sure that I am safe (the banks even advertise the PIE things on that basis). But, strictly speaking .....You nominate the tax rate with your expected marginal rate, 19.5% or 30%. If you overestimete you get no refund.
The Government has enticed you into this form of investment, you have followed.
PIEs were created alongside Kiwisaver to create a balance between overseas and local investment tax treatment.