What's your take on tax cuts/GST increase?

[Clockwork]

IRD gets it money from the following

19% of gov't taxes come from GST.
43% from individual income taxes.
17% from corporate taxes.

so....
Corp rate dropped from 30% to 28%, -2%

If top personal rate -5%
Second top tranche -3%
Third top tranche -3.5%
Lowest tax rate -2.5%.

But GST went up 2.5%.


So you cut 43% of your revenue by say 4% (depending on how many people pay in each bracket)
17% of corp taxes by 2%
Only to increase the 19% proportion by 2.5%....
Where does the wealth transfer from, from tax receiver to tax payer


clear as mud

Actually an increase from 12.5 percentage points (lets call them GST units) to 15 GST units represents a 16% increase in GST
ie
1% of 12.5 GST units = .125
2 /.125 = 16

Which is to say the Governement's GST take will increase by 16%

[Jonno.]

Most shops can't just charge 2.5% more on everything because deman will reduce. The contrary is true for removing tax from food. Supermarkets work out GST after they price things so it's not like everything's going to drop 12.5% or at least not for long.

[mashman]

Actually an increase from 12.5 percentage points (lets call them GST units) to 15 GST units represents a 16% increase in GST
ie
1% of 12.5 GST units = .125
2 /.125 = 16

Which is to say the Governement's GST take will increase by 16%

I googled percentage points, I didn't have a clue, so could be wrong. My sum could be wrong

15 - 12.5 = 2.5
(2.5/12.5) * 100 = 20% INCREASE.

I could be wrong. I hope they use percentage lol.

[rustic101]

IMO, I think its fantastic and the responsible approach for Govt to take. GST is actually a red hearing. Its completely dependant on individuals spending and discipline habits.

The message seems to be getting through to individuals about personal (financial) responsibility and financial literacy. Was reading today that Veda Advantage are reporting tighter spending control by individuals, more people moving away from credit cards and HP's.

The past Govt left this countries books in a shit state, right down to using ACC as a pseudo Welfare System. Their fiscal responsibility and spend, even in their dying stages of power was appalling. National are turning this around albeit slowly.

[Toaster]

Trying to kurb domestic spending, they're wanting to raise the retirement age and get rid or the super.

What peeves me off is THEIR pension plan never seems to get trimmed. About time these plonkers stopped lining their own pockets so much and did it harder like the rest of us. I am all for seeing their very generous perks cut.

[Mully]

Good for us.

Helping us smash the living shit out of the mortgage even faster.

[geoffm]

Don't forget that ACC levies out of wages and salaries are going up too...

and of course - Muldoon and Cullen's best friend "Fiscal Drag". It is a sneaky move - tax cut is fiscally neutral at the intro, but inflation this year is forecast to be 5%+. Over the next few years, wages will increase as prices increase - but tax brackets aren't indexed, so the income tax increases and meantime GST is self correcting being a percentage of the cost. In a short time, the tax cut is claed back - plus the GSt increase as well.

[Cayman911]

The way i see it.

Rich : pay 2.5% more gst. save alot more tax because they pay alot of tax because they earn alot.

medium to poor : pay 2.5% more gst. tax thing isnt a big issue as its made to be because you dont earn that much, so you're either worse off or the same.

student : pay 2.5% more. tax thing makes no difference to you

kind of a rich get richer poor get poorer scenario

[rustic101]

Saw this and though it was a great explanation of our tax system:

This little gem might help some of you understand the tax system better, but only if you want to!

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7.

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.”Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share? They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so the fifth man, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33%savings).

The seventh now pay $5 instead of $7 (28%savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 ( 22% savings).

The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

“I only got a dollar out of the $20,”declared the sixth man. He pointed to the tenth man,” but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

[p.dath]

All they are trying to do is encourage saving. We have shifted to a borrow and spend economy, and it's just going to be stable long term.

[p.dath]

You are correct, GST is rising 20% from 12.5% to 15%.

[schrodingers cat]

You are correct, GST is rising 20% from 12.5% to 15%.

To you the consumer, if you buy a $1000 item, after the GST increase it will cost you $1020.

Not really the end of the world is it?

Certainly wouldn't make me rush out to buy consumer goods as the fear mongers are suggesting.

[p.dath]

To you the consumer, if you buy a $1000 item, after the GST increase it will cost you $1020.

Not really the end of the world is it?

Certainly wouldn't make me rush out to buy consumer goods as the fear mongers are suggesting.

I'm not perturbed by it. I think the GST rise is good. In fact I would support an even stronger move to consumption based taxing.

I've just pre-purchased a whole lot of electricity. Might as well enjoy some of that saving.

[Dave Lobster]

Start taxing religion.

Sounds good.

I think the aim of this was to give people a false sense of hope. These days it's rare to get something for nothing.

And if we tax religion, false hope would soon be costing even more

[scumdog]

Don't want to lose NZs position in the 'highest taxed countries' list, do we?