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

[Banditbandit]

It's just a money-go-round. The Govt is taking it different waya and collecting it in different ways ...

They say it will allow people to save .. yeah right!!! Only the very rich ... I'll get around 20 bucks extra a week .. and pay out more in GST ...

Poor people wil be hit as they will get a minimal rise in income and a larger rise in spending because of GST ...

They say it will be fairer .. can't see that . rich people will get $60 a week more .. poor people get shat on ... and their spending will increase as GST goes up ...

And why save? Sure a savings account at the bank is good .. but investments and super funds are a poor risk .. they fall over ...

So for me, when I buy cigs, coffee and petrol I will be pissed off paying more because I see that ... but over all I'll be about the same ... but that won't be in my face every day like the GST increase wil be ...

[aprilia_RS250]

They say it will be fairer .. can't see that . rich people will get $60 a week more .. poor people get shat on ... and their spending will increase as GST goes up ...

Do you believe someone picks out a number from a hat and determines how much you'll earn hence why taxing the rich more than poor is fair?

So to you it's unfair a doctor spent 10 years off hard study/practice, put them selves in 100k of debt and now they "unfairly" receive a 200k salary? Where say a secretary did a typing course and does admin work for her boss and only gets 40k....

[Waxxa]

The majority of us will be worse off.

I have already worked out that I will be approx. $24 worse off per week than what I am now after introducing the tax cuts (I will be able to calculate properly once I see the tax cut, just working on figures out in the public at the moment).

Rent has increase, rego for the bike of course, bike insurance is going up and that hasn't included what the price of my groceries will come too, ETS hitting the fuel cost, increase on workers ACC levies, power, gas and water is going up...these are just the stables! A raise in inflation next year...will wages increase?

If the tax cut was $100 or more we might be able to cover costs and save but not on a $15-$25 a week tax cut.

[schrodingers cat]

In a simplistic way:

Income tax at lower rate is 'about' 23% (or have things changed?)
GST soon to be 15%

So if you're on the lower tax bracket then 38% of what you earn is soon to go on those two taxes alone I guess??

And if you're paying 33% PAYE....

Rego, Rates, Tax on fuel, Tax on Alcohol... Feel free to add more

[p.dath]

The majority of us will be worse off.

I have already worked out that I will be approx. $24 worse off per week than what I am now after introducing the tax cuts (I will be able to calculate properly once I see the tax cut, just working on figures out in the public at the moment).

You do understand GST is a consumption tax, and is there to discouarge spending and encourage saving?

[schrodingers cat]

You do understand GST is a consumption tax, and is there to discouarge spending and encourage saving?

Disagree. It is a very difficult tax to avoid and this is its attraction to politicians. Eventually even the cash you have (off the books) spirited away will get nibbled at

[Indiana_Jones]

-Indy

[Forest]

I have already worked out that I will be approx. $24 worse off per week than what I am now after introducing the tax cuts (I will be able to calculate properly once I see the tax cut, just working on figures out in the public at the moment).

If you want to know the change in your tax, go to the following site:

http://www.taxguide.govt.nz/

[Marmoot]

Disagree. It is a very difficult tax to avoid and this is its attraction to politicians. Eventually even the cash you have (off the books) spirited away will get nibbled at

Assuming living standard is the same (e.g., what you buy each month remains the same) before and after 1st October 2010, and you are earning income subject to PAYE:
- a cut in PAYE (personal tax) gives you more into your pocket at the time of payslip.
- an increase in GST adds a 2.5% amount to what you buy, essentially adding 2.5% to your living cost.

Now, assuming that before the 1st October you spend 50% of your income on things you buy, 40% of your income on non-GST items (mostly Mortgage or Rent), and 10% you save.
- The 2.5% GST increase would only apply to the 50% of your income.
- The 40% spent on income remains unaffected (or it is actually now less than 40% since your income pool increases due to the personal tax cut = more money in your pocket).
- The 10% amount of unused money now increases as you have more money in your pocket.

So, for people having a large portion of their income subject to no-GST (mortgage, rent, savings, etc), they would be better off.
In essence, this should help us getting homes (mortgage) or save.

If you had been spending 100% of your income to buy things (no mortgage, rent-free life), then you won't be better off. But this situation should be rare, or in a lot of cases involves financial illiteracy or hardcore consumerism lifestyle (e.g., "keeping up with the joneses", "living like there's no tomorrow", etc) which should be discouraged anyway.

Government simply has to do that since the cost of running the country (infrastructure building, bureaucracy cost, etc) remains the same. It just tries to get "those who spend" to pay for it, and allows a little leeway to everyone (again: mortgage, rent, savings). It is part of recirculating the money in stagnant economy (recession).

However, the above is an ideal situation.
In reality, a lot of retailers now think "these people just have a tax cut. And we haven't been able to increase our prices in a year due to recession! Now they have some money, we can increase the prices. Better yet, let's use "GST Increases" as an excuse".
So, off they go increasing the prices of items by a whallopping amount.
What was 50% you spend on these items suddenly becomes 65% because the prices on the individual items increased despite the amount you buy remains the same.

You're worse off.

Is this the government's fault?

In theory, no. They have put the law into place, and they have warned the retailers that anyone exploiting the situation may be liable for prosecution.

However, retailers have smart lawyers. In the court, they would argue the increases are "not due to GST increases". Weak case gets thrown out although there may be one or two retailers made as examples.

So, who ruined it?
Ourselves. The greedy bunch that increased the prices, and the lawyers that defend them.
No realistic measures can be put by the government unless we want to go into dictatorship-like temporary price freeze, which is against the freedom and democracy nature of our proud country.

[Banditbandit]

Do you believe someone picks out a number from a hat and determines how much you'll earn hence why taxing the rich more than poor is fair?

No, not at all ...

I certainly think that taxing the rich more than the poor is fairer. But then I grew up in a more socialist New Zealand. Our social welfare system was set up to help people who needed it. The changes to the system since it was introduced means that people are getting Government help who do not need it - such as the superannuation fund for all - and therefore the system is costing us more than it needs to, and our taxes are high to pay for an unsustainable system ...

That's not helped by a level of unemployment with a consequent higher level of people who need help ..

But the 1930 Labour architects of the social welfare system would be horrified at what it has become ... The intent was higher taxes for high earners is taxing the people with a surplus to help people in need ... a fair system. Currently we are paying peple out of the welfare system WHO DO NOT NEED IT.

So to you it's unfair a doctor spent 10 years off hard study/practice, put them selves in 100k of debt and now they "unfairly" receive a 200k salary? Where say a secretary did a typing course and does admin work for her boss and only gets 40k....

No, in our current system I don't think that is unfair at all. I can conceive of a fairer system overall - but in our current system that's how it works ...

[Banditbandit]

No realistic measures can be put by the government unless we want to go into dictatorship-like temporary price freeze, which is against the freedom and democracy nature of our proud country.

Hell .. the Muldoon Government of the late 1970s and early 80s did just that - wage AND price freezes

[Marmoot]

Hell .. the Muldoon Government of the late 1970s and early 80s did just that - wage AND price freezes

Just because someone has done it doesn't make it right/desirable/prudent and doesn't mean we should do it again.

For example, would you also agree with Muldoon's 20% surcharge on boats and caravans and 40% sales tax on music sales?

In addition, situations between Muldoon era and 2010 are massively different. Add to that the fact that Muldoon did not have to deal with economic recession to the current scale.

[Banditbandit]

Just because someone has done it doesn't make it right/desirable/prudent and doesn't mean we should do it again.

For example, would you also agree with Muldoon's 20% surcharge on boats and caravans and 40% sales tax on music sales?

In addition, situations between Muldoon era and 2010 are massively different. Add to that the fact that Muldoon did not have to deal with economic recession to the current scale.

No I certainly would not suggest we do it again .. Muldoon turned out to be an absolute disaster .. I was simply pointing out that, against your suggestion that NZ was a free and democractic country, within recent history such measued had actually been used in our free and democratyic country ... which shows we do not have a proud history of such ..

[Marmoot]

No I certainly would not suggest we do it again .. Muldoon turned out to be an absolute disaster .. I was simply pointing out that, against your suggestion that NZ was a free and democractic country, within recent history such measued had actually been used in our free and democratyic country ... which shows we do not have a proud history of such ..

Ah, friend
If you dig deep enough, you can always find some bones.
We are only human.
Let's look at the larger picture, as an average, or Root Mean Square style analysis (if you're an engineer).

[FROSTY:Me]

Disagree. It is a very difficult tax to avoid and this is its attraction to politicians. Eventually even the cash you have (off the books) spirited away will get nibbled at

Ya wanna explain that one to me?--sorry I genuinely don't get it.
To me if ya don't spend it then you don't pay gst on it.