National campaigned on a proposal to adjust the existing tax thresholds, but as part of coalition negotiations with ACT last year, it agreed to consider whether the “concepts” of ACT’s tax policy could be incorporated “subject to no earner being worse off than they would be under National’s plan”.
In simple terms, ACT would immediately axe the lowest tax threshold of 10.5 percent, meaning the government would collect more revenue from all income earners.
Some of that extra revenue would then be returned to low-and-middle income earners through a targeted tax credit to ensure they were not worse off.
The money left over would allow the government to reduce the higher tax rates at the top of the income scale - dropping the 33 percent rate to 30, and the 39 percent rate to 33
So wait a minute, he starts with removing the 10.5% tax rate so those earning stuff all now pay more tax on their meagre takings.
WTF? So he’s just stealing it from the poor to give to the middle bracket? What an absolute cunt…
Oh, and it keeps trickling up? This guy is crazy!
I’d like to point out that poor people (mostly) don’t vote for Act, so from their point of view this is better for their voters.
Though I stand by my previous claims that people who vote for Act (largely) do not understand the Act policies, and are just voting for someone who is not Labour or National.
I think enacting policies that only benefit their own voters is sort of a more sophisticated version of that thing that happens in some third world countries where if you vote for them you get a cash payout or a chicken or something.
Haha it pretty much is! My understanding of a center-right viewpoint is basically that people deserve their position in society based on their actions. It makes sense from that view point that a flat tax is fairer.
And let’s be honest here. The majority of right wing voters stand to benefit financially from right wing policies, but also the majority of left wing voters also stand to benefit financially from higher tax rates on the rich. People tend to vote for things that benefit themselves, and I think MMP helps solve that problem by forcing groups to come to compromises.
My personal view is that most people vote for what benefits themselves. Something about a society growing great when the old plant trees under which they will never sit - I like to think we’re closer than 50 years ago but we still have a long way to go.
Edit: I feel like I should add a disclaimer that any of my views are point in time, and they change like the wind 😆
When we look at facts and metrics fairer societies actually benefit everyone in them. For example there was an OECD study that found countries with higher income equality recover more slowly from economic recessions.
I also don’t get why the political right in NZ are content to have 20% of kids in relative poverty because those are our future taxpayers and citizens. We’d prosper better as a nation if everyone had access to skill building, proper brain development, and felt a bond of loyalty with the wider society.
That’s just magical thinking, but all too prevalent.
Nothing new here. This is the party founded by the people who gave us GST.
I might be a bit smooth in the brain but how is GST a bad thing? To be fair, I’ve never really considered it…
Doesn’t it effectively tax those that use the most? (in a user pays sense)
Its a regressive tax, because the greater proportion of your income you spend, the greater proportion of your income ends up taxed. And if you’re poor, you spend all of your income (and then some), so all of your income ends up getting hit with a 2nd round of tax via GST.
But if you’re rich, you don’t have to (hell, at some incomes, can’t) spend all your money, so you put that excess money in the bank, then leverage it to buy a house to let to the poor person, who pays your mortgage for you, but you offset your costs to reduce your own tax further, then sell the house a couple years later for some sweet tax free capital gains.
Just an edit to add:
Using GST to dampen consumption by raising it when there’s high inflation, and lowering it when there’s not could be a useful purpose for it; but its not used that way here. I suspect taxing excess cash out of the economy would be a less awful way than ramping up unemployment through interest rate hikes, but old white people won’t vote for tax hikes. GST is also a way to get tax off some people who might not have an income otherwise taxable; but I would think wealth taxes, or capital gains taxes would be far better ways of achieving that.
This is its one good point: We collect tax from travellers who, if there was no VAT, would pay zero tax while visiting NZ.
Not quite zero, if you count some airport fees etc. But otherwise yeah, it is a gap. Albeit we do end up collecting tax on that money once its counted as income for the companies or individuals providing services to those tourists.
It also gets around off-shoring profit to avoid income tax.
It’s not perfect, is regressive and, imho, is too high. But it does have SOME benefits.
If I were made dictator I would lower gst to 10%, meddle with the income tax rates (including a tax free bottom bracket and higher tax for the top brackets) and add CGT.
But that’s just me.
Thanks! That makes lots of sense
It’s the opposite insofar as the total percentage of your income you pay in taxes is higher if you’re low income.
Back when I worked, I was putting about 1/2 of my income into savings so there was no GST on that.
Now I can’t work I have to spend all of my income on cost of living, which means I effectively pay another 15% on most of it.
@flambonkscious @Dave That’s back to front and complicated. The Australian rates where people don’t pay tax on the first $14-15k or so is much simpler and much more use to people on low incomes. Reducing GST back to 12.5% would also help low-income earners a lot, too. Much less complicated than a rebate or tax credit.