English on GST

October 19th, 2009 at 9:00 am by David Farrar

The Dom Post reports:

Low-income earners would have to be compensated if was increased as a result of the current review, Finance Minister says. …

“Low-income earners, in particular, would have to be compensated for any increase in GST,” he said in a speech to chartered accountants in Auckland. “The tax working group will have to come up with some fairly compelling reasons to convince us of the overall benefits of further property-related taxes or an increase in GST.”

“We don’t want to go down the route of raising taxes,” he said. “The Government has a strong preference not to increase taxes to close the deficit. We prefer more efficient taxes over higher taxes.”

Most forms of income should be covered and, where possible, loopholes that allowed income to be sheltered from tax should be closed.

With one of the most mobile workforces among developed countries, New Zealand’s tax system must help attract and retain people, businesses and investment.

I of course agree that spending restraint should be used to close the deficit rather than higher taxes. But a more “efficient” tax system which contributes to higher economic growth is very desirable.

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26 Responses to “English on GST”

  1. Brian Smaller (3,915 comments) says:

    “We don’t want to go down the route of raising taxes,” he said.

    Increase in earner levy on ACC
    Increase in ACC component on car/bike rego.
    Increase in ACC component of petrol price.

    Have I forgotten anything?

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  2. big bruv (12,349 comments) says:

    The “low paid” (here read lazy bastards who did not bother to take any notice at school) are already compensated by the rest of us, the “low paid” receive WFF and effectively pay no tax.

    National were the party that told the middle class families that they would lighten the load, these same middle class families have been financially raped by Labour for nine years and those same middle class families voted for Key in their droves.

    Fuck the “low paid”, I am sick and tired of supporting them and I am sick and tired of being a ATM for this fucking socialist government.

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  3. Manolo (12,622 comments) says:

    “We don’t want to go down the route of raising taxes,” English said.

    And he said all this with a straight face! Incredible cynicism from the Minister of Finance.

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  4. tvb (3,938 comments) says:

    GST could be broadened to include matters that are presently exempt. This includes financial services and domestic rentals. Capital gains tax exists already but only for those people the IRD manage to catch up with as traders. I see no reason why people cannot be caught with CGT on gains in property and shares that are not reinvested into the family home or a superannuation scheme. The trade-off would be large cuts in income tax rates and company taxes. Gift duties could be reformed with an increased exemption, estate “gifts” could be treated the same way, the gift being treated as income in the hands of the recipient.

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  5. BlairM (2,266 comments) says:

    Well the answer is simple: A tax free income threshold. It would give everybody a cut and compensate for a rise in the GST. Nobody would be worse off.

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  6. Will de Cleene (485 comments) says:

    I’d like to hear Bill English make a promise that my old man gave back when he was selling GST. If anyone can show to him that they are worse off after the introduction of the new tax scheme, he would fly them to Wellington and shout them dinner at Bellamy’s.

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  7. Monty (946 comments) says:

    Stephen Franks also made the very good comment yesterday on Q&A about reignjng in spending rather than increasing taxes.

    I had to laugh about compensating the low income workers if GST was raised – fine if the buggers paid any tax. At present only 40% of the population are net tax payers – the remaining 60% are tax takers – this is not sustainable and National needs to broaden the tax base for the system to be sustainable.

    I would be very happy with an increase in GST so long as there was a decrease in income tax.

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  8. menace (407 comments) says:

    Big Bruv: I fit into the low paid, and news to you BUDDY, I aint no “lazy bastard! I dont work full time, im a seasonal worker that has large breaks in between work. Another news flash BUDDY! I havnt touched the dole for over tens years and don’t intend to start, I am a man that stands on his own two feet even in times of almost no funds(aint no dam crim neither!) But yes i did not listen in school, it wasnt for me, i couldnt capture my attention, im just the person i am unfortunatly. But no regrets things are the way they are, i enjoy my life very much.
    Definaitly there should be CGT, i personally have no chance at profiting 50 or a 100 grand and getting away without being taxed on it and neither should no “unlazy high paid BASTARD”(as bruv would have us put it).
    The best thing i think we could do is as mentioned in one of DPF’s earlier blogs about publicising all government spending over a hundred dollars. This would pretty quickly make the politicians think carefully about how they spend there money.
    Gst is already enough, effectivally for me when GST came about it ment a furthar 12.5 percent tax increase on more than 90 percent of the things i spend my money on, so no more increase’s do not suit me as they are effectivaly percent for percent income tax increases for me.

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  9. side show bob (3,660 comments) says:

    “lower income earners, in particular, would have to be compensated for increases in GST”, sounds a lot like more fucking socialism to me Bill. Here’ s a novel idea for you, how bout a flat tax rate and screw the GST. I bet you don’t like that idea, fancy people spending their earnings on what they want. You clowns have been dicking around for fucking years and still can’t get it right, why do think this is Bill ?. Because it’s all about big government with the big stick. Let people make their own choices with how the wealth is spent in this country and I think you will find many of our problems will find their own solutions.

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  10. Jeff83 (765 comments) says:

    Introduce a Capital Gains Tax (effectively progressive) and increase in GST (effectively regressive) and dump WFF.

    Use the savings to lower top rate to 30%, and bring in a tax free threshold of $15,000 (or what ever is affordable).

    Effectively both groups fund their own tax cuts (with the exception of WFF which is a bad bad idea to start with), and you have a much more efficient tax structure.

    The soon to be abolishment of the Conduit regime and introduction of the active vs passive CFC test will hopefully be positive as well.

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  11. menace (407 comments) says:

    Bloody oath, $15,000 theshold! That i can work with. upto $15,000 per year in nz, teh rest in oz and other places, that can really work for somebody like me.
    Ops that would give the high end binifits to the low end. As much as i would like to see this as it would mean a good pay increase for me. The big boys dont let the little boys get these sorts of benefits.

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  12. Alistair Miller (557 comments) says:

    Instead of new taxes, increasing taxes or “broadening the tax base”, howzabout some ways to enforce the current tax regime? What about those crooks who start up company after company, closing each one down in succession leaving massive tax debts? Property developers are particularly good at this; one corporate entity for each ghetto. Some subtle changes to the corporate veil would result in massive increases in the tax collected from these scum.

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  13. MikeNZ (3,234 comments) says:

    TVB
    Yeah lets increase the taxes on taxes that is so logical.

    Menace
    They spend our money not theres.
    But I think DPF’s idea is a good one having to put it up on the web for the grannies to go over..

    SSB
    I would want that no GST and a fixed Income tax with a Tax Free threshold.

    Monty – only 40%, I’m in a minority !

    Jeff83
    “What is affordable”?
    Why do we have to start at present spending levels?

    Alistair Miller
    Do you think the politicians should start the ball rolling and allow scrutiny into all of parliamentary affairs as a start?

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  14. Alistair Miller (557 comments) says:

    MikeNZ: Yes I do. Open Parliamentary Services up to the OIA, as a minimum, but DPF’s idea to publish every dollar of spending over $100 is brilliant. I can’t see the troughers doing it, as much as it would be wildly popular.

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  15. Hagues (711 comments) says:

    Just make GST, all personal income, trust and company tax 15% and I’ll be a happy camper.

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  16. Inventory2 (9,788 comments) says:

    @ Will de Cleene – didn’t your dad christen GST as God Save Trevor?

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  17. Lipo (226 comments) says:

    From BlairM
    “Well the answer is simple: A tax free income threshold. It would give everybody a cut and compensate for a rise in the GST. Nobody would be worse off.”

    You have this around the wrong way

    Answer is to make a tax free income limit. Say everyone pays the same income tax up to $150,000. Anything you earn over that is Kudos to you and its tax free. The harder you work the better off you are

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  18. Spoff (275 comments) says:

    Can anyone link me to a decent discussion of “Tobin” or Financial Transaction tax? I have long considered it to be an interesting concept with many pluses (virtually no admin or compliance cost, taxes spending – not saving, spreads the burden more fairly) and few negatives. Obviously there must some serious flaw that keeps it out of the national discourse. I just haven’t seen it yet.

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  19. Gooner (995 comments) says:

    Bill English decoded:

    “We’re just gonna tinker around the edges, like Labour did. Except we’ll tinker better”.

    BTW, I thought GST *was* an efficient tax? If English prefers more efficient taxes, then raising GST and cutting income taxes *is* the most efficient medium isn’t it?

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  20. nickb (3,629 comments) says:

    “We’re just gonna tinker around the edges, like Labour did. Except we’ll tinker better”.

    Haha, exactly.
    One question I have though, is when are we going to similarly see a Working Group on cutting Idiotic Spending of Taxpayers money on Wasteful Rubbish?

    Perhaps if we had a true national govt that would look into this also, we wouldn’t need MORE taxes..

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  21. Jeff83 (765 comments) says:

    “Why do we have to start at present spending levels?”

    Guessing you mean stay at. Note I noted WFF as something which should be cut. As for staying at current levels of public spend, I would find it hard to say that there is really much savings to be found in the education, health, transport budgets, and things are going to be worse with the government effectively giving welfare to businesses again with there emissions bill.

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  22. freethinker (648 comments) says:

    Whats wrong with starting on reducing government spending – 5% this year/5% next year then a freeze year so if govt spends 40% of GDP of say $160Billion savings of roughly $6Billion over 2 years and dont tell me there isn’t waste of 5%. I run a small business and although we watch the pennies I am sure we can find a 5% saving in expenses withouth even looking too hard. In an earlier post someone suggested scrapping quangos witrh the word commission in them – all 49 – sounds like another likely source of savings.

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  23. nickb (3,629 comments) says:

    Exactly freethinker.

    The main thing I think HAS to go for the future of NZ’s economic growth prospects is WFF.
    Don’t take people’s money off them in the first place.

    You could cut this and then give the billions back in tax cuts, plus a massive extra amount from all the hundreds of millions you could save by chopping IRD and WINZ in half from administering the monster.

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  24. johnbt (90 comments) says:

    What is it the bastards don’t understand about …. ” stop spending our freaking money ” ???

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  25. NeillR (345 comments) says:

    Isn’t property investment a “loophole that allows income to be sheltered from tax that should be closed”?

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  26. backster (2,000 comments) says:

    FREETHINKER……..Your suggestions are logical, but the present Socialist solution of cost plus seems to be the agenda. The Commissions are largely a collection of ejected Socialist Ministers and their nominated fellow travelers. The ACC solution seems to be to increase taxes rather than to eliminate waste, yet the waste and extravagance in that system is legend.

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