Erm. No? That’s just a the-opposite-kind-of-arbitrary stat.

A useful stat from the POV you’re taking would be how many households were better with the effect of all members taken into account. As above.

If you have two earners in a household, one on 50k and one on 15k, and the middle tax rate of 33% goes down to (say) 30%
The amount of tax they would pay would go from
$10940.00 + $2270.00 = $13210.00

down to
$10640.00 + $2270.00 = $12910.00

So they would save $300 per year (according to the online ird income tax calculator)

Now, peoples largest single expense is usually rent/mortgage, which shouldn’t attract GST. If people are paying $300 per week for a family home in a modest suburb, not in an inner city that is $15,600 per year. Lets say they are putting away 5k a year in savings as well ($50 per week) then what they are spending is $31,190 per year on food, clothing, transport, school fees, entertainment, all that sort of stuff. That’s the stuff which will attract GST, (and includes it). The GST-free price would be 27724.44, if GST goes up to 15% their new price is $31883.11— or nearly seven hundred dollars more per year.

So the example that was given, of someone on 50k and someone on 15k means that that family would spend $400 more per year on tax.

Is this a purely theoretical argument? Yes, yes it is. Does that mean it’s worthless? Not really, any theoretical argument has more value the closer to reality it is.

And how do you think the government is working out ‘who will benefit’? Exactly through arguments such as these. Theory is important.

Does this mean that that family will be worse off? the answer is “Probably, but maybe Working for families will make up the difference”. So, who knows really? But it’s not as cut and dried as a lot of people are trying to make out.

RA

I think you are right in saying that a lot of business’s will sneak up the prices by more and blame it on GST increases.

There is no direct reason for a business to increase prices by more than the GST increase.

Some businesses will absorb the increase to remain competitive, for a while anyway.
Some will just increase by the GST increase.
And some will use it as an excuse to put their prices up more and blame it on GST.

Many prices fluctuate more than a couple of percent during the course of a year anyway.

And there won’t be many people who can’t adjust their spending budget to absorb the increase. What will it take to reduce by 2%?

$4.90 piece of steak instead of $5.00
One less car trip to the dairy a month
Drink one less bottle of beer every 4 dozen.
Buying a $14.70 bottle of wine instead of a $15 one.
One less cigarette every 2 1/2 packets.
One less pay-per view movie on Sky every 3 months.
You wouldn’t notice (or miss) 2% less porridge.

meaning there’ll be less work for accountants and lawyers who are already on a good wicket and can absorb the GST rise cos their tax cut from being in a higher income bracket will offset it…

…but for the working poor there’ll be a flat 2.5% increase across the board on all purchases and for small businesses/ producers there’ll be more of a mark up to offset the costs on raw materials and labour to produce their goods

meaning an even larger hike in prices which tax cuts for lower incomes won’t offset…true or false ?

To be honest burt, i’m not really up on what sort of shape Labour left the economy in but whatever, it seems Key hasn’t changed up his gameplan to allow for the effects of the recession which, would i be right in saying, Labour couldn’t predict ? Maybe as a finance and money guy, Key could have predicted the banks crash that dragged the economy down with it, i dont know.

But for all that, it still seems like he wants to give out tax cuts based on election promises he made and prioritised that by any means neccessary with the easiest option being, raise GST. I just dont see the value in pointing the finger of blame anywhere else if it is him who is doing the damage now. Surely he needs to step up and own this shit.

I’m not opposed to raising GST if it was to generate money for jobs. It’s just that the evidence for those who will benefit most from tax cuts to invest their windfall in job creation schemes is missing, are under no obligation to and so probably won’t, yet i’m supposed to put my faith in Key and his plans that they will, based on what…faith ? hope ? assurances ?

Property investors that have been creaming off the rest of us, it’s fair they should pay something to tax.
High income earners “structuring” (fiddling) their incomes to get Working For Families or qualify their kids for Student Allowances should be honest about what they earn and not filch off the rest of us.

That sort of thing pollywog.

Key’s assurance of not lifting GST was on the back of Labour’s assurance the economy was in great shape….

Of course if Key had balls and went in pursuit of seeing key liars in the Labour govt charged under the Fiscal Responsibility Act rather than awarding them plum jobs in SOE’s then he might have had some high ground for his apparent flip-flop.

And Sorry Pete, but could you please elaborate on this, its a bit too cryptic for me.

“And most of those that will end up paying more (or getting less handouts) are currently unfairly getting too much or are getting away with too much.”

The thing with Keys assurances is, he assured us previously that he wouldn’t raise GST . There seems too many variables at play for him to be giving assurances with any confidence and i’m not expecting much, to be honest i’m expecting a turn for the worse as witnessed by this…

http://www.stuff.co.nz/national/politics/3330717/Young-brown-and-out-of-work

I guess your adult children will be sending you a cheque each week to help with the extra GST on food and electricity etc that you will need to cover on your fixed income, I don’t think they will be too happy then.

You seem to have forgoten that years and years of Labour govt said to these people that if they pay the high taxes now they will be looked after in retirement. Oh, sorry I forgot – every generation needs to pay high taxes for some future benefit that Labour just never get around to delivering.

And muppets like you still believe them that they are looking after more than just their own election outcomes…. unbelievable.

Honestly DPF is this all part of the softening up process before National only drop taxes for middle and high income earners and not for low income earners?

I think Key has made a clear assurance that most people won’t be worse off – it’s just that those on lower incomes and beneficiaries shouldn’t expect much.

And most of those that will end up paying more (or getting less handouts) are currently unfairly getting too much or are getting away with too much.

that does not mean its not doable, or that the people who pay most of the tax should not get more of their money back.

But you are taxed as individuals (not as a family) so if only the top rate is cut then the part time worker on $15K a year receives no tax reduction however they will still have to pay the extra 2.5% of GST.

‘But if you are retired and earning just $25,000 a year, that doesn’t mean you are against tax cuts, because you are happy that your adult children will benefit from them.’

I guess your adult children will be sending you a cheque each week to help with the extra GST on food and electricity etc that you will need to cover on your fixed income, I don’t think they will be too happy then.

Honestly DPF is this all part of the softening up process before National only drop taxes for middle and high income earners and not for low income earners?

[DPF: God try reading what I said. No one but you is saying only the top tax rates will be lowered. The point I am making is that lots of families benefit from a reduction in the 33% tax rate]

Two points:

A) The benefits then need to be distributed amongst the household members, so they are lower per head than for an lone individual paying that rate.
B) The very same argument can also be made for 12.5% and 20% tax rate. Only that even more people will benefit from them and thereby even more households. Some households will even reap double benefits.

That’s a big part of the problem identified right there. Let’s make it LOOK like we are doing something. Oh you’ll hear some bullshit about how this will reduce consumption and encourage saving – bollocks. It keeps the machine called the public service busy and looking like they are actually doing something.
If National took to the shiny pants brigade with the knife that they deserve (and which was indicated pre election) and fairly taxed the property “investors” they could do the tax cuts and leave GST as it is. Mr Key is too scared to upset anyone who might vote for him to actually do anything relevant. If the lower socio economic groups get hit a wee bit harder (I’m not saying they will) it will cause less damage to his core voter base than say – a capital gains or land tax.

…would require taking on some serious retraining, upskilling and higher education debt which i just cant take on, what with the family and all. and forget venture capital for any risk taking entrepreneurial self employment scheme i might have, i just dont have the guarantees.

“… but surely the pride of living off your own efforts, not taking from others must be worth something?”

sure, but its not worth anything i can sell. as a virtual polynesian underclass, we just cant live on hope and pride and it eats away at us to be welfare dependent.

personally, i’m past playing the victim and i dont want anyones sympathy, just some understanding that it’s not all cut and dried economics and academic theory. there is a real cost to pay in my real world and its a hell of a lot different to most of your worlds cos for every rise in disposable income for the wealthy i’d expect to see a rise welfare dependence at the other end and even worse in crime stats.

Hmmmm…Maybe i should become a prison guard, there’s bound to be some job ops there