Secondary tax

August 24th, 2014 at 11:00 am by David Farrar

Stuff reports:

Labour has announced plans to scrap secondary for workers with more than one job – but National says it’s already implementing the policy.

In the current system, those with more than one job often pay a higher rate on their secondary income.  It is expected they claim a refund on the wash-up at the end of the financial year.

However, Labour says this is too complex, overpayments are often not claimed back and the system hits hardest those in casual work.

Within five years of taking office Labour would develop an alternative to secondary tax. In the interim, it would implement special tax codes until an Inland Revenue computer upgrade comes online.

I’m not sure you can call this a policy. At best it is a desire. A policy would be an announcement of the alternative. All they have announced is that at some stage before 2020, Labour will develop an alternative.

However, National’s revenue spokesman Todd McClay said they were already going ahead with the policy.

He said IRD’s Business Transformation plan will “address the PAYE system, including secondary tax and end-of-year square-ups.”

And that work is due to be completed by the end of 2015, well before 2020.

12 Responses to “Secondary tax”

  1. dog_eat_dog (1,032 comments) says:

    Breathlessly reported as a solid and fairer policy by an eager and complicit media.

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  2. flash2846 (320 comments) says:

    Doesn’t help National with this election because as usual Labour have grabbed a headline. Why the hell is the government so pathetic at getting messages to the workers? Do some target marketing for goodness sake!

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  3. OneTrack (4,602 comments) says:

    Just the same as all their other “policies”(tm) – no details and no idea how it will actually address the supposed “problem” they say they want to solve. And no idea what will happen once the co- parties make their adjustments.

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  4. oldpark (1,011 comments) says:

    Dog eat dog.

    Agree it was just about over the top in the Australian owned Newstalk ZB.Same people who own N Z Herald go figure,what an indictment .Sneaky Newstalk ZB .Being supported by National/ACT/ businesses, yet forever putting the boot into present Government in a furtive way.An unsuspecting accountancy company named KPMG,sponsors a radical left wing person called Rachel Smalley hates Nats,Israel,and all so called fat women , weighing 70ks in NZ, whom she refers to as Heifers and Lardos.Shame Newstalk.

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  5. brucehoult (230 comments) says:

    That’s innumerate thinking.

    If you have more than one job, and pay PAYE on each one as if it is your only job, then with a progressive tax system you will owe money at the end of the year.

    The only way you won’t is if the total of all jobs put together is less than the top of the lowest tax bracket, currently at $14,000.

    Maybe what Labour means is they will implement ACT’s flat tax proposals?

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  6. rouppe (1,249 comments) says:

    There already are special tax code for secondary income. Why not just change them…?

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  7. The Bangles (382 comments) says:

    This just shows how desperate labour is to find something useful. At first they had some ideas which would help the low income labourer. No GST on fruit. First $100 a week or so, earned tax free. A return to the Research and Development tax credit, to get the economy producing higher value goods. So although it would have cost, at least someone would have gained. Then they abandon those ideas, and give the whole amount to children in schools.

    Now that their popularity has gone down, they need to find something to help the low income worker. And what is this going to do? Only raise the cost of administration. At the end of the year, tax payers will receive or pay the difference anyways.

    Oh, yes those who are earning money in addition to their main income, will end up paying tax. Self employment earnings get paid at the end of the year. An absolute waste of money as usual with Labour.

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  8. Grizz (710 comments) says:

    This is just rearranging deck chairs on the Titanic. Fundamentally the amount of tax you pay does not change. How much PAYE you pay dictates whether or not you receive a refund or have a terminal tax payment. Secondary tax rates have a place. You nominate the rate that best suits your situation so that you minimise the shortfall or over payment of your tax. Making changes here does not change the amount of tax you will pay. In fact Labours tax policy will see a lot of people with secondary jobs paying more tax.

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  9. simpleton1 (606 comments) says:

    Make arrangement to have a main job on Monday, a 2nd job on Tuesday, a 3rd job on Wednesday, and so on so forth .

    The tax will be at the rate of annualized income for the Monday then Tuesday job etc..

    Just make sure all income is spent for the year…

    These days you do not need to file a return every year.
    Really great if some lower incomes do not need to pay tax.

    Do you think IRD will find you?
    What can they do if there is no assets, no cash in the bank.
    An order against income ? ?
    A good lawyer will soon point out that IRD is taking money from what will become poverty stricken children.

    Maybe we should all exploit that loophole?

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  10. mandk (2,038 comments) says:

    Another effect of Labour’s policy is that some people will end up owing money at the end of the tax year and not being able to pay.
    With the current system people save involuntarily. With Labour’s system people will get into debt involuntarily.

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  11. Tauhei Notts (2,399 comments) says:

    One cannot avoid having a secondary income tax rate UNLESS
    one has a flat tax rate.
    End of story.
    Jamie Whyte will be able to explain that simple fact to Labour Party people.

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  12. wreck1080 (5,056 comments) says:

    As above, flat tax will work.

    Under the current scenario each extra earned dollar changes the total tax payable per dollar at the end of the year.

    I’ve a suspicion labour just do not understand.

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