By popular demand, and further to yesterday’s post, here is the actual video of John Key in October 2008 saying, very clearly, that he would not be raising GST, and that he would not need to do that if National were doing a “half decent job”. (Hat Tip, BliP)
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27 Responses to ““National is not going to be raising GST””
He clearly states that National want to cut taxes – not raise taxes.
Yes GST looks like it will be going up – but they have committed that there will be personal tax cuts to offset – Across the board.
Labour put up GST and personal taxes – thank goodness National are doing something about it – else we are left with 10% of the people paying 73% of the taxes in NZ – and that is simply wrong.
ghostwhowalksnz – me thinks that will be a little biased here on RA dont you think – if this is going to be done – how about letting Righties point out all the “weasel words’ of the left. Yeah – didnt think you Mr Mallard would allow that.
Oh time to get sooooooo excited. Labour will not get ant traction with this outside their devoted 30% supporters. Thanks to the mess left by Labour by a decade of tinkering with the tax system the National Government now needs to restructure it.
This is a none event and will be yesterdays fish and chip paper by lunchtime.
BikerKiwi, the top 10% income earners of the population don’t pay 73% of the tax take, or even near it. Stuart Nash has written on this matter here Exploding Tax myths 3.
The personal tax cuts will not cover the increase of costs via GST. “A person on the average wage of $48,600 gets 35 cents a week and on $70,000 just $12.69.” Response.
Only the very top end of earners will get much out of this tax change, and they will get quite a bit. But apparently half of them avoid their tax commitments anyway, so why would they care? Who pays the price of tax cuts for the rich?.
What is this personal tax cut across the board? I haven’t seen any mention of middle income earners getting more than yet another kick. From what I can see increasing the GST is going take back the $10 a week we got awhile ago and take a further $12 out of my pocket per week. But great to see John is giving himself near $300 weekly tax break out of the new changes.
In an over-consuming society any tax shifts which penalise consumption and lifts the tax penalty on working has to be a good thing in principle. Let’s agree that.
And then we can discuss the specifics about who should benefit, and how the vulnerable can be protected and so on.
George good points, but you probably need to consider the effects on the vulnerable before you make decisions.
In this case they have decided on the 3D approach to consultation- Decide, Defend, Deny.
But I’d like to see some sort of response from Labour which doesn’t apparently demonise the raising of consumption taxes as a principle.
I’d have thought that there were lots of people in the Labour Party who’d be in favour of discouraging consumption and lowering PAYE rates to ensure, for example, that there’s less of a penalty on someone opting to do a couple of hours overtime at the weekend.
I don’t think that raising GST, per se, is an unpopular thing. People are rightly concerned by the width of GST coverage in NZ, and the fact that as it applies to the basics of life it hits everybody, and the poorer proportionately harder.
Could some clever person work out what would be the impact on average and lower decile households of exempting certain items (certainly food, but perhaps other things as well) and increasing GST for everything else to, say, 18% or 20%? If the cost is neutral at the lower end, but starts to hit those who buy more ‘non essential’ things then this could be the way to go? Could have good ‘Green’ effects both at the production and disposal ends, and also positive balance of payment impacts?
I get the feeling that many in the Labour Party find the idea of an element of choice in whether you pay tax or not hard to swallow, but if they could get over this hurdle there could be more positives than negatives.
I’d have thought that there were lots of people in the Labour Party who’d be in favour of discouraging consumption and lowering PAYE rates to ensure, for example, that there’s less of a penalty on someone opting to do a couple of hours overtime at the weekend.
I have to disagree with you George. We aren’t discussing GST in terms of pricing extravagance out of the reach of many; it will raise the cost of everything, costs that can not be avoided.
To a large degree, consumption is necessary for life in this society, and the less money you have, the more of your income has to go directly out on consumption (such as food, rent…). So while taxing consumption applies the cost evenly, it is disapportionately higher on those who have less, and there is little that they can do to avoid the cost.
Given the changes to personal tax only starts providing enough money to buy a kilo of cheese a week somewhere between $48,600 (the average income), and $70,000, the majority of New Zealanders will be no better off with this change, in fact they will be worse off.
Also, in my experience, tax has never been a disincentive to work. There isn’t anything that is a disincentive to work or finding work, and I’ve taken every moment of overtime I could find. Simply put, poverty sucks.
Sean – hear what you say. I specifically mentioned working out a two tier GST regime – 0% for essentials and x% for everything else.
If someone who earns $25 an hour does 4 hours overtime and is taxed at 30% the treasury gets $30 from they guy’s efforts. If tax is 25% he gets to keep $5. I’d rather that $5 be raised from someone who wants to buy something that isn’t essential to life, whether that is a couple of packets of ciggies, a few litres of petrol or a flat screen TV.
I know that the practicalities of getting the numbers and the balance right is hugely complex, but just as a principle I’m more comfortable with as much as possible being raised from a tax on non-essential consumption and as little as possible from a direct tax on working.
I agree with you regarding tax discouraging people to work, at least when it’s around the rates we have at the moment. If we ended up with silly rates – I think that at one time in the 70s in the UK there was an 87% band – then that might just be a disincentive to get out of bed to do a couple of hours overtime. But I’m not suggesting we’re discussing extremes like that.
Interesting to hear Prime Minister John Key quote Goff on GST increases when Labour were in Government. Seems Goff very much supported GST increases when Labour were in Government.
Still a non-issue Grant – I think the country accepts that the tax system is broken (a Labour Legacy) and National now have the job of fixing it.
This is not about tax – but rather how to restructure the economy – so we do not have our best and brightest leaving in droves – and so we can increase productivity, and so we can increase GDP.
Personally I really cannot give a stuff about those on $40,000 who are paying virtualy no tax. For a decade I have been paying a massive amount of my salary in tax as Cullen bled the middle classes to fund his social programmes – It is fair and reasonable that teh government now broaden the tax base.
Just to recap Labour introduced GST to NZ in 1986 with a rate of 10% (I think there were promises back then that the rate would never increase and ultimately it would replace personal income tax)if I am wrong I aplogise now, the rate was then increase to 12.5% in 1989 by you guessed it Labour. So thanks firstly for introducing it to these fair shores and thanks again for going back on a promise that it would never increase.
To let the blog know you are using italics you have a starting symbol at the beginning of the text you are italising, and a finishing symbol at the end.
Now, obviously if I type these symbols out properly you won’t see them, because they will embed into the text and just turn the words in between into italics.
So instead what I will do is space the symbols out with dashes (-) , so the blog will read them as text, not symbols.
So if I’m to turn the text ‘Hello George’ into italics what I need to do is type this in first
Then put in the text Hello George
Then end it with the symbol
So it looks like Hello George
Now if we take those five dashes out what you get is Hello George.
I read what you say about GST, but since Rogernomics GST has been applied as a blanket tax, all Goods and Services are covered by it. It would be a major change for the National / ACT / Maori party to create an unevenly applied GST system. And John Key didn’t hint of doing that.
As for the top end tax brackets, yep I recall tales of those, and of course the great George Harrison piece ‘Taxman’ on the Beatles’ ‘Revolver’ album. But you are right, those tax brackets are not in the picture now. And you are not wrong about the whole business being tricky, the problem is that get it wrong and child poverty rates in New Zealand will increase, and we will be living with the consequences of that for decades.
Bikerkiwi: when did labour put up GST? It has been at 12.5% since the 80s – I thought Muldoon put it up to 12.5%. I know the Lange government (Roger Douglas in particular) debated raising it to 15% with a flat income tax of 20%.
While I think changes to the top rate are necessary now, I do think Labour did the right thing by putting it up to 39c in 2000 as the interest on student loans were outrageous & all our public services had been left to flounder so the money had to come from somewhere to pump into those areas. It will be interesting to see what comes out in the next Budget and what Labour has to offer by way of alternative policy.
Thanks Martin! Btw, don’t you mean Roger “I want to tax the living daylights out of you” Douglas! How he ever managed to see himself on the left is beyond me!
Can anyone explain to me why business’s are allowed to claim back GST?, a simply explanation would be nice.
Im sick and tired ofbeig told by people who own business that they are able to claim for all sorts of things that have nothing other than some lame explanation to do with business, so I would like to know why can they claim back GST in the first place?
Interesting to see the trolls seek to veer the main point of the post – that John Key has flip-flopped yet again – into a discussion on the merits of a consumption tax.
Lets remember this: John Key will say one thing one day, and another the next. He’s as slippery as greased pig.
As a business you can only claim back GST on purchases if you charge GST on your goods and services in the first place.
If you weren’t allowed to do this you’d end up with GST being paid n times over by the end user (us).
For example a farmer sells vegetables to a restaurant at $10 + $1.25 GST.
Let’s assume for simplicity that the restaurant charges double the price of its raw materials for the meal.
If the restaurant couldn’t claim its GST back it’d have a raw materials cost of $11.25, would then charge $22.50 for the meal and then have to add on another 12.5% GST. You’d be paying GST on top of GST.
Because the restaurant claims back GST on purchases the actual raw materials cost to them is $10, which results in a $20 meal to which GST is added.
What happens is that each period a business tots up all it spends on GST for its purchases, and all it charges in GST to its customers on sales, and pays the government the difference. As long as the company is trading at a profit it has to write a cheque to the government rather than getting an overall refund.
At least that’s the way VAT worked in the UK, and I assume GST is roughly the same.
Yeah right BLiP – why would we want to discuss he relative merits of different ways of raising tax revenue when we could go ‘Yah Hoo’ to the Prime Minister and score some political points?
These are the voices of Labour MPs on issues that we care about - and we'd like to hear what you think too. What you’ll read are the individual opinions of MPs. We won’t always agree with each other and sometimes our opinions may change.
Perhaps RA could have a new monthly ‘Weasel words’ post.
He clearly states that National want to cut taxes – not raise taxes.
Yes GST looks like it will be going up – but they have committed that there will be personal tax cuts to offset – Across the board.
Labour put up GST and personal taxes – thank goodness National are doing something about it – else we are left with 10% of the people paying 73% of the taxes in NZ – and that is simply wrong.
ghostwhowalksnz – me thinks that will be a little biased here on RA dont you think – if this is going to be done – how about letting Righties point out all the “weasel words’ of the left. Yeah – didnt think you Mr Mallard would allow that.
@ bikerkiwi:
10% may be paying 73% of tax but they also control and/or own 90% of the capital so it seems to me they have just been paying their fair share…
Oh time to get sooooooo excited. Labour will not get ant traction with this outside their devoted 30% supporters. Thanks to the mess left by Labour by a decade of tinkering with the tax system the National Government now needs to restructure it.
This is a none event and will be yesterdays fish and chip paper by lunchtime.
BikerKiwi, the top 10% income earners of the population don’t pay 73% of the tax take, or even near it. Stuart Nash has written on this matter here Exploding Tax myths 3.
The personal tax cuts will not cover the increase of costs via GST. “A person on the average wage of $48,600 gets 35 cents a week and on $70,000 just $12.69.” Response.
Only the very top end of earners will get much out of this tax change, and they will get quite a bit. But apparently half of them avoid their tax commitments anyway, so why would they care? Who pays the price of tax cuts for the rich?.
What is this personal tax cut across the board? I haven’t seen any mention of middle income earners getting more than yet another kick. From what I can see increasing the GST is going take back the $10 a week we got awhile ago and take a further $12 out of my pocket per week. But great to see John is giving himself near $300 weekly tax break out of the new changes.
@Monty. Seems to be of some interest to MSM. Just done Radio Live interview, and both the Herald http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10625326 and Stuff http://www.stuff.co.nz/national/politics/3311679/Key-no-GST-rise-video-emerges are on it.
In an over-consuming society any tax shifts which penalise consumption and lifts the tax penalty on working has to be a good thing in principle. Let’s agree that.
And then we can discuss the specifics about who should benefit, and how the vulnerable can be protected and so on.
George good points, but you probably need to consider the effects on the vulnerable before you make decisions.
In this case they have decided on the 3D approach to consultation- Decide, Defend, Deny.
TC – fair enough.
But I’d like to see some sort of response from Labour which doesn’t apparently demonise the raising of consumption taxes as a principle.
I’d have thought that there were lots of people in the Labour Party who’d be in favour of discouraging consumption and lowering PAYE rates to ensure, for example, that there’s less of a penalty on someone opting to do a couple of hours overtime at the weekend.
I don’t think that raising GST, per se, is an unpopular thing. People are rightly concerned by the width of GST coverage in NZ, and the fact that as it applies to the basics of life it hits everybody, and the poorer proportionately harder.
Could some clever person work out what would be the impact on average and lower decile households of exempting certain items (certainly food, but perhaps other things as well) and increasing GST for everything else to, say, 18% or 20%? If the cost is neutral at the lower end, but starts to hit those who buy more ‘non essential’ things then this could be the way to go? Could have good ‘Green’ effects both at the production and disposal ends, and also positive balance of payment impacts?
I get the feeling that many in the Labour Party find the idea of an element of choice in whether you pay tax or not hard to swallow, but if they could get over this hurdle there could be more positives than negatives.
I’d have thought that there were lots of people in the Labour Party who’d be in favour of discouraging consumption and lowering PAYE rates to ensure, for example, that there’s less of a penalty on someone opting to do a couple of hours overtime at the weekend.
I have to disagree with you George. We aren’t discussing GST in terms of pricing extravagance out of the reach of many; it will raise the cost of everything, costs that can not be avoided.
To a large degree, consumption is necessary for life in this society, and the less money you have, the more of your income has to go directly out on consumption (such as food, rent…). So while taxing consumption applies the cost evenly, it is disapportionately higher on those who have less, and there is little that they can do to avoid the cost.
Given the changes to personal tax only starts providing enough money to buy a kilo of cheese a week somewhere between $48,600 (the average income), and $70,000, the majority of New Zealanders will be no better off with this change, in fact they will be worse off.
Also, in my experience, tax has never been a disincentive to work. There isn’t anything that is a disincentive to work or finding work, and I’ve taken every moment of overtime I could find. Simply put, poverty sucks.
Sean – hear what you say. I specifically mentioned working out a two tier GST regime – 0% for essentials and x% for everything else.
If someone who earns $25 an hour does 4 hours overtime and is taxed at 30% the treasury gets $30 from they guy’s efforts. If tax is 25% he gets to keep $5. I’d rather that $5 be raised from someone who wants to buy something that isn’t essential to life, whether that is a couple of packets of ciggies, a few litres of petrol or a flat screen TV.
I know that the practicalities of getting the numbers and the balance right is hugely complex, but just as a principle I’m more comfortable with as much as possible being raised from a tax on non-essential consumption and as little as possible from a direct tax on working.
I agree with you regarding tax discouraging people to work, at least when it’s around the rates we have at the moment. If we ended up with silly rates – I think that at one time in the 70s in the UK there was an 87% band – then that might just be a disincentive to get out of bed to do a couple of hours overtime. But I’m not suggesting we’re discussing extremes like that.
PS – Sean – how can I get italics in my postings like you did?
Interesting to hear Prime Minister John Key quote Goff on GST increases when Labour were in Government. Seems Goff very much supported GST increases when Labour were in Government.
Still a non-issue Grant – I think the country accepts that the tax system is broken (a Labour Legacy) and National now have the job of fixing it.
This is not about tax – but rather how to restructure the economy – so we do not have our best and brightest leaving in droves – and so we can increase productivity, and so we can increase GDP.
Personally I really cannot give a stuff about those on $40,000 who are paying virtualy no tax. For a decade I have been paying a massive amount of my salary in tax as Cullen bled the middle classes to fund his social programmes – It is fair and reasonable that teh government now broaden the tax base.
Just to recap Labour introduced GST to NZ in 1986 with a rate of 10% (I think there were promises back then that the rate would never increase and ultimately it would replace personal income tax)if I am wrong I aplogise now, the rate was then increase to 12.5% in 1989 by you guessed it Labour. So thanks firstly for introducing it to these fair shores and thanks again for going back on a promise that it would never increase.
Sure George, happy to try and explain italics.
To let the blog know you are using italics you have a starting symbol at the beginning of the text you are italising, and a finishing symbol at the end.
Now, obviously if I type these symbols out properly you won’t see them, because they will embed into the text and just turn the words in between into italics.
So instead what I will do is space the symbols out with dashes (-) , so the blog will read them as text, not symbols.
So if I’m to turn the text ‘Hello George’ into italics what I need to do is type this in first
Then put in the text Hello George
Then end it with the symbol
So it looks like Hello George
Now if we take those five dashes out what you get is Hello George.
I read what you say about GST, but since Rogernomics GST has been applied as a blanket tax, all Goods and Services are covered by it. It would be a major change for the National / ACT / Maori party to create an unevenly applied GST system. And John Key didn’t hint of doing that.
As for the top end tax brackets, yep I recall tales of those, and of course the great George Harrison piece ‘Taxman’ on the Beatles’ ‘Revolver’ album. But you are right, those tax brackets are not in the picture now. And you are not wrong about the whole business being tricky, the problem is that get it wrong and child poverty rates in New Zealand will increase, and we will be living with the consequences of that for decades.
Dang, the symbols disappeared. Sorry George, I’ll see if I can find a simple guide on line.
Try this link George, under the heading Text appearance.
http://biega.com/HTMLQuick2.html
Bikerkiwi: when did labour put up GST? It has been at 12.5% since the 80s – I thought Muldoon put it up to 12.5%. I know the Lange government (Roger Douglas in particular) debated raising it to 15% with a flat income tax of 20%.
While I think changes to the top rate are necessary now, I do think Labour did the right thing by putting it up to 39c in 2000 as the interest on student loans were outrageous & all our public services had been left to flounder so the money had to come from somewhere to pump into those areas. It will be interesting to see what comes out in the next Budget and what Labour has to offer by way of alternative policy.
Thanks Sean
conscientious – Labour introduced GST at 10% in 1986, then increased it to 12.5% in 1989. It was instigated by Roger “no taxes” Douglas.
Thanks Martin! Btw, don’t you mean Roger “I want to tax the living daylights out of you” Douglas! How he ever managed to see himself on the left is beyond me!
Can anyone explain to me why business’s are allowed to claim back GST?, a simply explanation would be nice.
Im sick and tired ofbeig told by people who own business that they are able to claim for all sorts of things that have nothing other than some lame explanation to do with business, so I would like to know why can they claim back GST in the first place?
Interesting to see the trolls seek to veer the main point of the post – that John Key has flip-flopped yet again – into a discussion on the merits of a consumption tax.
Lets remember this: John Key will say one thing one day, and another the next. He’s as slippery as greased pig.
Waterboy – this is how I understand it:
As a business you can only claim back GST on purchases if you charge GST on your goods and services in the first place.
If you weren’t allowed to do this you’d end up with GST being paid n times over by the end user (us).
For example a farmer sells vegetables to a restaurant at $10 + $1.25 GST.
Let’s assume for simplicity that the restaurant charges double the price of its raw materials for the meal.
If the restaurant couldn’t claim its GST back it’d have a raw materials cost of $11.25, would then charge $22.50 for the meal and then have to add on another 12.5% GST. You’d be paying GST on top of GST.
Because the restaurant claims back GST on purchases the actual raw materials cost to them is $10, which results in a $20 meal to which GST is added.
What happens is that each period a business tots up all it spends on GST for its purchases, and all it charges in GST to its customers on sales, and pays the government the difference. As long as the company is trading at a profit it has to write a cheque to the government rather than getting an overall refund.
At least that’s the way VAT worked in the UK, and I assume GST is roughly the same.
Yeah right BLiP – why would we want to discuss he relative merits of different ways of raising tax revenue when we could go ‘Yah Hoo’ to the Prime Minister and score some political points?