As we travel around the country explaining Labour’s opposition to the govt’s proposed increase in GST, I am pleasantly surprised by the overwhelmingly positive response we are receiving. People understand the issue: they know that increasing GST means an increase in the price in everything. This leads to less money in their pocket, budgets that are stretched even further and a growing disparity between the few earning the big bucks and everyone else.
A lot also know that when the Mr Key was campaigning in 2008, he said that there would be not be an increase in GST. They are pretty annoyed about this reversal.! Most don’t believe that they will be adequately compensated and think that this is a government looking after the few and ignoring the needs of the many. Can’t help but agree.!
I actually believe that we have a real chance of forcing a National back down on a GST increase. Why? Because we are listening to ordinary kiwis who are telling us how it is – and they do not want any increase in GST. Can you hear them, Mr Key.?
As part of the tour do you tell them that the cost of the GST rise will be offset with super increases, welfare increases, and lower taxes? It’s probably the sensible thing to do in order to establish real support and open debate?
Charles- the offsets are one off increases, where GST is a multiplier and it takes that extra little bit each time there is inflation.
@Charles 6:12 – can you clarify this one?
Raising GST hits the lower income PAYE earner the hardest.
Take a household item that retails at $1500 plus GST.
Jo Citizen buys this item at retail.
The self employed buys this item through his company or his “contacts” at wholesale $1000.
15 % of 1000 is 150. 15 % of 1500 is 225.
The self employed is able to use the company to claim the GST back and he is ultimately then allowed to depreciate the item against his company as well.
[deleted - offensive - Chris]
@Logie
You seem a bit confused. The issue of business spending is just explaining what is happening now. As you state later 15%of 1000 = 0 after return completed. They pay the GST on the profit margin ie $725. Why would they pay GST on the $1000 that has had the GST paid by the supplier? Wouldn’t this increase the price even more?
If someone buys things for personal use on the business account this is either tax evasion or theft from a business. Not to suggest this is an uncommon practice.
Hard to see your point as being low income vs high income – more business vs employed.
Try thinking in terms of school cleaner (low income employed) Vs Builder (Self employed) Vs Doctor (High income employed) Vs Michael Hill (Big business).
Grrrrrrr
Jeremy – I do not consider I am confused.
Though thank you for confirming the rorts and unfairness of GST.
When I talked about the self employed (where you admit there is scope for problems) I purposely omitted to include that we also know that it happens between the captains of industry. Cannot imagine they ever purchase at retail.
And then there is the scope and temptation for the black market increase with any increase in GST.
“a growing disparity between the few earning the big bucks and everyone else.”
This is not true. GST is a flat tax, not a regressive tax, so it hits all income groups equally. The claim that people can avoid GST by saving and not spending is nonsense. By definition all income MUST be spent at some point. You can defer when you pay GST but you can’t avoid paying it.
Greg – There is no denying that the low income earner pays a greater portion of their income to the tax man. Full Stop. GST is regressive. No we do not need to spend all income (No GST on finance/investment/Gifts/Sponsorship).
Logie – Still find the methodology confused as you are not comparing like for like, and seem to have highlighted an equity issue that will not be different with a 12.5% rate compared to 15%. The conclusion was right though and the simple comparison is between high income and low income PAYE earners.
So Labour will campaign for ridding us of GST?
Jeremy – Pardon me but I thought we were discussing the merits of increasing GST, it simply becomes more inequitable the higher the rate of GST. And if you are in the privileged position of purchasing items at the lower price you pay even less GST.
And of course so many low income earners have so much disposable income to benefit from GST exemption on (now what was it?) finance/investment/Gifts/Sponsorship. WTF. Let’s get real here.
People would have to be brainless and memoryless to believe that you lot would reduce taxes in any sustainable way.
You never reduced spending in term after term.
You gave cuts via wff and nothing to other workers so that people who use government services the most payed none of the cost. Don’t prattle on about fairness and froth up about some rich people getting more money, thats just a red herring. You have no solutions because National is pretty much doing what you would have done apart from cosmetic car crushing,tinsheds for crims,superficial education changes, …etc a whole school of red herrings of their own.
You are screwed because you don’t have any meaningful alternatives and are incapable of coming up with any due to the general mindset of your mp’s.
Jon – must be past your bedtime, getting grumpy I see.
Logie – There again the exemptions quote was for Greg claiming that all people must pay 12.5% GST(currently) on all income. You still don’t seem to see the difference between legitimate business expenses and personal perks. The rules are already there, maybe not enforced.
Jeremy you don’t understand what I’m saying. In all those examples (”finance/investment/Gifts/Sponsorship”) GST will be paid on that income. In the case of gifts/sponsorship it will be paid by the beneficiary of that income, not the income earner themselves but paid nonetheless. In the case of finance/investments that once again is just defferred spending. So the GST will be paid eventually. The great advantage of GST is that it is incrediably hard to avoid for precisely these reasons. Even those who trade on the black market eventually get caught by it.
Okey, can see the arguments that Labour are making against raising GST, therefore they should announce their position on whether they would Axe it. I understand it has been said they are too afraid to give away their hand at this point, but it does make them look a bit double standard and silly if they can’t back their contention with real policy.
Yes I get what you say, someone buy dope, sell dope and then takes profit to service station or supermarket. All well and good, but GST still liable on original transaction, not paid. Goes for all buy sell private transactions (eg Trademe). And no GST is liable for gifts, never has been (gift duty payable by giftor, after $27,000).
Labour will give away their hand when the time is right, not before, so there
Mean while in answer to Spud they use our money to travel the country claiming they want to “AX THE TAX”
When they will not say how they intend to pay for everything they promise
How many fools do they think are out there
Yes but Jeremy in this situation (rather curiously) the cannabis dealer is in the same position as the gift reciever or the trademe seller. GST will not be paid on the original transaction, but as you state it will be paid when the recipient of this income “takes profit to service station or supermarket”.
As an aside I’m pretty sure trademe sellers are actually liable for GST.
Stuart read this then and reconsider your stance matey
Labour are campaigning against the GST increase (yet being careful not to promise to reverse it), saying it will hit households hard. Well Stats NZ have calculated that the impact of GST going to 15% will be a one off increase of 2.0% in the CPI.
Now let’s see how that compares to the CPI increases under the last two Government’s.
In December 1990 the CPI was 731 and in December 1999 it hit 837. That was an increase of 14.5% over nine years – an average of 1.5% a year,
From December 1999 to December 2008 the CPI went from 837 to 1072 – an increase of 28.1%, and an average of 2.8% a year.
The difference between inflation under Labour and under National is around 14% – or seven times greater than the one off 2% increase caused by a GST increase.
Now if one takes just food prices, it is even worse. The food price index increased only 9.9% under nine years of National. Under nine years of Labour it shot up a massive 37.1%.
So if you hear a Labour MP talking about the impact increased prices will have on families, remind them of the 37% increase in food prices and the 28% increase in all prices that occurred under Labour
I earn over six figures and for one look forward to the fact that my tax rate is dropping and I can “CHOOSE” without nanny state how I can spend my extra money. Thanks god we gave Helen Von Stalin Clark the boot. Long may she stay on the other side of the world. Planet Pluto would be even better.
You guys blew the books so badly last term, and now you are sitting on the other side of the fence throwing stones.
Whoops forgot to mention ACC as well. Mr Cullen forgot to mention that eh.
Oh and before you call me a Tory, up until the last election I had voted LAbour all my life and have donated $$0000’s to the party over the years.
Most of the voting base who left the party in disgust at how rotten the old gaurd had become and most most will not return until the dead wood is gone.
Get rid of that bloody bore Phil, get someone in with vision and fire power and you might get some bloody votes not mention some more people like me who mighy think about donating money again.
I expect the coffers are a bit empty at the moment.
Thanks, Matt former supporter and finacial donor.
Raymond, we are also all going to be paying for Rodney Hide to spend the next year explaining to all of NZ far and wide how great he and ACT have been… Afterall that is what our Minister for Local Government announced is his priority for the next 12 months.
Ol’ Spuddy’s a donor too, yeah it’s mere peanuts I gave
, but I say good on them for getting out on the bus and spreading their message. Of course they’re not going to bring their policies out into the open before election year, but then they will! 
I don’t think there’s anything wrong with Phil, methinks people are just trying to lynch the party leader.
G
FF 2 
!! Woo Hoo!!! 
So Lab is against GST increases, where will the govt get the money to cover pensions, healthcare etc as the working force decreases as a %, servicing debt increases for govt, businesses and the public, peoples real wealth decreases thru the likes of “leaky homes”. There is a huge financial wave facing us me thinks and no answers. Somewhere in the future we will face a decision to cut govt spending or increase taxation, the longer we wait the greater the pain we will have to incur by this adjustment. I think that this bus trip is either being nieve or being extremely misleading to the bulk of the public.
One day the world will not be so forthcoming in lending us to cover for our inability as a net debt nation.
Stuart, you forgot to mention three things: firstly that the taxpayer is having to foot the bill for this bus tour; secondly, that Labour were the ones that introduced GST; and thirdly, that despite the misleading title, Labour have no plans to Axe The Tax. Only one political party has explicitly stated it would abolish GST if elected.
@ Jeremy, perhaps while you’re giving advice to the great unwashed you can explain this one… you will see it is indirectly related to taxes.
Publicly owned assets, (particularly land and its unearthed riches and resources) are in the scope for selling off.
The proceeds of the sales go where? – retiring debt – no.
Financing tax cuts in a lolly-scramble – more attractive.
And who will be the major beneficiaries of the tax cuts.
Oh yeah, Alan Gibbs and his mates.
Now just a moment, aren’t they the giants who will be buying the assets?
So, the government takes Gibbs’ money in the sale and then gives it back to him in tax cuts.
Nice one – government by the rich for the rich. Don’t you just love it?
Many of the rich that people being referred to on the top tax rate also benefit from govt aid WFF, Kiwisaver etc. That was the cost that Labour were willing to pay for votes in ‘05 (Also the tax cuts in 08). So within 4 years the bribes gifted then, the recipiants are unworthy of them now?
I am still awaiting anyone to comment on what a livable household wage is, and how to allow those under this to be able to enjoy life?
Also do we not gain with increase of GST if NZers ARE compensated with equalivent tax cuts. NZ still gains from the spend of tourists, Govt treasure chest increases and NZers could be no worse off, is that not a great deal for residents?
I did not hear of this concern in the Lab years regarding the increase of power, tax creep, CTS (and now a big hit in personnel wealth with leaky homes (Accepting that this was not totally Labs making) without being skeptical there could be a few croc tears here.
A livable wage wouldn’t be an easy one to answer. It would depend on rent or mortage, how many in household, age of people, any special needs..
Then how if a livable wage was referred to in the pre ‘84 -90 period is it so difficult now. Also how can you allocate assistance eg WFF, housing allowance etc to those who require it without knowing at what level it costs to run a household, also what is an appropiate level that min wage should be based on. in 05 the average household spent about $950/week
I take it that Darien Fenton is aware of what is a livable wage as here is an exapmle of her using the term in a quote
“The workers have to do long hours of overtime to earn a living wage. In some cases they’re working 60 hours a week,” says Darien Fenton, National Secretary of the Service & Food Workers Union, the union for Hubbards workers.
http://www.scoop.co.nz/stories/GE0003/S00067.htm
Matt, you posted the same argument 24 hours earlier.
I posted in reply to that this.
So Labour is responsible for the fact that worldwide inflation was higher in the past decade than in the 1990’s? (the post 2002 worldwide credit binge). And Labour is responsible for rising global food prices and the rising “demand” for energy worldwide – “and” in the development of more expensive renewables (and our growth beyond the old cpacity level of hydro)?
You have no spporting argument as to why you infer Labour government’s “cause more inflation” – because the only significant pertinent policy involved (government spending levels) hase no relationship to food prices, energy prices or the level of worldwide credit (causing asset value inflation and the sense of consumer wealth which results in rising demand).
I know the Labour party won many “centrist core party” votes over the 1999-2005 period, but how many used terms like “I can “CHOOSE” without nanny state how I can spend my extra money”, “Thanks god” and “Helen Von Stalin Clark”.
Possibly the average reader here is not as gullible as some posters would hope.
@ Logie – I Suspect that the Chinese Govt SOEs can out bid Alan Gibbs, you did hear that they dipped out buying Australia’s minerals?
And the proceeds of the sale can go anywhere the govt chooses, would not be surprised if they built a new prison/hydro dam/ or retired debt/lowered taxes.
Yes the rules around tax as well as other business law are always tilted to the rich and influential. Thank god we don’t live in the USA.
Axe the tax. What a lovely slogan from the party that brought GST in in the first place.
When I get a moment to catchup with the taxpayer funded bus. I must ask Phil what he did to offset the last GST rise for pensioners and the low paid.
If I remember correctly absolutely nothing.
Well Andy, it began with Roger promoting a flat tax and then having a fight with others over that idea. Then came the compromise – which included quite large cuts in tax rates across the board (larger than any increase of 2.5% in GST).
Then came the consequences of the economic downturn which came after the open market economy and governement sector reforms resulted in job losses. That (lower levels of taxable income) with these low tax rates did not generate the income required to run government. Basically Roger won more tax cuts than the government budget could stand running on his economic policies (and that was less than what he actually wanted). Remember that whenever he advocates on these issues.
The successors to Roger were left a mess. And that mess included finding new revenue – it included an increase in GST. No there were no compensating tax cuts they had come earlier and were not actually affordable without the GST increase – Roger thought they were, and he was wrong.
The relevant issue to now is this, there was the option of reversing some of the tax cuts (top rate down to 33 cents) back in 1989 if they were not affordable. Labour increased the top rate to 39 cents in their 1999-2008 period in government, they might well reverse any cut to 33 cents National makes now with the proposed GST increase.
That is the issue of the bus trip – use the GST increase on the many to cut the top rate for the few (while you are cutting governement spending providing services to the many) and we will simply put the top rate back up when we return to government. The issue is as much about the more general issue of fairness as GST (which has the regressive factor, which is only mitigated by focusing compensation to the lower and middle areas AND maintaining public provision).
Hmmm, getting support for disagreeing with an increase in GST…a no brainer really as who would ever vote to increase tax? I think Labour’s energy would be better spent coming out with alternatives/detailed solutions. Otherwise you’re just giving us the PR spin that you accuse National of. I would also love to hear a definitive answer on whether Labour, if voted back in, would reduce the GST back to the original 12.5% – how difficult is it to “unscramble the egg”?
As a pensioner I am hit 4 ways but Nationals “tax adjustment” Key says pensioners will be better off. You cannot trust a may who lies.
My pension is taxed at a higher rate of 21%. All pensioners are hit wit this.
The GST rise becomes cumulative so no one off compensation covers this.
The rise in living expense adjustment will always be a year behind so the GST excess of 2.5% will always lag forever accumulating.
My pretaxed ( at a very high rate) Government Service pension scheme that I paid into for 40 years will not be compensated with the lower buying power of the $ due to increased GST.
Meanwhile the rich are definitely going to pay less tax on whatever they cannot manage to avoid declaring.
Helen Clark spoke the truth when she said “you cannot trust them” Tell me when you could. The never ending story of greed being supported for those who have, and yet the spending of the have not is what supports them. Look at the statistics on how our nation is stratified economically and you will see who does the spending and where the consumer numbers are.