The Nats had the Tax Working Group and Australia had the Henry Tax Review. Dr Henry is the Australian Federal Treasury boss.
For some reason, Prime Minister Key and Finance Minister English have always operated under the assumption that the Henry review would recomend to the Rudd government that taxes should be cut - esp the company rate. Key and English’s own tax working group also seemed to be operating under such an assumption.
Dr Henry presented his report to Federal Treasurer Swan in December, and while the report has not been made public, Dr Henry said in a recent speech that the consequences of the aging population means that Australian’s will need to pay MORE taxes. Mr Rudd has said that he is putting the Henry tax review on hold as he concentrates on major health reforms.
Mr Key and Mr English seem to be stuck in a late 20th century economic timewarp when the rest of the world is concentrating on how to stimulate the economy by providing relief for those who actually need it – those 70% of salary and wage earners on $40k or less – those 800,000 New Zealand families with a combined household income of $60k or less. How about doing something for these Kiwis Mr Key.! Take a leaf from Mr Rudd’s book and put these tax increases for the many so as to cut taxes for the few on hold – then seek a mandate from the people in 2011 for such radical and unfair changes. Go on.
Mr Key and Mr English, who have been courting grey power, seem to be using the ‘we’ll up your super to relieve the GST rise” bribe as a means to seeking re-election.
In a recent Herald report they were quoted as saying the tax changes would generate an extra $1.3 billion, yet we are all going to be better off – maybe they are going to place a bet on the TAB, cause the maths doesn’t add up???
Agreed.
I can’t believe we have another year of this. 
so, you’re saying Labour will raise taxes and lower GST?
They’re not saying anything.
It’s not their time to release policies yet. Though there are a lot of tories out there, who secretly LOVE the Labour Party, who desperately want to hear the policies so that they can drool over them. 
For some reason, Prime Minister Key and Finance Minister English have always operated under the assumption that the Henry review would recomend to the Rudd government that taxes should be cut – esp the company rate.
You’ve never heard this anywhere else?!
I always find it amusing how Labour’s “many” never seems to include the ones paying the most taxes – that is, the ones who actually pay their fair share as are not rich enough to spend hundreds of dollars a month hiring an accountant to hide it in trusts etc.
I personally don’t really see the point of lowering taxes, but I want to see the thresholds change to reflect today’s current cost of living and I want the personal & trust rates aligned & perhaps with the company too as everyone seems to forget that NZ has imputation credits which means overall we actually do have a very low company rate compared to other countries.
To put it into perspective we pay $27,000 in tax, $5800 in ACC and get nothing back: we don’t use the public transport as it is more expensive than running our car, we have private health insurance as lets face it, unless you’re almost dead you don’t have a chance at getting surgery you need, we will probably have to go private for high school education as thanks to Labour’s funding freeze on schools in the Hutt, the schools here are rubbish and yet despite all of this, we only get $15 off the $80 GP visit if we go there under ACC. And then there is the mortgage (for an average house), high cost of basic food items, petrol etc etc.
I pay my fair share and I want my fair share in return.
Rebecca,
We’ are pretty much in the same boat as you- get nothing from WWF, no after school or child care subsidies, pay lots in ACC, rarely use PT, don’t watch rugby or TVNZ etc..
What I would like are some decent teachers for my kids and some hospital services if I get sick. Do you see any chance of improvement of these under National? I dont want a tax cut, I just want decent government services.
Oh and I would like some work going into encouraging economic growth. The job I did in Mebourne now pays 100% more than my current one.
Yes you do – you get a stable society to live in.
People seem to forget that the society that they live in costs and to support that everyone needs to make a sacrifice. They sacrifice some of what they can do (speed limits etc) and they sacrifice some of their wealth so that important infrastructure (telecommunications, roads etc) can be built and services (justice system etc) rendered. Private providers won’t provide any of those as they’re far too expensive.
Rebecca and Top Cat
“We’ are pretty much in the same boat as you- get nothing from WWF, no after school or child care subsidies, pay lots in ACC, rarely use PT”
I don’t get all the stuff you guys dont’ get. I don’t have children, never had, will never, and I help pay for the healthcare and education of others. I dont use public transport (but I live in Auckland where PT is a dirty word), but I do drive on the roads… Ihave no children but I subssidise other people’s children to go to University, polytechs etc…
I never went to war and NZ has never been invaded but I pay for the military. I can swim and leave my itinerary when I go tramping so don’t need expensive rescuing. Unlike Don Brash I have never had an investigation of the Police, even though I have had to call the police once or twice in my life.
When ACT had a platform of no tax and full user pays, did you two vote for them?
“Mr Key and Mr English seem to be stuck in a late 20th century economic timewarp”. Hmmmm – I suggest that it is you who is ’stuck’ Mr Hipkins. It is glaringly obvious to all who follow the ups and downs in Australia, that the mooted tax increases there present NZ with an ab-fab opportunity to steal a march on our dear neighbours. Please Mr Key et al – lower our taxes to below those of Australia, especially please lower the business tax rates to well below those in Oz. Do that and see a surge in wealth creation activities in NZ (anathema to you Mr Hipkins), and a fall off in the awful rate of emigration to Australia.
If you care for our country and its future Mr Hipkins, you will support the drive to lower our taxes vs. Australia – but in all sincerity do you and yours really care about us ?
As a former Labour supporter and voter, the way that the last government presided over the mass emigration of our people to Australia was a principal cause for me changing my voting behaviour. The lower our taxes, the more our people will work to make more dollars and so wealth creation and jobs will follow – just watch.
Come on Labour Wake up !
Tracey – no Act had to be bumped since I only got 2 votes like everyone else and I wanted to make sure Labour was not in government for another term.
But yes I liked a lot of their policies as even if they were too far to the right for my liking, it was just refreshing seeing something that was not aimed just at the lower socio economic groups.
We are such a tiny country and I do not believe that this cradle to grave mentality we have whether that be welfare, national super or public services etc is sustainable. We went for too long without putting proper investment into these areas and now we have a situation where even though our population is that much bigger and able to give the government more revenue, the needs of the masses still seem to still be dominate so we are just constantly playing a game of catch-up.
I always want to make sure there is a safety net for those that truly need it as that is the right thing – the human thing – to do, but I also want more incentive for people to get ahead.
I personally think that our current super system whereby you qualify as a matter of right if you have been a NZ for 10 years or qualify under a social security agreement such as that with Australia and the UK will have to change. I think that everyone will be ducking for cover when the baby boomers all start putting their hands out as I just don’t believe there is enough money in the purse.
In terms of assistance for lower income families, I despise WFF and think it is one big have – have given my reasons for this many times so won’t bother repeating them here. However, I am a firm believer in doing something to help these families as their children and my children are our future tax payers.
Someone will always have to pay for services that they don’t use in one form or another and to be honest, you need to help subsidise my child’s & that of other children’s university education as they may very well be your doctor, lawyer, vet, accountant, nurse, local councillor, MP or rest home manager one day. In a nutshell, that is the point of procreation – to have someone look after us in our old age.
The point is that there could be a better balance so one group is not constantly being squeezed from all sides without any returns whatsoever.
My only worry is that National, like Labour will not have the guts to give everything a good shake up. They haven’t yet and it is doubtful they will in the next 2 years.
While Labour is doing its job in Opposition very well by way of criticising everything National does, I still can’t help but think it is a little rich since they were in government until about a year ago and have yet to outline their alternatives. This game is something that I despise in politics, but I guess that is just how things work. Don’t get me wrong, if Labour came out with a viable alternative I would jump ships in a heartbeat!!!
Military – we pay to help other countries fight wars that have nothing to do with us….not quite sure how you fail to see that our taxes being spent here is a waste!
Tracey. Not sure why you submitted this comment three times Clare
Tracey – no Act had to be bumped since I only got 2 votes like everyone else and I wanted to make sure Labour was not in government for another term.
But yes I liked a lot of their policies as even if they were too far to the right for my liking, it was just refreshing seeing something that was not aimed just at the lower socio economic groups.
We are such a tiny country and I do not believe that this cradle to grave mentality we have whether that be welfare, national super or public services etc is sustainable. We went for too long without putting proper investment into these areas and now we have a situation where even though our population is that much bigger and able to give the government more revenue, the needs of the masses still seem to still be dominate so we are just constantly playing a game of catch-up.
I always want to make sure there is a safety net for those that truly need it as that is the right thing – the human thing – to do, but I also want more incentive for people to get ahead.
I personally think that our current super system whereby you qualify as a matter of right if you have been a NZ for 10 years or qualify under a social security agreement such as that with Australia and the UK will have to change. I think that everyone will be ducking for cover when the baby boomers all start putting their hands out as I just don’t believe there is enough money in the purse.
In terms of assistance for lower income families, I despise WFF and think it is one big have – have given my reasons for this many times so won’t bother repeating them here. However, I am a firm believer in doing something to help these families as their children and my children are our future tax payers.
Someone will always have to pay for services that they don’t use in one form or another and to be honest, you need to help subsidise my child’s & that of other children’s university education as they may very well be your doctor, lawyer, vet, accountant, nurse, local councillor, MP or rest home manager one day. In a nutshell, that is the point of procreation – to have someone look after us in our old age.
The point is that there could be a better balance so one group is not constantly being squeezed from all sides without any returns whatsoever.
My only worry is that National, like Labour will not have the guts to give everything a good shake up. They haven’t yet and it is doubtful they will in the next 2 years.
While Labour is doing its job in Opposition very well by way of criticising everything National does, I still can’t help but think it is a little rich since they were in government until about a year ago and have yet to outline their alternatives. This game is something that I despise in politics, but I guess that is just how things work.
Don’t get me wrong though, is Labour came out with real solutions (let’s face it, after 9 budgets they would still have a pretty good idea of our accounts a year out of office) I would jump ship in a heartbeat.
Military – we pay to help other countries fight wars that have nothing to do with us….not quite sure how you fail to see that our taxes being spent here is a waste!
Nope, the lower our taxes the more people will leave as our society goes to the dogs. Australia’s tax rates were higher than ours over the last decade and their businesses thrived and our people went over there. Over here, well, the rich got richer, the poor got poorer and necessary services declined.
The baby boomers deserve their super! They have paid their taxes and built this country.
Oops, I have no idea how I managed to post my comment twice..
Anyhoo Draco, can you please qualify “Australia’s tax rates were higher than ours over the last decade and their businesses thrived and our people went over there”?
We looked at going to Australia in 2007 and when we looked at the Australian tax calculator, we worked out we would be $3000 better off. The top rate didn’t kick in until $100k which was the biggest difference for us & why most people we know have left NZ to live in Aus. We only stayed because of family circumstances. And now the job we would have had has gone. So we’re stuck for the time being. The rates looked the same if not slightly lower again in 2008 & 2009….
P.s @ Clare – I clicked the submit button twice as it didn’t look like it even registered my comment initially…
@Spud – Must disagree – Not all boomers can have super, we must at some stage means test it. I work with 70% over 50s who have tried the “we paid taxes” argument, but apparently we still had a deficit so they obviously weren’t paying all their taxes (or ran out of silver to sell), or they took too much free education-health-etc. (P.S. I said means test not asset test).
@ Rebecca. just a couple of points – Public Transport is paid from WRC Rates. Taxes pay for the motorway you drive on. I can report using Hutt Hospital on occasion and havealways found the level of care to be very high. Comparing with internet friends from US their system is poked. In some cases very scary.
And if you are struggling for a school (assuming college) try going to the largest in the Hutt, you know black & gray uniform. in 100 years they have produced more prizewinning students than any other school in Lower North Island – That is Nobel prizes, Sports medals, Oscars, Music etc.
Mean test?
Oops I mean means test 
I’m gonna have to disgree with you on this one Jeremy.
go on spud – tell me a bleeding heart story about how John Key needs another couple of hundred in his retirement (assuming also he gets a generous parliamentary package for 1/4 the length of time of the Mallards/Clarkes/Lockwoods/English)
Not Key, I’m sure he’ll be fine with his millions. I’m talking about Joe Public!
Then we may agree ‘in principal’. I wouldn’t know where I would put the cut off, definitely 100K mark would be comfortable with no mortgage, no kids, no student loan, Free bus, dicounts on rates & every other bill. Health I see as financed separately through Com service Card or hospital.
One very big problem is once we set a figure every election it will get squeezed, so it needs to be enshrined in the constitution.
Just strikes me as the most crazy system that Joe millionaire gets paid, while Jane public has to sell their house for later life care.
@ Topcat “Oh and I would like some work going into encouraging economic growth. The job I did in Mebourne now pays 100% more than my current one.”
No details/industries/reasons so just speculating.
Knowing that OZ has not had twice the “economic growth” as we have (for extended period) could the difference in wage rates and wealth in OZ be due to stronger labor laws and stronger unions???? Are we too focused on outgoings (tax & inflation) and not enough on the inflows?
@Rebecca
Its hard to get ahead when you get kicked down at every turn. We made the choice for me to stay at home with the children, then he left and due to cuts made where I was working there is no job there now even if I did reapply.
I tried to study so I could have a more secure job, using TIA to cover childcare but that was cut. Now they say they might make it harder to study part time, people taking too long to get a degree is wasting tax payers money. Well I can only study part time due to the cost of childcare, my children are not yet in school and was hoping by the time they are I would be qualified, now that is up in the air. Were I was able to just get what we needed from the shops, some days we can’t afford bread. (I do make scones those days, my children never go hungry, I sometimes do, but never my children)
You just never know what is around the corner.
Oh A Mother
I’m sorry you go hungry.
Not at the moment spud. I have a garden full of tomatoes and silverbeet that I can make a quiche out of, though I know they are not free range eggs, we have eggs. and grapes nearly ripe. And usually that only happens on Wed’s.
Just trying to make a point to Rebecca that you really don’t know what around the corner. I used to be in here position not having to worry about it and my ex on good money, not quite the top, only qualified for WWF once I stopped working, but we were well enough off.
http://jimdonovan.net.nz/wp-content/uploads/2009/05/oecd-tax-wedge.jpg
That said, Australias’ taxes are much more progressive than ours with the top rate being higher and the rest lower. Also, have you considered that it wasn’t because of tax rates that you were better off but because wages are higher in Oz?
Two things about cradle to the grave:
1.) It’s a prerequisite of society and is, as a matter of fact, why we have one.
2.) It’s sustainable – if we don’t have the rich who take up most of the resources available to society and if we live within our renewable resource base. ie, not in a capitalist society.
Size really has nothing to do with it. It only applies in an economic system that requires unsustainable growth – ie, capitalism.
It’s a massive subsidy to business who aren’t paying high enough wages.
As long as we have capitalism then one group will always be squeezed for more – the poor.
A mother you are in the group that deserve the most support we can give you. While horrible, your story unlike the ‘DPB bludger myth’ is actually all too common.
I believe that where families such as yours are concerned, lower taxes across the board such as first $10k tax free and no GST on raw food items but higher GST on luxury items (e.g. sky, flat screen TV etc) would help you far more than the current system including WFF. While WFF appears to be a form of giving you a tax break, it is a tax break less all the associated costs with getting that extra assistance into your bank account which means you are getting less than you would if they just taxed you less in the first place. In sum, I’m a big fan of Gareth Morgan…
In my opinion, encouraging people to be more self-sufficient by way of letting them keep more of the money in the first place, is a better way to go. I believe in a little bit of Robin Hood (so-called rich pay more taxes to help so-called poor) as I think you have to if you want to call yourself a human, but not to the extent we have at the moment mainly because the un-rich like me are paying proportionately more than everyone including the actual rich. Not fair!!!!
And yes, I agree. Always pays to prepare for the rainy day although a spouse leaving is usually not something you would ever expect.
You are obviously a strong woman who clearly has a lot of focus so kudos to you for continuing to try and get ahead. I am sure some days are very tough with trying to balance everything.
Jeremy – black & grey uniform? We’re not in that zone. Our uniform is either maroon or teal. And as for WRC paying for our public transport costs – uuum perhaps for buses, but not the trains (& both are equally expensive) you do know the government bought Kiwi rail and bought new carriages in 2008 or 2009?
Rebecca- Look at your WRC Rates – It lumps all the PT into one, but Rail takes about 2/3(Bus, infrastructure & Admin take rest). Council also paid the lions share (borrowed money) of the new rail carriages with some assistance from govt. The WRC still pays for the service (and gets to fine kiwi rail when services not run). This won’t change till at least the next contract round.
One point is that the bus companies are required to open their books to WRC to qualify for subsidy, but Rail (no competition) has always refused citing commercial sensitive. Ie, if anyone knew just how much they were milking then other companies would be over here too.
As for cost both buses and trains will deliver you into Wellington for less than parking, not counting gas & maintenance for a car, but we all have other reasons for driving.
@Rebecca.
I don’t know how that would work since the DPB is 272.70 (for everyone) and avg rent is 300+. The DPB would have to rise, even if they took GST off food.
The rest is made up of WWF without the in work tax, and Accom Sub. Paula Bennett also adds the Childcare subs which you don’t actually see as it goes to the childcare provider and not into your account but thought I would just mention it as she adds it on to make it look like people are receiving more than what they are, but by doing that the more people are deemed to be receiving the less they actually have to live on.
I nominate Draco for comment/response of the week
to “I despise WFF and think it is one big have”
you replied
“It’s a massive subsidy to business who aren’t paying high enough wages.”
Clever
I do however see where you’re going in regards to No GST on food staples though. That would help as don’t buy much processed food. Rather buy apples than 2 bags of chippies
@ Tracey – perhaps clever, but inaccurate.
@ A mother – yes Paula Bennett including the childcare subsidies as part of the income was just bollicks, completely inappropriate and misleading.
When I talk about scrapping WFF I mean cutting tax & wiping out family assistance, accommodation supplement etc, but increasing the basic benefit rate instead and still keeping childcare subsidies – let’s face it, even if you manage to get the maximum subsidy you are still left with a bill of about $5 per hour per child, or at least in the main centres anyway.
It really annoys me how irrelevant the benefit rates have been and continue to be, that they need to be topped up by various other forms of assistance which not only increase the cost of administering that assistance, but also still falls well short of what it costs to get the basics – food, clothing and shelter.
The benefits also be a living wage, but because of all the negative connotations associated with them they are unlikely to ever be relevant in terms of what it costs to house, feed, clothe yourself let alone your children. This is more so when another fraudster hits the news. I would actually like the entire benefit to be loaded onto the community service card in a similar way to how petrol cards work where people still have complete autonomy over how they spend their income but that certain things are banned (alcohol, cigarattes, lotto, TAB etc). I’m sure this would do something to help keep the integrity of why one is on a benefit in tact.
Oh and I want to see some changes in terms of how some beneficiaries are treated such as yearly reviews for those on the disability benefit. If you don’t have legs and arms then that is hardly likely to change in a years time, it’s not like they can grow back!
Sorry, off topic. Back to tax…since GST is part of these tax changes…..
@ Stuart Nash or anyone from Labour: can you please explain why it is so hard to remove GST from raw food items? Any time anyone ever discusses this issue there is always the call for this to happen and yet the response from all parties is the same – too difficult, can’t happen.
I like most of what you wrote except that putting benefits on community services cards then makes the user be identifiable as a beneficiary every time they shop.
True that but overall I think it would help reduce the stigma associated with being on a benefit. I tell you what, if my husband ran off with some tart I’d being tell the world that I’m on the DPB and proud of it as quite frankly, I’ve earned it given the sheer volume of taxes I have paid in my working life pre-baby and post baby while in business. It is nothing to be ashamed of at all. It’s there as a safety net whether for Mums or for those who have the misfortunate to be badly injured, suffer a debilitating illness etc and we should be proud of the fact that we at least have it
Rebecca one of the reasons not to do as you suggest is the connundrum of having benefits creep higher than those ona minimum wage. That is why Draco refers to WFF as a business subsidy, we are propping up people with our money because business, many of them, will not budge their lowest pay rate unless legislated against.
Tracey the so-called business subsidy is only the tiniest proportion of the benefits that we are paying so no, I disagree. Your statement and that of Draco’s assumes 2 things: first that there is enough jobs for everyone and secondly, that everyone is fit for work. Not so. Of course the minimum wage needs to be increased too but to assume that this will fix the anomalies in the tax system including that the con that is the WFF is wrong. WFF was a sticky plaster at best, and a one with big gaping wholes that actually fixed nothing.
“it would help reduce the stigma associated with being on a benefit.” – I disagree, I think that there will always be people who will judge the beneficiaries.
As for the rest, he he he – get that mythical cheater
haha he wouldn’t dare – why go for crumbs when you’ve got jam already
LOL
Why not ’stimulate’ the economy by giving money back to low and middle income wage earners – by making the first $50,000 of their income tax-free?
What so people over $60 or $70 pay ALL the taxes, not just 70% of them? Not a chance!
No, I agree with Gareth Morgan’s (or was it someone else?) ideas instead – make the first $10k tax free then flat rate of about 20% until $100k then tax 45c in every dollar for $100k & over.
I also want to see tightening up of the residential property market as the baby boomers have gotten away with buying our first homes and renting them back to us at a premium for far too long and I want to see rich people actually pay their fair share. People using trusts or companies to minimize their income for the purpose of skimping on taxes & child support and then having the audacity to claim family assistance and the other components of WFF has got to stop. It’s been going on for over a decade. They should not be able to leave it to people like me to pick up the tab.
Maybe we should all go into politics as right or wrong, we seem to be coming out with more ideas than the Labour Party….