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Posts Tagged ‘GST’

OCR remains at 2.5% – now economy v english

Posted by Stuart Nash on March 11th, 2010

The Reseve Bank has held the OCR unchanged at 2.5%.  In the quarterly Monetary Policy Statement that accompanies each OCR announcement (see URL below), Governor Bollard has said (amongst many things): inflation predictions are around 2%, (however, there has been no modelling done for the proposed increase in GST and the cut in the top marginal tax rates for the 8% of Kiwis earning over $70K); GDP growth expected to be around 1% per quarter, or 4% per ann; and employment expected to drop by around one percentage point a year.  This begs a couple of questions / points:

1. if economy is expected to grow at 4% per year, then surely Minister English can now afford to give state sector employees a decent pay increase this year – remember he said last year possible wage freezes for up to 5 years.

2. if inflation is expected to be around 2% per year (without having yet modelled the impact of GST increases or tax cuts for the top 8%) then this implies a further reduction in the purchasing power for those 70% of extra-ordinary hard working kiwis earning $40k or less. 

3. Surely, with inflation forecast at 2%, and GDP growth forecast at 4% per year, the minimum wage has to increase more than the paltry 25c / hr given by the government last year.  Mr English? Mr Key?

Come on now Mr English and Mr Key – you have signalled what you are going to do for the 8% of kiwis earning over $70k/ann – now tell us what you are going to do for the other 92% – apart from increasing costs through increasing GST…

http://www.rbnz.govt.nz/monpol/statements/

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Filed under: GST, Tax
9 Comments

Go the Coasters

Posted by Chris Hipkins on March 10th, 2010

hilton

Joined the big red ‘Axe the Tax’ bus in Westport yesterday morning. Headed down the cost via Reefton, Blackball and Greymouth before heading over to Christchurch. We were very warmly received all the way down the coast. Nobody wants to see GST increased.

Spoke to quite a few retailers who are concerned an increase in GST will act like a ‘double whammy’ by forcing them to up their prices while also reducing the amount of ‘discretionary’ spending money people have left over after they’ve paid for the essentials.

Funny moment at the Bearded Mining Company in Reefton where they handed us a hunk of lead that had been spray-painted gold – they call it National Party gold. Lots of disappointment with the Nats; Auchinvole will be a one-term MP.

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Filed under: GST, Tax
32 Comments

“Axe the Tax” bus hits the Mainland

Posted by Chris Hipkins on March 8th, 2010

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Yesterday the big red Axe the Tax bus was in Wellington. I joined the crew in Timberlea, Upper Hutt where we handed out red balloons to the kids and were warmly received by the parents too. Later in the afternoon the bus was parked outside parliament where quite a few people stopped to chat on their way to the Phoenix game.

This week the bus hit’s the mainland. I’ll be on board from Tuesday to Thursday. The Axe the Tax campaign is online too, here’s a quick summary of where to find everything:

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Filed under: Cost of Living, GST, Tax, Uncategorized
19 Comments

Labour ideas spark interest on major Chinese website

Posted by Raymond Huo on March 5th, 2010

An article by Stuart Nash has gained some attention on the popular Chinese-language business website Luuloo.com.

Following my columns on NZ-based Chinese-language websites I have now gained a platform for my articles to be published on Shanghai-based Luuloo.com.

Luuloo.com features major business stories and market developments from around the world (including updates from the NZX) and it seems as though Stuart Nash’s thoughts on National’s tax reforms have caught the eye of many in the Asian business world.

Keep an eye on the site to see more articles from Labour MPs in the future.

Click here to read Stuart Nash’s article.

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Filed under: asian, ethnic
1 Comment

Tax tour update – are you listening, Mr Key?

Posted by Stuart Nash on March 1st, 2010

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.?

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Filed under: GST, Tax
34 Comments

AXING THE TAX PACK

Posted by David Cunliffe on March 1st, 2010

Labour is taking the fight to the government on its unfair tax plan.  The “Axe the Tax” bus tour is covering the country.

We are campaigning against is whole tax package, which includes all of:

  • GST going up from 12.5% to 15%, even though National said before the election they would NOT;
  • The unfairness of the massive cut to the top tax rate, dressed up as “alignment”, which delivers windfall gains to the top few percent.

The government’s GST tax switch is really just cover for the massive shift towards top end tax reduction.

Politics is, at least partly, about who gets what – and guess who stands to benefit most from National’s plans?

Not the vast bulk of Kiwis, who are on middle and lower incomes and who have toughed out the recession.

Labour will release its tax policy before the next election.  Labour’s tax plan will be fair to all Kiwis, not one aimed at delivering big cuts only to a few.

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Filed under: GST, Tax, Tax Working Group, Uncategorized, business, economic, economy
54 Comments

“Axe the Tax” bus hits the road

Posted by Stuart Nash on February 28th, 2010

Labour’s initiative to travel the country by bus to inform ordinary New Zealanders about the destructive impact of an increase in GST is now underway.  Led by leader Phil Goff and finance spokesperson David Cunliffe, Labour’s MPs believe strongly that any increase in GST must be fought, as it is simply not fair.

As we know, National plans to increase GST by 20% (from 12.5% to 15%) in order to fund tax cuts to the top 10% of wage and salary earners.  We think this proposed increase is wrong for a number of reasons, but primarily because it simply isn’t fair to the vast majority of hard working kiwis: to those 800,000 families struggling on a household income of $60k or less, or the 75% of New Zealanders earning below the average wage.

No one voted for this tax increase, and the Prime Minister actually said that he wouldn’t increase GST.  Increasing taxes for those most vulnerable in our society will only widen social and economic dislocation rather than increasing demand and stimulating the economy into recovery.

A recent Economist article noted that countries need to be careful that they don’t increase tax and loosen monetary policy too quickly (as in 1939 and in Japan in 1997) as this could force the global economy back into recession.  There is simply no economic logic to this tax policy.

So, if you see the bus on the road, toot in support.

The Axe the Tax bus hits the road

The Axe the Tax bus hits the road

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Filed under: GST, Tax
43 Comments

Video: John Key on GST

Posted by Chris Hipkins on February 24th, 2010

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Filed under: GST, Tax, national, video
20 Comments

Household income makes tax cuts fair..? Ahh no.

Posted by Stuart Nash on February 16th, 2010

Yesterday David Farrar put up an interesting post at Kiwiblog titled ‘all theory no reality’ ‘(http://www.kiwiblog.co.nz/2010/02/all_theory_no_reality.html).  He critiqued a post by No Right Turn on income distribution on the basis that it “gives us a great example of the difference between an academic theoretical analysis, and understanding the real word.”

David wrote: “You see in New Zealand, we have these things called families and households. What No Right Turn sees as a mass of poor people who will be unaffected by tax cuts, are spouses, older children, many students and even parents of those who do earn more than $23,000 a year, or even $48,000 a year.” 

“If a family has one parent earning $60,000 a year, and one on $15,000 part-time, they both benefit from a change to the 33% tax rate. Because they are a family!! …. So ignore the stupid stats and graphs about individual incomes. They are relevant to academic theory, rather than the real world. Household Family income is what affects most people. Now as of June 2009, the median household income was around $64,000. 30% of households have income over $93,000.” 

The medium household income is actually closer to $60k David.  This means that over 800,000 kiwi families are living on a combined household income of $60k or less; out of which has to come food, rent/mortgage, clothing, school uniform and books, telephone, petrol, rates, repairs, doctors etc etc (which will all increase due to GST rising). 

The tax cuts floated by the National govt with give PM Key an extra $500/wk in-the-hand and the CEO of Telecom an extra $2,500/wk in the hand.!!!  I suspect those families surviving on $60k household income will see the inequity and unfairness of the proposed tax cuts, even if Mr Farrar can’t. 

Household income deciles Number of households Percentage on or below this income
1 – 10K 20,300

1.26%
10 – 20K 149,200

10.53%
20 – 30K 188,400

22.24%
30 – 40K 163,500

32.40%
40 – 50K 146,500

41.51%
50 – 60K 138,900

50.14%
60 – 70K 111,300

57.06%
70 – 80K 104,200

63.53%
80 – 90K 93,900

69.37%
90 – 100K 72,100

73.85%
100 – 110K 61,300

77.66%
110 – 120K 60,900

81.44%
Total Number of Households 1,609,100  

I also love this line from David in the same blog: “..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.”  Of course, that’s right David – mum and dad can shiver through winter (powerbills have GST, and we know how high they go), but if the kids are lucky enough to be one of the 9% in the top tax bracket, then all will be fine because they can now afford that winter holiday in Fiji…!  What about the parents whose children are one of the 800,000+ kiwi families struggling on $60k household income.?  Suspect they also will see the gross inequity and unfairness in the govt’s proposed tax changes…

So perhaps Mr Farrar should take his own advice.  Stop worrying about the theory, and focus on the real world.

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Filed under: GST, Household income, Tax
9 Comments

GST poll in herald – disingenuous

Posted by Stuart Nash on February 13th, 2010

If anyone had any doubts about the NZ Herald’s political stance over Key’s GST proposals, they certainly won’t anymore.  Front page of the NZ Herald this morning had a headline “Poll shows solid backing for GST rise if income tax cut”.  We then read on to find out that the so called “poll” was actually an email sent to the 6,432 Herald readers on the Herald’s reader panel.  Of these only 1,407 replied. 

Now I hardly think this “poll” is scientific, objective and representative of the views of all NZers.!  Far from it.   Wouldn’t mind knowing the full demographic of this reader panel – but I can guess…  What the Herald only mentioned at the end of the article is that a greater percentage of readers thought that the tax package was unfair (45%) than it was fair (43%).!!! Also only 22% thought that the tax proposals would promote economic growth versus 51% saying it wouldn’t.  Wonder why the Herald didn’t lead with these results..?? 

Come on the Herald, you can do better than this, and your readers expect more.!!!

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Filed under: GST, Tax
21 Comments

Key flip flop on GST astounding

Posted by Stuart Nash on February 12th, 2010

Key has now said that he will not introduce an increase in GST if the data proves that some kiwis will be worse off, or if he can’t get support from the Maori party.  What..??? Astounding.!

The government’s Tax Working Group presented its discussion paper on GST at the end of July last year, so the govt has had all this time to do the figures around this important piece of tax reform.  What have English and Dunne been doing for the past 6 months?  Both Key and English have previously said in the House and the press that no New Zealander will be worse off when GST is increased to 15%, but now we have this amazing admission that perhaps they were wrong.  We always knew they were – and told them so – perhaps they should have listened to the party that represents the many not the few: NZ Labour. 

As for the Maori party – again, Key, English and co have had 6 months to consult and build concensus with their coalition partner on this important issue, but obviously didn’t even tell them their plans before the PM’s state to parliament.  Some coalition, some partnership - where’s the trust.? 

So Key’s flip flop appears to be an admission that he is wrong re the numbers and a case of out-and-out incompetence (wouldn’t want to be Bill English at this moment in time).  As for the Tax Working Group – they must be wondering why they bothered.!

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Filed under: GST, Tax, Tax Working Group
34 Comments

Exploding tax myths – Part 4

Posted by Stuart Nash on February 9th, 2010

Myth: John Key has said that New Zealand taxes consumption at a relatively low rate.

Reality: The rate of GST in New Zealand, at 12.5%, is relatively low, but the coverage of our GST system is particularly comprehensive. As a result, New Zealand has the sixth highest level of general consumption taxation, as a proportion of GDP, out of the 30 countries in the OECD.

The OECD stated in its 2007 edition of Revenue Statistics that:  ” . . contrary to the expectations of some commentators, there has not been any general trend in OECD countries from direct to indirect taxation. Indeed, there has been a slight trend in the other direction over the last thirty years, following a sharper fall in the share of indirect taxes from 1965 to 1975. Over the past forty years, the general trend away from indirect taxes has been so strong that only six countries– Luxembourg, Mexico, the Netherlands, New Zealand, Poland and the Slovak Republic – escaped it.” (p. 38, emphasis added)

So despite some general trends in this direction, New Zealand has been an outlier. This reflects our late (1986) adoption of a GST but also its comprehensiveness.

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Filed under: GST, Tax
4 Comments

No support for GST increase to cut tax for high earners

Posted by Trevor Mallard on January 21st, 2010

I haven’t been able to find any support in Hutt South or on facebook for an increase in GST to offset revenue lost from cutting the top tax rate.

Inequity pretty obvious and would be a good point of difference for Labour at the next election.

Certainly some support for closing some of housing loopholes esp getting deduction for depreciation on appreciating asset.

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Filed under: Tax, economy, finance
31 Comments

Tax a big issue

Posted by Stuart Nash on September 13th, 2009

Once again it looks as if tax policy is shaping up to be another big issue that will define the philosophical differences between Labour and the Nats. 

Party members at the conference were horrified when I told them that the Treasury official on Bill English’s Tax Working Group said that they are crunching the numbers on increasing GST to fund income tax cuts from the current top rates of 38 and 33% down to 30%.  He was, however, only reiterating National policy of cutting the top rates down to 30%. 

Another kick in the guts for ordinary kiwis on middle to lower incomes who would not qualify for a national tax cut - again!

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Filed under: Tax
7 Comments