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Posts Tagged ‘GST’

100% tax cuts ahead

Posted by on May 7th, 2012

Today’s crash of Inland Revenue’s website highlights a wider IT vulnerability that must be addressed – urgently.

The IRDs current tax collection system was designed in the early nineties. It was effective for many years.  But it has become increasingly obvious that patches applied over recent years are a failing stopgap.  New Zealand needs real progress on a replacement system.

The Government has already written off millions of dollars after a failed attempt to rebuild the student loans component of the IRD online collection system.  Since then no progress, only bad news.  Earlier this year, it was revealed that the Government estimates a necessary IT rebuild of IRD’s whole tax collection structure will cost up to $1.5 billion dollars.

New Zealand is not unique in having a tax system.  Adapting successful systems used elsewhere is the logical approach to replacing our ailing IT infrastructure.  This problem has been on the horizon for some time.  It beggars belief that the Government has not yet outlined a convincing plan or timeline for the development of overdue IT solutions. 

Voluntary compliance with a transparent tax system is critical to the efficient and effective functioning of our society. 

Businesses rely upon our tax collection system working properly when they put their GST returns in.  They don’t have time to waste reentering data when systems go down.  We cannot afford to risk the patience of those citizens who wish to comply with their civic duty.

And testing the patience of businesses is not all that is at stake here. Our hospitals and schools rely upon a trustworthy tax-collection system.  The IRD must not be allowed to fail.

The Minister of Revenue has not put forward a credible timeline for the project, and it is becoming clear that the government is sitting on its hands whilst New Zealanders face the consequences of an IT time bomb.

Not good enough Minister.

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Filed under: Tax
11 Comments

Addicted to Food

Posted by on December 30th, 2011

Perhaps it’s just because Christmas overeating is still heavy on my mind (and other body parts) but I’ve noticed there seems to have been a lot of discussion about causes of and suggested solutions to obesity over the last few days.

Waikato University scientist, Dr Pawel Olszewski suggests sugar and fat may produce changes in the brain which resemble the effects of addictive drugs. This may have a profound impact on the way governments, health practitioners and communities plan to combat the impact of the growing incidence of obesity.

We must be careful, though, not to directly equate sugar and fat, which our bodies need, to nicotine, alcohol, THC, amphetamines etc which we can quite happily do without:

Dr Olszewski says that while the brain responds to tasty foods in ways that have a lot in common with its reaction to drugs, he stresses there is a clear distinction between the complex mix of substances found in foods and a single compound such as morphine or nicotine. For this reason he describes over-eating patterns as “addictive-like”.

“We don’t want to send the message that if you’re eating a sandwich, that you’re consuming a drug. However palatable, high-sugar foods very often increase activity of the same brain circuits that are involved in the creation of the addictive state.

“So we believe this addictive-like behaviour stems from the effect that nutrients, in particular sugar and to some extent fat, have on the same set of brain areas that drive addiction.”

Tony Falkenstein, chief executive of Just Water International, made the connection and took it to a seemingly logical conclusion by suggesting a sugar tax. (Which, of course, would benefit his company).
This drew a thoughtful rebuttal from Dr Jim McVeagh at MacDoctor:

Immediately one can see the absolute pointlessness of a sugar tax. Potatoes, white bread, rice and pasta become sugar in the body as fast as pure cane sugar and nearly as fast as glucose powder. Taxing sugar is like sticking your finger in the dyke when the tsunami alarm has just gone off. And taxing carbohydrates in general is just adding a tax to nearly all food.

I’m inclined to agree that taxing sugar is pointless and taxing fat just becomes ridiculously complex as you attempt to define ‘good’ and ‘bad’ fats.
As Jim McVeah says,

all that causes obesity is taking in more calories than you burn up.

So if an excise-type tax were to be used in an attempt to curb obesity, the only logical approach I can think of is for it to be based on calorie density. Extremely calorie dense foods tend to be those that we ought only to eat occasionally although I expect there will be exceptions. A similar  effect could be achieved by taking GST off  low-calorie density foods. Both approaches have flow-on consequences that would have to be thought through before suggesting that either is worth implementing.

Add to the mix research released from Ohio State University this week that shows the attachment between mothers and toddlers is linked with incidence of obesity and you quickly get the picture that obesity is not straight forward and solutions will be neither singular nor simple.

Obesity is a significant driver of the increasing cost of healthcare and therefore cannot be ignored. Developing prevention and treatment strategies is the responsibility of governments as much as it is the responsibility of parents, communities and individuals.

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Filed under: health
28 Comments

Flashback – Key on GST rise

Posted by on November 1st, 2011

To help refresh memories, here is exactly what John Key said on GST before the last election. Personally I don’t think there is any room for nuance here. He said he would not increase it, and he did.

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Filed under: #ownourfuture
24 Comments

Carmel talks about the cost of living

Posted by on August 21st, 2011

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Filed under: #ownourfuture, Cost of Living, GST, Tax
11 Comments

Families struggle as food prices go up

Posted by on July 13th, 2011

Hard working Kiwi families have been struggling to keep up with the increasing cost of living under the National Government, and as the cold of winter bites, power bills aren’t the only things up with food prices increasing.

According to Statistics New Zealand, food prices rose up 1.4 per cent in June over May, and annually, food prices are up 7.5 per cent on a year earlier.

Fruit and vegetables have been hardest hit in June, rising 12.2 per cent. Tomatoes were up a staggering 56.9 per cent over their price in May, with lettuce and capsicum also up over 40 per cent on the previous month.

Labour promised to take GST off fruit and vegetables. If this policy were introduced the price of fresh fruit and vegetables would fall dramatically. Not only would Kiwi families have a cheaper grocery bill, but they would also have a healthier lifestyle.

It seems that hard-working kiwi families are being hit everywhere. GST rises, working for families’ cuts, kiwi saver cuts and arbitrary employment laws (90 day fire-at-will) mean that Kiwis are on tenterhooks as the costs mount during winter, a time when doctor visits are essential and power bills naturally increase.

When will the National Government give hard-working Kiwi’s a break?

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Filed under: asian
42 Comments

Long Term Effects

Posted by on April 5th, 2011

Yesterday Otago University released data linking the increasing unaffordability of food with deteriorating mental health.

It’s a very good example of the need to consider the long term effects of government policy. Yes, we all understand that putting GST up without proper compensation for people on middle and low incomes is making life harder for kiwi families right now, but the long term effects are much more concerning.

National’s policies have not only increased inequalities, they are creating a problem for future governments by failing to keep people well and increasing future demand on all health services including mental health.

It might not be of much concern to John Key and co because it won’t be their problem. But someone will have to deal with it and we’d all be a lot better off (financially and socially) if we prevented the problem when we can see it coming rather than waiting for someone else to clean up the mess.

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Filed under: health
28 Comments

Tax Swindle Leaves 38% in Waikato worse off

Posted by on October 18th, 2010

So says the front page of Saturday’s Waikato Times, after they polled 180 readers on the subject.

only 12% felt they were any better off, 38% worse off and 33% unchanged. Some readers said John Key has lost their vote over the GST increase.

And just to show how out of touch those on big incomes are with reality, a partner of Deloitte Hamilton says people just had to “reprioritise.”

“You can choose whether or not to spend money and therefore pay tax,” he said.

Really? Choose not to buy groceries, pay the power bill, pay for petrol, pay the rent? This man has no idea that low and middle-income families spend all they earn on just getting by.

His out-of-touch comments reflect arrogant National Party thinking. Guess he must be in the 12% laughing at the expense of the other 88%.

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Filed under: Cost of Living, economy, Hamilton, inequality, polling, Uncategorized, waikato
19 Comments

As you do the Saturday shopping

Posted by on October 2nd, 2010

You saw it here first (well not quite first, but for the first time after the election), so a reminder as you look at the bill from shopping this morning that National campaigned explicitly not to increase GST.

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Filed under: Cost of Living, GST, Tax
46 Comments

The Tax Switch/Swindle

Posted by on September 26th, 2010

The last few days in the electorate have been marked by an increasing number of people, of all political persuasions working out that the tax switch is going to see them no better off, and in many cases worse off. The GST increase, and the associated price increases are top of mind. In Wellington 6% increases in power bills and the increasing costs of bus travel will wipe out the meagre tax cut benefits for those on low to middle incomes. Everything from the increased cost of rates, rents, stamps and food have also been raised with me.

The NZ Herald had a feature story on this yesterday as well, and the experience of the family who have had the benefit of tax cuts wiped out by the government’s funding cut to early childhood education is another commonly raised issue.

The Sunday Star Times story today, though, makes clear the real problem with the tax switch

The real winners from the cuts are people earning more than $70,000 a year. Anyone earning $100,000, for instance, can expect nearly $70 more in their pay, making them $42 better off after paying that extra GST. For low income earners, the impact is marginal. Someone on $20,000 will be nearly $3 better off, while someone on $30,000 will be $6 richer.

No wonder John Key has instructed his MPs to try to sell the tax switch. The problem is people know their own budgets and costs, and no amount of spin will change that.

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Filed under: Cost of Living, economy, GST, Tax
40 Comments

Why should we believe you John Key?

Posted by on September 22nd, 2010

John Key is starting to trip himself up. In parliament in question time today he was asked to confirm whether he said before the election he would not increase GST. He said “I had no intention of increasing GST”. In other words: well I didn’t want to increase it but I’ve had to.

Well watch the video for yourself. Again.

Did he say “National is not going to be increasing raising GST” or did he say “I have no intention of raising GST”?

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Filed under: economy
28 Comments

Cost of living goes through the roof

Posted by on July 27th, 2010

LabourSurvey pic 27July10

I thought I would share this response to some questions we have asked in the community with Red Alert readers.

The loose translation of the Chinese text is:

Dear MP Huo, Thank you for your Labour Party who always speaks on behalf of ordinary kiwis, particularly at a time when the cost of living is increasing dramatically, well done, we support you. (name and address withheld)

This constituent echoes the thoughts and feelings of many families across the country.

It is concerning for everyone in the community that prices are rising faster than wages, and with an increase in GST coming into effect shortly, this situation is only going to get worse.

With inflation expected to hit 5.9 percent next year, it seems there is no let up for hard working kiwis either.

Any tax cuts should make it easier for more kiwis to get ahead. However, National’s tax plan gives most of the tax cuts to the privileged few. But, 70 percent of salary and wage-earners are on $40k or less, with 800,000 kiwi families with a combined household income of $60k or less.

Under National, transport prices rose 3.1 percent with higher prices for International air transport and vehicle licensing fees.

Cost of food is increasing with a recent OECD study finding that New Zealand food prices over the last 10 years rose higher than almost any other of the 30 OECD countries studies, at 42% compared to the OECD average of 33%.

Under National’s ETS, families pay twice – once as consumers and once as tax-payers ($110 billion over the next 2-3 decades) while polluters get an easy ride.

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Filed under: asian, ets
30 Comments

Discontent among the black tie set (and the taxi driver)

Posted by on July 18th, 2010

Went to a black tie event last night in Dunedin. Not normally my thing. But the cause was important. What was interesting was the consistent number of similar conversations I had about the government. Horror and discontent would be the major theme. No plan for our economy, lack of investment in local industry. Gutting of tertiary education.

I did not feel defensive once.

People could not understand why the government is so high in the polls.

I found it interesting because these are the people I would expect to be John Key cheerleaders. But was obvious they felt there was nothing to cheer about. Or that they felt led.

And then there was my taxi driver. Had never met him before. Couldn’t shut him up. He has done all the calculations on the effect of a GST rise. Him and his missus absolutely depend on Working for Families. They are terrified it will go. Two young kids.

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Filed under: consultation, economy
19 Comments

Budget 2010: UK Tory Style

Posted by on June 23rd, 2010

It’s official and  it’s a shocker. Cameron’s first Budget puts VAT up to 20%. It cuts company tax cut from 28 % to 24%. Govt dept spending is cut by a staggering 25%. Capital gains tax is up from 18% to 28%.

A budget suplus in 3 years? – dreaming.  The social dislocation will be too awful to describe.

This is an uber-Tory Budget that relies on neoliberal economic ideology.

Given that Brown had already cut spending by GBP 72bn and this cuts another GBP 40bn it contains real risks of stagflation/deflation. If that spreads through a Europe bound together by linked currencies, it could  contribute to a double- dip recession that mayaffect us.

And of course we are now more vulnerable after Mssrs Key anad English borrowed more for unaffordable tax cuts.

For now, here is David Milliband’s reaction:

The Tory-Lib Dem Budget is a hammer blow to families and business across the country – and to the future of the British economy. George Osborne’s measures are driven by ideology not economic reality. And the price will be paid in higher unemployment and lower living standards for the poorest and those on middle incomes.

When they asked for your vote at the last election, David Cameron and Nick Clegg said they would reduce the deficit without hitting the frontline or hurting the poorest – but they have already broken that promise.

…

Below I set out what I would do differently – read on and then sign up to my Broken Promises campaign – help me show David Cameron and Nick Clegg that we will expose and oppose their Broken Promises every step of the way.

  1. I would make reducing unemployment a top priority. We must oppose the Tories’ decision to scrap Labour’s job guarantee, which provided work to the long term unemployed. The Tories are making the same mistake they made in the 1980s, of letting unemployment devastate lives and communities.
  2. I would not increase VAT, which is a regressive tax that hits the poorest hardest. Don’t take my word for it, David Cameron said it. And the Lib Dems promised to fight against a VAT rise until they decided to support it.
  3. We should be supporting the industries that will drive jobs and prosperity in the future – like Sheffield Forgemasters who have been robbed of a loan that offered world-beating jobs for Britain.
  4. The Tories’ four pounds of spending cuts for every one pound of tax rises is extreme. Even Mrs Thatcher went for a pound of spending cuts for a pound of tax rises. I would strike a fairer balance between reductions in spending and tax rises to reduce the deficit. If we need more tax let’s look at measures like a Mansion Tax on £2m homes not VAT rises.”

Sound familiar?

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Filed under: Budget, economy, finance, Foreign Affairs, inequality, Tax
86 Comments

BUDGET 2010: English – A Fudge Too Far

Posted by on June 1st, 2010

Good fun in the House today grilling Bill English here and here on why the Government’s online tax/benefit calulator leaves out the forecast inflation rate of 5.9% in 2010, and thus overstates benefits.  Its a blatant case of misleading the public.   The Speaker rules it is a straight question that deserves a fair answer: Bill English doesn’t get it, and digs a hole deeper than the original mistake…

…It would be funny except it has misled many average income Kiwis who were encouraged by the Govt to believe that the budget left them “better off”, when in reality it left them behind until at least 2014.   It will be no fun at the checkout queue for many hard working families.

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Filed under: Budget, economic, economy, finance, GST, Tax
50 Comments

BUDGET 2010: Jigsaw Pieces Click

Posted by on June 1st, 2010

The jigsaw pireces of the Budget are starting to click in the public mind if recent polls are any indication.  In the last week :

  • The IMF described NZ’s savings gap and net international indebtedness as “among the largest of any advanced nation”
  • Analysis shows a $9.2bn additional fiscal hole in the Budget by 2023 arising from the tax changes
  • Budget documents show expenditure as a % of GDP falling from 33% to 28%
  • Bill English floats Kiwibank sale as one example of a number of SOEs ripe for partial privatisation.

In other words: give away taxes up front (very largely to their mates); run an out year deficit (deliberately); compress spending (as ‘prudence ” then demands); and flog off what is left of the family silver to fill the remaining gap (dressed up as mum and dad savings products, of course).

What does all this mean for the average Kiwi?

  • despite the govt spin, they are worse off for the next four years at least due to the toxic cocktail of GST, inflation, other govt charges and taxes, and slow wage growth;
  • public services like Heatlh and Early Childhood Education will be slashed as new spending lags inflation ($300m short in Health) or deliberate policy changes bite;
  • the outlook for public services gets dramatically worse as the National Party tries to resize the state to 28% of GDP – although they won’t want to talk much about that before the election;
  • the underlying economic problems reamin unresolved and get more intractable over time.   There is no credible plan for growth and jobs.

Moral of story: do NOT let National get a second term   Stop the malign juggernaut before it does irrepairable damage.

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Filed under: Budget, business, economic, economy, education, finance, GST, Household income, poverty, privatisation, productivity, public services, Tax
52 Comments

Another Budget Video

Posted by on May 25th, 2010

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Filed under: Budget, GST, Tax
6 Comments

Labour’s Budget video

Posted by on May 21st, 2010

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Filed under: ACC, Budget, Cost of Living, economy, education, GST, public services, Tax
15 Comments

Bollard in 1992 on the impact of GST increases on the economy

Posted by on May 19th, 2010

Reserve Bank Governor, Alan Bollard, wrote a paper in 1992 titled “New Zealand’s Experience with Consumption Tax”.  It dealt with the implementation of GST in NZ.   He wrote “in 1989 when GST was increased to 12.5% the effect on retail sales and subsequently on growth was marked; after experiencing signs of a pick-up the economy dropped back to recession the following year”. 

When asked about history repeating itself in the FEC select committee today, Dr Bollard said that the impact of the proposed GST increase on the economy would depend on the total tax package balance.  Interesting.  Remember when GST was increased by 2.5% in 1989, kiwis at the top end had just received massive personal tax cuts in 1988: the top rate dropped from 48% to 33%. 

I hope for NZs sake, history does not repeat itself with this current budget, because it all looks awfully familiar.

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Filed under: economic, GST, Tax
20 Comments

PM – “Don’t be jealous – rich are crucial to economy”

Posted by on May 18th, 2010

Who is as insulted as I am over PM Key’s statement, reported in today’s Dom Post, around why the highest earners will get the tax cuts in this week’s budget, at the expense of the 92% who earn under $70k/ann (http://tinyurl.com/23natqb)? ”We can be envious about these things, but without those people in our economy all the rest of us will either have less people paying tax or fundamentally less services they provide”

Well, my daughter is taught by a teacher earning under $70k, most of the police who put their lives on the line for us earn under $70k, nurses who fix us up when we fall over earn under $70k, and the vast majority of people who actually make this country tick – the backbone of the nation – earn under $70k.  Are these people any less deserving?  Do they not ensure that the wheels of industry are well oiled, the streets are safe and our citizens are provided with the services required of a first world country?  Of course they do.!

How bloody insulting.!  As I blogged earlier this year, there are a myriad of reasons people live and work in New Zealand – and tax is way down this list.  These changes will, if anything, drive middle NZ across to Australia and further afield.  Mr Key – just be honest with Kiwis and stop feeding us your propaganda: these tax cuts are not about creating equality of opportunity, driving higher productivity, developing a fairer tax system or building more equitable society – because they will not achieve any of these goals.  If you believe they will, then I suggest you start studying your economic and financial text books and reading your case studies –  those published this century – not last.!

Don’t get me wrong, I am not saying that our high achievers are not deserving – they are – but so is everyone else.  The increase in tax through the GST hike to 15% is broad and all-encompassing – so should the tax cuts be.!

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Filed under: GST, Tax
63 Comments

Paul Henry – put your money where your mouth is.

Posted by on May 14th, 2010

Here’s a challenge to TVNZ’s Paul Henry – lets see if you can live on the Auckland median wage for a month, and then lets see if you change your mind about Labour’s idea of removing GST from fresh fruit and vegetables. 

Why the challenge..?

Watched Paul Henry interview Phil Goff on Thursday morning, and one of the issues that came up was Labour’s idea around removing GST from fresh fruit and vegetables.  Phil reiterated that this was not Labour party policy, but an idea that the caucus was considering in light of the increase in GST to 15%. 

Paul banged on all morning about what a silly idea this was.   I suppose when you are one of TVNZ’s highest paid presenters (I don’t know exactly how much he earns, but if you look at TVNZ’s annual report its not that hard to figure out…), then a simple 2.5% increase in GST will be much more than off-set by the massive personal tax cut you are going to receive. 

Personally, I think Paul has lost touch with reality.  Two points Mr Henry: 1) there are many kiwi families who are really struggling to make ends meet, and a 2.5% increase in GST on fresh fruit and veges will be a killer.  An Auckland University study has shown that if you drop the price of fresh fruit and vegetables, people will buy more; and 2) in this day and age of obesity-related diseases, anything that can be done to increase the consumption of fresh fruit and vegetables must be good.

As mentioned, this is not Labour party policy, but it is something that we re looking at and will make a call once we have all the information and evidence.

So come on Paul Henry – lets see how you survive on the Auckland median wage for a month – and then lets see if you change your mind about doing something to drop the price of fresh fruit and vegetables.!

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Filed under: GST, Tax, Television
79 Comments

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