Every quarter we get the same rhetoric from Michael Cullen regarding tax cuts. The surpluses keep getting higher but Cullen keeps refusing to reduce the NZ tax rate or to even raise the tax rate thresholds. Before Labour came to power the top tax rate was 33%. Labour raised the tax rate to 39% and now 7 years down the track it is still 39% and still pegged at incomes over $60K. The media in the last few days have been talking about how Australia is gearing up to again cut taxes meaning the wedge between what we earn here and what we pay in tax compared to our Aussie counterparts is getting bigger and bigger. I now see this morning on Stuff that Cullen is quoted as saying: "If you give most people a tax cut, they will spend it,". What the? That is a very lame excuse and a very odd thing to say but it is no different to what Cullen says every quarter.
In April this year Labour increased the amount of support for their 'Working For Families' package and raised the threshold so that people on higher incomes could also qualify. Now this package is a thinly veiled tax incentive in fact the government actually calls it 'Tax Credits'. I call it a money merry-go-round because the IRD collects tax and then pays it back. It is actually quite absurd when you consider that a single person on $30k per year pays tax and then some of this tax is given to a couple with 4 kids earning $100K a year. Then you have couples with children earning around $40k per year who effectively pay no income tax at all.
Cullen is really saying or implying that anyone who does not have children is irresponsible because they would spend any tax cut and therefore the 75% of the families who now qualify for and receive 'Working for Families' are responsible and would never spend the government hand out on a new LCD TV, a new car or a better house. Well how wrong you are Mr Cullen. I have friends who have just had a second child, with the extra hand out they received they did exactly that, a new 32" LCD TV for the bedroom! What a bonus.
Labour seems to have a problem with what they consider are people who 'earn to much money'. These would be the 5% of the population who pay 80% of the income tax. I believe that Labour have now dug a hole so large they are going to have problems getting themselves out of it. Sure, unemployment is low but sickness and invalids benefits are at an all time high and once you add the 75% of families able to receive 'tax credits' it does not take an economist to realise that little New Zealand is one gigantic welfare state.
In my opinion Australia are moving in the right direction:
No tax up to A$11,000
30% tax threshold moves from A$25,000 to A$30,000
40% tax threshold moves from A$75,000 to A$80,000
This system is fair because it acknowledges that over time salaries do rise and people do move into higher paying jobs. It encourages and rewards people who work hard to improve themselves through education to gain better and higher paying employment. It also pegs the tax rate to avoid 'bracket creep' where (over time) more people move from one tax bracket to another through higher wages.
Compare this to our system which says do not work harder, do not improve your employment and forget about educating yourself. Instead have another kid. So why bother woking hard earning $30K per year to support yourself through a Polytech IT course which could see you eventually earning $60K when someone who is uneducated with a couple of kids is going to take home more money than you?
What a joke. We may as well all give up.
Other related posts:
I Smell a Conspiracy
Disposal of Eco-bulbs
Welcome to Vuestar
Comment by alasta, on 10-May-2007 13:01
Well said. I realise that raising children isn't easy and I don't mind making some form of contribution to those who are struggling, but I'm beginning to feel as if I am being victimised for my own decision not to have children.
Sadly, Labour seems to insist on building a society where people are unable to accept the consequences of their own life choices.
Comment by pat, on 10-May-2007 13:52
And we wonder why there's a brain drain and the knowledge gap is growing. Its no wonder I dont want to vote for Uncle Helen and the loony left or whoever nationals leader is this week, nor any of the other fringe lunatict parties... Perhaps NZ Voters should just refuse to vote en-masse
Comment by lurker, on 10-May-2007 20:48
Michael Cullen does remind me a little of Disney's Uncle Scrooge enjoying a swim in his mountains of money. I wonder if he's forgotten whose money it really is.
Comment by timestyles, on 10-May-2007 23:29
As someone who is childless by choice, the subsidies for having children do seem to be quite high. However, this 'bonanza' for the child rearers will no doubt end sometime in the future. By then, any babies born now will will still be in school, costing their parents heaps and causing financial hardship for many. Childrearing is always a negative investment.
Comment by Waylon Kenning, on 12-May-2007 18:27
Hold on a second. There's more than income tax in Australia, while here there's not that many taxes at all. Second of all, lets compare quality of life. How's that shower going? Nice? Nice bath perhaps? Yeah, it's pretty good not running out of water. The Australian economy has a bit of commodity influence to it unlike ours, however, I'm not fully qualified to compare everything. All I'm saying is there's more to life than money, and we really should be comparing quality/cost of living rather than straight taxes/salaries.
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