What will a Labour Goverment do to my pocket come April 2018 Tax Cuts?

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#1866559 14-Sep-2017 23:17

tdgeek:

Geektastic:

MikeB4:
Geektastic:

mattwnz:

Labour at last has done the right thing, and will be putting the Tax Working group decisions to the 2020 polls, and will only come in if they get re-elected. But this flip flop does make me wonder if there is some division in the party, as wasn't JA clear that these policies would come in before the election?

Just a question, is Labour also planning on removing GST off fruit and veges? I recall this used to be one of Labours policies 1 or 2 elections ago. But haven't seen any mention of it this time around? If they no longer have that policy, anyone know why they have removed it, because the need for that sort of policy would be greater now than ever. Apparently NZ first want this to come in.

I can't believe that policy is real. What do you spend on those? $10 a week? So that saves a whole $1.50?

A family would require a lot more than $10 per week for fruit and vegetables.

Mine doesn't. Even doubling the amount saves...$3 a week.

KFC chips? They are vegetables...

Agreed.

It's not a problem for me - I can't stand many vegetables and eat no fruit at all, ever. I can see why vegetarians might want to loose the GST on their main food source though...!

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#1866601 15-Sep-2017 07:11

ajobbins:

I don't see it as a 'flip flop' at all - Labour asked the electorate to trust them to explore a range of tax options, and give them to ability to enact them quickly. The question came down to do you trust them at their word, or think that they don't have a secret tax agenda already lined up and the working group is just a guise to get them through the election without scrutiny? While personally I'd be willing to give them my trust, there was a loud and clear signal from the electorate that they were not willing to give Labour that trust. In the face of that, they have made a pragmatic decision to respond to the will of the electorate and put any new tax policy back to the people at the next election.

I agree with all you are saying, but what about the voters who have already voted? I'm not sure on the stats, but this tax policy should have been released right in the beginning. It pays NOT to vote early I suppose because as the saying goes, a week is a very long time in politics.

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#1866602 15-Sep-2017 07:17

Wiggum:

ajobbins:

I don't see it as a 'flip flop' at all - Labour asked the electorate to trust them to explore a range of tax options, and give them to ability to enact them quickly. The question came down to do you trust them at their word, or think that they don't have a secret tax agenda already lined up and the working group is just a guise to get them through the election without scrutiny? While personally I'd be willing to give them my trust, there was a loud and clear signal from the electorate that they were not willing to give Labour that trust. In the face of that, they have made a pragmatic decision to respond to the will of the electorate and put any new tax policy back to the people at the next election.

I agree with all you are saying, but what about the voters who have already voted? I'm not sure on the stats, but this tax policy should have been released right in the beginning. It pays NOT to vote early I suppose because as the saying goes, a week is a very long time in politics.

Its just too bad, so what, who cares? Labour made the mistake with the tax so they have already lost votes, its done. Its no different to National raising GST after the election when no one had an opportunity to factor that into their vote. Its done, don't worry about it

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#1866684 15-Sep-2017 09:31

Geektastic:

MikeB4:
A family would require a lot more than $10 per week for fruit and vegetables.

Mine doesn't. Even doubling the amount saves...$3 a week.

Is this your family https://www.stuff.co.nz/national/health/94651243/teen-suffers-from-rare-eating-disorder-that-only-lets-him-eat-dry-yellow-food ?

I don't think the removal of GST on fresh fruit and vegetables is a current policy it was one they had two elections ago. Which is to say the arguments about Labour having 9 years to develop tax policy are meaningless as they have dropped and added policy all the time in response to changing conditions here and abroad as well as based on public perception of various policies and situations. As any political party needs to do.

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#1866690 15-Sep-2017 09:40

Wiggum:
...a week is a very long time in politics.

Especially before an election! ;)

tdgeek

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#1866694 15-Sep-2017 09:49

Varkk:

Geektastic:

MikeB4:
A family would require a lot more than $10 per week for fruit and vegetables.

Mine doesn't. Even doubling the amount saves...$3 a week.

Is this your family https://www.stuff.co.nz/national/health/94651243/teen-suffers-from-rare-eating-disorder-that-only-lets-him-eat-dry-yellow-food ?

I don't think the removal of GST on fresh fruit and vegetables is a current policy it was one they had two elections ago. Which is to say the arguments about Labour having 9 years to develop tax policy are meaningless as they have dropped and added policy all the time in response to changing conditions here and abroad as well as based on public perception of various policies and situations. As any political party needs to do.

GST on Fruit and Veges sounds like the best possible policy that could ever be passed. But its not. Its a cost to lose GST, and your losing GST from the rich as well as the poor, so it does not help the poor in as far as a fairer distribution of the tax burden.

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#1866729 15-Sep-2017 10:42

This is not an area that I have any expertise in, but when I lived in Holland we managed to get by with a two-tiered GST for years, and I imagine that is still the case today. There was a low GST (VAT, or in Dutch, BTW) on foodstuffs, a higher rate on other items. This was not impossibly complicated, it did not drive businesses out of business, and it did not bankrupt the country. There is an awful lot of special interest-driven FUD around discussions like this. Kiwis seem to revel in thinking of reasons why something won't work, instead of looking for ways to make them work.

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#1866734 15-Sep-2017 10:50

Rikkitic:

This is not an area that I have any expertise in, but when I lived in Holland we managed to get by with a two-tiered GST for years, and I imagine that is still the case today. There was a low GST (VAT, or in Dutch, BTW) on foodstuffs, a higher rate on other items. This was not impossibly complicated, it did not drive businesses out of business, and it did not bankrupt the country. There is an awful lot of special interest-driven FUD around discussions like this. Kiwis seem to revel in thinking of reasons why something won't work, instead of looking for ways to make them work.

If a food GST benefitted the needy Im all for it, but it benefits everyone, that doesn't work for me. Id prefer that the cost of that poilcy (reduce Govt income) went to the needy, it will cheaper. Off course we could have GST tables and GST Food Tax codes for each of us, then we get back to the complex and costly to administer argument. So status quo works, and the Govt of the day can target easier to administer benefits as they currently do

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#1866806 15-Sep-2017 12:19

tdgeek:

GST on Fruit and Veges sounds like the best possible policy that could ever be passed. But its not. Its a cost to lose GST, and your losing GST from the rich as well as the poor, so it does not help the poor in as far as a fairer distribution of the tax burden.

Getting rid of all GST would leave a massive revenue hole for the government, but I am not convinced GST is the best mechanism anyway.

Firstly, it's a regressive tax. The rate of GST disproportionately affects those on lower incomes who spend a higher proportion of their income on essentials, with less discretionary spending and lower savings rates. If you looked at the percentage of a persons income that ultimately spent on GST, that figure would be much higher for a person on lower income than a higher one.

Secondly, it's already getting messy as we spend more overseas. Collecting GST on Netflix etc, and on goods imported from overseas doesn't work very well.

I'd rather see GST removed entirely, a bump in income tax rates above the poverty line to partially offset it, with the rest offset by a tax on luxury goods such as high end cars (Australia has that already).

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#1866829 15-Sep-2017 12:50

ajobbins:

tdgeek:

GST on Fruit and Veges sounds like the best possible policy that could ever be passed. But its not. Its a cost to lose GST, and your losing GST from the rich as well as the poor, so it does not help the poor in as far as a fairer distribution of the tax burden.

Getting rid of all GST would leave a massive revenue hole for the government, but I am not convinced GST is the best mechanism anyway.

Firstly, it's a regressive tax. The rate of GST disproportionately affects those on lower incomes who spend a higher proportion of their income on essentials, with less discretionary spending and lower savings rates. If you looked at the percentage of a persons income that ultimately spent on GST, that figure would be much higher for a person on lower income than a higher one.

Secondly, it's already getting messy as we spend more overseas. Collecting GST on Netflix etc, and on goods imported from overseas doesn't work very well.

I'd rather see GST removed entirely, a bump in income tax rates above the poverty line to partially offset it, with the rest offset by a tax on luxury goods such as high end cars (Australia has that already).

Good points. I was suggesting to get rid of GST, just the GST on food issue that gets raised from time to time, which I also disagree with, for the reasons you stated

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#1867010 15-Sep-2017 16:39

https://www.stuff.co.nz/national/politics/96866771

Who was right and who was wrong in the finance debate between Labour and National

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#1867145 15-Sep-2017 23:44

I read an article about removing GST from "certain foods" by Spinoff/Newsroom which laid out why it's a bad idea. Basically, even if you try to keep it simple it gets WAY complicated. We perhaps don't appreciate how good our tax and superannuation schemes are with respect to their simplicity - tax rates are known, relatively few deductibles, universal super etc.

It's a well intentioned idea and yes, in an ideal world we would find a way to make it work rather than say "it's too hard, may as well not bother". But afaik there is no acceptable-for-NZ "reduced or no tax on certain foods" policy in force anywhere in the world.

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#1867182 16-Sep-2017 08:51

Rikkitic:
This is not an area that I have any expertise in, but when I lived in Holland we managed to get by with a two-tiered GST for years, and I imagine that is still the case today. There was a low GST (VAT, or in Dutch, BTW) on foodstuffs, a higher rate on other items. This was not impossibly complicated, it did not drive businesses out of business, and it did not bankrupt the country. There is an awful lot of special interest-driven FUD around discussions like this. Kiwis seem to revel in thinking of reasons why something won't work, instead of looking for ways to make them work.

Likewise, the UK has zero rate on basic foodstuffs.

GV27

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#1867743 18-Sep-2017 07:28

ajobbins:

tdgeek:

GST on Fruit and Veges sounds like the best possible policy that could ever be passed. But its not. Its a cost to lose GST, and your losing GST from the rich as well as the poor, so it does not help the poor in as far as a fairer distribution of the tax burden.

Getting rid of all GST would leave a massive revenue hole for the government, but I am not convinced GST is the best mechanism anyway.

Firstly, it's a regressive tax. The rate of GST disproportionately affects those on lower incomes who spend a higher proportion of their income on essentials, with less discretionary spending and lower savings rates. If you looked at the percentage of a persons income that ultimately spent on GST, that figure would be much higher for a person on lower income than a higher one.

Secondly, it's already getting messy as we spend more overseas. Collecting GST on Netflix etc, and on goods imported from overseas doesn't work very well.

I'd rather see GST removed entirely, a bump in income tax rates above the poverty line to partially offset it, with the rest offset by a tax on luxury goods such as high end cars (Australia has that already).

Luxury taxes on cars were nothing more than a sop to the domestic manufacturers who were producing a sup-par product with low build quality who eventually left anyway. We have no industry to protect, and 'luxury taxes' are just an attempt at double taxation unless you are spending your money in a state-approved fashion - you know, income you've already paid tax on when you've earned it.

Geektastic

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#1867981 18-Sep-2017 12:04

GV27:
ajobbins:

tdgeek:

GST on Fruit and Veges sounds like the best possible policy that could ever be passed. But its not. Its a cost to lose GST, and your losing GST from the rich as well as the poor, so it does not help the poor in as far as a fairer distribution of the tax burden.

Getting rid of all GST would leave a massive revenue hole for the government, but I am not convinced GST is the best mechanism anyway.

Firstly, it's a regressive tax. The rate of GST disproportionately affects those on lower incomes who spend a higher proportion of their income on essentials, with less discretionary spending and lower savings rates. If you looked at the percentage of a persons income that ultimately spent on GST, that figure would be much higher for a person on lower income than a higher one.

Secondly, it's already getting messy as we spend more overseas. Collecting GST on Netflix etc, and on goods imported from overseas doesn't work very well.

I'd rather see GST removed entirely, a bump in income tax rates above the poverty line to partially offset it, with the rest offset by a tax on luxury goods such as high end cars (Australia has that already).

Luxury taxes on cars were nothing more than a sop to the domestic manufacturers who were producing a sup-par product with low build quality who eventually left anyway. We have no industry to protect, and 'luxury taxes' are just an attempt at double taxation unless you are spending your money in a state-approved fashion - you know, income you've already paid tax on when you've earned it.

Likewise the 10% duty on clothes and shoes imported to NZ. Which is probably 90+% of them....!

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