Chris Hipkins, New Zealand Prime Minister 2023

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#3026845 25-Jan-2023 09:08

GV27:

It sounds like the CGT might be back on the cards. I hope they've learned their lesson and are planning on tweaking it substantially. The initial policy and later Working Group was a major missed opportunity, it would be a shame to get the same underwhelming and poorly thought-out policy dusted off again.

I can't see that TBH. Aside from being a rinse and repeat, I don't believe there is much to gain. Much better to tweak the tax rates, and that should happen annually or bi annually anyway due to inflation (once it slowly recovers back to the 2% era one day) Fund tax rates by taxing the wealthy a little more, and reducing existing policies. If things are going well, reduce tax slightly for all, rich and poor, that goes back into the economy.

NZ is too small to do a lot more than small ticket items, and the odd medium ticket item. Better to have a longer term plan to chip away, pun not intended

Both parties need to steer clear of hot potatoes

GV27

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#3026858 25-Jan-2023 09:31

tdgeek:

I can't see that TBH. Aside from being a rinse and repeat, I don't believe there is much to gain. Much better to tweak the tax rates, and that should happen annually or bi annually anyway due to inflation (once it slowly recovers back to the 2% era one day) Fund tax rates by taxing the wealthy a little more, and reducing existing policies. If things are going well, reduce tax slightly for all, rich and poor, that goes back into the economy.

NZ is too small to do a lot more than small ticket items, and the odd medium ticket item. Better to have a longer term plan to chip away, pun not intended

Both parties need to steer clear of hot potatoes

Our discussion around tax policy has become so polarised that indexing is shot down as being a 'tax cut' by the Finance Minister when in reality it's just 'updating the personal tax rates to take account for a decade of inflation so the Government can't clip the ticket on nominal wage increases in an inflationary environment it requires to exist'.

I support a CGT for housing if just to help keep a lid on house prices themselves, I'm even open to it including the family home, but Kiwisaver should absolutely be excluded and the taxing of it should switch to exit-only like Australian super scheme.

But there's almost no chance of that kind of level of reform if we can't even get the 'adjust the tax brackets once a decade' bit over the line without it turning into a university common room debate.

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#3026861 25-Jan-2023 09:35

Here's something - how about flat tax rates and getting rid of all loopholes, so everyone pays tax based on their true income?

Fair? yes. Proportionate? yes.

Why do those on higher salaries have to pay larger percentages of tax? They already pay more than their fair share. What about household tax bundling? My wife is a minimum wage part-timer. Between us we earn less than many couples, but pay more tax, as aresult of the higher tax rates that I pay. Doesn't seem entirely fair or equitable...

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tdgeek

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#3026863 25-Jan-2023 09:45

Handsomedan:

Here's something - how about flat tax rates and getting rid of all loopholes, so everyone pays tax based on their true income?

Fair? yes. Proportionate? yes.

Why do those on higher salaries have to pay larger percentages of tax? They already pay more than their fair share. What about household tax bundling? My wife is a minimum wage part-timer. Between us we earn less than many couples, but pay more tax, as aresult of the higher tax rates that I pay. Doesn't seem entirely fair or equitable...

Be interesting what the flat rate tax would be if the overall tax take was kept neutral.

I guess the argument for tax thresholds, is that someone on $40k has zero PDI (Personal Disposable Income) while someone on $140k has an amount of spare cash

It's a divisive topic though, as no matter what happens, someone may end up paying more, so its delicate

GV27

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#3026870 25-Jan-2023 10:00

tdgeek:

It's a divisive topic though, as no matter what happens, someone may end up paying more, so its delicate

The old 'tax as a redistributive tool vs. tax as a tool for funding the state' debate.

Over time I feel we are leaning more and more firmly to the former than the latter. Which is fine, but you can't be surprised when people baulk at having to pay more but see their tax dollars going into some things ahead of others.

Conversely Hipkins has been rehashing the 'fair share' garbage again which doesn't stack up when it comes to who actually pays what share of tax in NZ. Presumably he's talking about eschewing that even further, not actually making sure everyone pays a 'fair' share.

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#3026897 25-Jan-2023 10:35

GV27:

The old 'tax as a redistributive tool vs. tax as a tool for funding the state' debate.

Over time I feel we are leaning more and more firmly to the former than the latter. Which is fine, but you can't be surprised when people baulk at having to pay more but see their tax dollars going into some things ahead of others.

Conversely Hipkins has been rehashing the 'fair share' garbage again which doesn't stack up when it comes to who actually pays what share of tax in NZ. Presumably he's talking about eschewing that even further, not actually making sure everyone pays a 'fair' share.

Yep

To be fair, the distribution of wealth is an issue on both sides. Luxon's past idea was to give low income people $850 a year (I thought it was $20 per week) and Luxons high but not that high salary gives him $18,000 per year. Perhaps an independent group needs to decide what's fair on low medium and higher incomes, and for now ignore the effect on Govt coffers and the economy, as a base starting point

What is fair, needs to be given a number

GV27

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#3026920 25-Jan-2023 11:06

tdgeek:

Yep

To be fair, the distribution of wealth is an issue on both sides. Luxon's past idea was to give low income people $850 a year (I thought it was $20 per week) and Luxons high but not that high salary gives him $18,000 per year. Perhaps an independent group needs to decide what's fair on low medium and higher incomes, and for now ignore the effect on Govt coffers and the economy, as a base starting point

What is fair, needs to be given a number

They've walked away from that, from what I understand. So tax is basically a 'who knows' at this point. Wealth distribution matters less if your incomes are sufficient relative to your living costs, but we've got this weird messy thing going on with WFFTC actively suppressing wages and the accommodation supplement acting as a price floor for rents and property investors.

Tear the whole thing up, start again. Make wages meet the market, then figure out what is reasonable for people to keep. Net contributions muddy the debate at an individual level but across a whole population, it's a useful tool for breaking down who is requiring what and who from to make ends meet.

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johno1234

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#3026946 25-Jan-2023 12:27

tdgeek:

GV27:

The old 'tax as a redistributive tool vs. tax as a tool for funding the state' debate.

Over time I feel we are leaning more and more firmly to the former than the latter. Which is fine, but you can't be surprised when people baulk at having to pay more but see their tax dollars going into some things ahead of others.

Conversely Hipkins has been rehashing the 'fair share' garbage again which doesn't stack up when it comes to who actually pays what share of tax in NZ. Presumably he's talking about eschewing that even further, not actually making sure everyone pays a 'fair' share.

Yep

To be fair, the distribution of wealth is an issue on both sides. Luxon's past idea was to give low income people $850 a year (I thought it was $20 per week) and Luxons high but not that high salary gives him $18,000 per year. Perhaps an independent group needs to decide what's fair on low medium and higher incomes, and for now ignore the effect on Govt coffers and the economy, as a base starting point

What is fair, needs to be given a number

Take $18k less a year is another way of saying it. The top 3% of earners pay 24% of the income tax in NZ. Saying high income earners don't pay their share is obviously false. High earners pay most of the tax and that's why governments can't just give them tax cuts - they're dependent on them for the revenue.

https://www.treasury.govt.nz/information-and-services/financial-management-and-advice/revenue-expenditure/revenue-effects-tax-changes/who-pays-income-tax

Personally I favour a tax free threshold and indexing of brackets to prevent everyone ending up in the top rates.

tdgeek

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#3026954 25-Jan-2023 13:22

johno1234:

Take $18k less a year is another way of saying it. The top 3% of earners pay 24% of the income tax in NZ. Saying high income earners don't pay their share is obviously false. High earners pay most of the tax and that's why governments can't just give them tax cuts - they're dependent on them for the revenue.

https://www.treasury.govt.nz/information-and-services/financial-management-and-advice/revenue-expenditure/revenue-effects-tax-changes/who-pays-income-tax

Personally I favour a tax free threshold and indexing of brackets to prevent everyone ending up in the top rates.

I'm not disagreeing. Of course they pay more tax, irregardless of the higher income thresholds. Fairness could be your correct example. Or if Government coffers will be reduced markedly, is that fair. They may then decide the tax rates are fairer now but we cannot afford it, so they move the rates up evenly to cover that off. Another is the PDI at various income levels. Another is if a person got a net income increase will that go to the economy or a passive investment? If we have a net tax reduction, are we all happy to reduce the Govt coffers? Maybe we are, maybe a Government is, I don't know

Re your idea, that's sounds good, and simple. If that benefits someone, someone else will miss out, which with your good idea will be Govt coffers, which will affect what any Govt can do annually. That would need public buy in. However, if the economy is boosted that's hellpful.

Clearly though it needs a full reset, blank sheet approach. (which will never happen)

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#3026962 25-Jan-2023 13:41

GV27:

Make wages meet the market, then figure out what is reasonable for people to keep.

That would be an interesting discussion.

tdgeek

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#3026970 25-Jan-2023 13:54

SJB:

That would be an interesting discussion.

Very. End of the day, people want or need tax cuts, its just who gets them or the most. I'm not really bothered by that question, to me, the issue is who pays for it. The taxpayers will pay for it. And that's ok, but assuming either party's tax cuts/changes reduce the tax take, then the taxpayers need to be fully aware that this will reduce the available policies every year. If say they cost 1 Billion, then that's 1 Billion every year. If everyone is on board, that's all good

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#3027070 25-Jan-2023 16:50

Not everyone wants or needs tax breaks. I am not in favour of them nor do I need them. I would rather the money was spent on well thought out and well executed policies directed at getting more efficiency and cohesiveness in Education or Healthcare, and specifically right now, mental health, which I believe is the next pandemic in NZ.

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#3027076 25-Jan-2023 17:11

networkn:

I would rather the money was spent on well thought out and well executed policies....

I've never come across a politician who was even remotely capable of doing that.

mudguard

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#3027083 25-Jan-2023 17:32

Handsomedan:

Here's something - how about flat tax rates and getting rid of all loopholes, so everyone pays tax based on their true income?

Fair? yes. Proportionate? yes.

Why do those on higher salaries have to pay larger percentages of tax? They already pay more than their fair share. What about household tax bundling? My wife is a minimum wage part-timer. Between us we earn less than many couples, but pay more tax, as aresult of the higher tax rates that I pay. Doesn't seem entirely fair or equitable...

The problem with a flat tax is that it generally penalises someone on a lower income. Take two single people, one earns $40k, the other earns $80k. They need the same accomodation, say one bedroom apartment, and eat the same amount of food etc. Have a flat tax of 20% and it's more penal on the lower income earner as they have less overall than the higher earner to live on. That's where GST is a little murky for me, on the one hand it's brilliantly simple, but on the other it penalises those who need to spend a bigger percentage of their income just to live. Now I now if Mrs $80k can save her money the government will get it's GST eventually.

As someone has alluded too, if you took the progressive tax rates away and had a flat rate, you might not like the look of the required flat rate. I have no idea what it could be. It could be worked out.

tdgeek

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#3027088 25-Jan-2023 18:28

networkn:

Not everyone wants or needs tax breaks. I am not in favour of them nor do I need them. I would rather the money was spent on well thought out and well executed policies directed at getting more efficiency and cohesiveness in Education or Healthcare, and specifically right now, mental health, which I believe is the next pandemic in NZ.

100%. Ive not had mental health issues, or maybe I have but wont accept it, but I have had and have family members with them. Regrettably its a nice thing to offer the voters, but it doesnt get the traction it deserves. Go back 200 years or even 100 years, or 50 years, life wasnt easy but it was SIMPLE. Its not now

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