Same old story – Tax changes mean more for rich, less for poor
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On Friday the National governments tax changes announced in the last budget came into effect. The government has argued that no one will be “worse off”, as while Goods and Services Tax has risen from 12.5% to 15%, income tax has been cut in all brackets. Of course, some will come out better off than others. 3 News estimates: “A single person on minimum wage earning $26,520 living at home without any rent costs will get around an extra $4.13 a week, after the GST increase is taken into account. Over year, that adds up to $214.76.” meanwhile however “A high-flying CEO on a pay packet of $2 million will get a tax cut of $1,896.73, and pay $534.33 extra in GST, for an annual boost of $70,844.80.” Regardless of how much of a net gain anyone gets, which is debatable, there is no question that the tax reforms are further shifting the tax burden onto those least able to afford it. As New Internationalist has pointed out:
Everywhere the percentage of government revenues that comes from ‘indirect’ tax (on goods and services) has been increasing. Such taxes account for a much larger proportion of the income of poor people, who must spend more of it on goods and services than rich people.
Indeed indirect taxes like GST or VAT (Value Added Tax) have become favoured by governments the world over, the same issue of NI notes that while VAT was first introduced in 1948, then being in place in two countries in 1967 (France and Brazil respectively) by 2008 it was in place in 130 countries. The number of African countries levying a value added tax increased from two to thirty during the 1990s. Herald columnist Matt McCarten hammers home what the changes are likely to mean in New Zealand:
Even the dimmest of us can work out that if the changes are "neutral" and [Finance Minister Bill] English got a personal weekly $143 tax cut while most of the rest of us got around $15, then all that's happened is that struggling Kiwis just handed another $25 a week to the rich...this GST rise will slow spending and increase unemployment. The truth is that the economic agenda that's been promoted by the political and corporate elites for more than two decades was never about what's good for ordinary people.
