How much tax do we pay?

The average wage earning or small business person pays quite a lot of tax.

Damien Grant at Stuff: The National Government a Labour PM would be proud to lead

In my small business, for every dollar that comes in almost half of it goes out in tax: GST, PAYE, FBT, ACC and in the event there is anything left over, income tax comes clobbers a third.

So, I was pleased to see John Key elected. National has a set of principles. These include limited government and personal responsibility. They have had nine years to implement their principles. How have they done?

When Bill English became minister of finance government spending was $60 billion. It is now $80b. Sovereign debt was a mere $10b when National took office. It is now $60b. In nine years of relatively unfettered power, National has failed to roll back a single penny of the welfare state, failed to confront the disaster of the Resource Management Act, unwind restrictive building regulations or do anything consistent with their stated principles.

This is a centre-left government Norman Kirk would have been proud to lead.

So how much tax do we actually pay? PAYE has different rates of tax at different thresholds, plus there is ACC Earner Levy. And we get taxed on interest earned or gains in investments – including on our Kiwisaver. And on top of that we get taxed on all the goods and services we pay for.

PAYE has different rates of tax.

  • Income up to $14000, taxed at 10.5%
  • Income over $14000 and up to $48000, taxed at 17.5%
  • Income over $48000 and up to $70000, taxed at 30%
  • Remaining income over $70000, taxed at 33%

Plus the current ACC Earner levy is 1.39% on top of that, up to earnings of $126,286.

Payroll tax:

TaxIncome

Payroll tax plus GST on quarter of income:

TaxIncomeQuarterGST

Payroll tax plus GST on half income:

TaxIncomeGSTHalf

Payroll tax plus GST on all income:

TaxIncomeGSTAll

 

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32 Comments

  1. Patzcuaro

     /  September 3, 2017

    “So, I was pleased to see John Key elected. National has a set of principles. These include limited government and personal responsibility.”

    Limited government and personal responsibility works well if you already have an asset base, say via inheritance, or are in a high paying job. It doesn’t work so well if you start out without a leg up from your parents or have a relatively low paying job.

    I imagine most of the people pushing for limited government and personal responsibility belong to the first group. Unless there are more people in the first group than the second, basically more wealthy people than poor people, we are going to get governments of the current variety.

    This does mean that that people shouldn’t take personal responsibility, they should but it is not enough in the current environment.

    Reply
    • PDB

       /  September 3, 2017

      “This does mean that that people shouldn’t take personal responsibility, they should but it is not enough in the current environment.”

      I disagree – there is far too many people, even those well-off, pulling in some form of benefit or subsidy whether that be working for families, sickness when not sick or rich kids getting ‘free’ (not to the taxpayer) student loans.

      If all those people were told to fob off the people really in need would be far better off.

      Reply
      • David

         /  September 3, 2017

        The fundamental problem with benefits systems is that they tend to regress to the lowest level sustainable for people who barely exist. Instead of being a reasonable level of support through challenging times, they become an absolute bare minimum for long term subsistence.

        Reply
        • Patzcuaro

           /  September 3, 2017

          I don’t disagree with you, too many people who don’t need support are taking it. People have a tendency to organise their affairs to pay as little tax as they can and get as many benefits as they can.

          Reply
  2. Mr Grant has got it wrong right at the start. GST is a tax on his customer, not his business . PAYE is a tax on his staff, not his business. . His business is able to claim all its expenses. Mr Grant only pays tax on his share of the profit.

    Reply
    • David

       /  September 3, 2017

      Correct. Company tax is also a tax that partly lands on the customers, not just the owner.

      Reply
    • PDB

       /  September 3, 2017

      Not much of a small business owner – you are correct, in terms of GST.

      Unfortunately he is right to a point as we live in entitled times where rolling back welfare is comparable to murdering small children.

      Reply
  3. Blazer

     /  September 3, 2017

    this was chopped from that article for some…reason….’OPINION: My wife wants a bigger pool and I’d like to work less. ‘

    Reply
  4. Geoffrey

     /  September 3, 2017

    What about the tax on fuel that is then subject to gst?

    Reply
    • True, it’s a double tax, but both are claimable as expenses, with no nett effect on his business. The ones who pay, as always, are the consumers, the last link in the chain.

      Reply
  5. David

     /  September 3, 2017

    NZ has a tax level of 34.5% of GDP. Lower than most of Europe, but 10% points higher than the US or Australia.

    Curious it’s so much more than Australia given the big difference in rates (aussie has a 45% top rate), it really show just how little those higher rates actually bring in to the Australian treasury.

    Personally, I think the general tax burden in NZ is fine, any adjustments should just be on stretching those lower tax bands.

    Reply
  6. Kitty Catkin

     /  September 3, 2017

    I was astonished when I saw what my medication would cost if I had to pay the full rate-it was staggering, and I wish that I could remember it. There is no way that I could afford it if I had to pay that, the savings account would have been empty years ago.

    Reply
    • Patzcuaro

       /  September 3, 2017

      The local vet reckons he is tax neutral due to the cost of his medicines.

      Reply
      • Kitty Catkin

         /  September 3, 2017

        Well, someone’s paying for mine. I will never again complain about the cost of prescriptions !!!

        Vet medicine-ouch. I know someone who has her dogs flea’d and wormed at the vet & the cost is eye-watering,.Why she doesn’t buy worm pills & flea whatevers at the supermarket, I don’t know. Nor do I know why ordinary flea collars went out of production-was it because a few animals had allergic reactions to them ? In that case, stop using them for your pet . None of mine ever had any problems (rant, rant)

        Reply
        • Gezza

           /  September 3, 2017

          I enjoyed all of that but the two rants were especially appealing.

          Reply
          • Kitty Catkin

             /  September 4, 2017

            Thank you. I had no sucess with Spot-On when the first Siamese was a flea farm one very dry summer which was heaven for fleas, but a cheap Pam’s flea collar killed the little buggers instantly-24 hours later, only one was seen and that one soon went to join the others.

            Reply
            • PDB

               /  September 4, 2017

              Spot on was quite successful……

            • Kitty Catkin

               /  September 4, 2017

              Not on my Siamese; it was all but useless. The fleacollar knocked ’em dead at once; I couldn’t believe it. She wasn’t much of a television watcher, so perhaps that made the difference.

  7. Mefrostate

     /  September 3, 2017

    I’d like to see lower income tax rates with some of the burden shifted onto wealth.

    Reply
    • Conspiratoor

       /  September 3, 2017

      Where does ‘wealth’ begin for you. Which bracket do we shift the tax into?

      Reply
      • Mefrostate

         /  September 3, 2017

        Not an income bracket, directly onto wealth. Land, houses, capital, etc.

        Reply
    • David

       /  September 3, 2017

      ‘Wealth’ is almost impossible to tax.

      Reply
      • Mefrostate

         /  September 3, 2017

        Probably the trickiest would be foreign investments, which we do tax.

        Reply
        • David

           /  September 3, 2017

          I sold all my foreign investments and reinvested into Aussie to avoid this tax. It’s the worst designed tax NZ has, just bonkers.

          Reply
          • Conspiratoor

             /  September 3, 2017

            …or you could move it all to Dubai and become a non-resident

            Reply
          • David

             /  September 3, 2017

            Of course, but Dubai is a shithole.

            Reply
            • Conspiratoor

               /  September 3, 2017

              Why would you think that? The cops drive lambos

            • David

               /  September 3, 2017

              Spent 6 months there, it’s a nasty place.

            • Conspiratoor

               /  September 3, 2017

              It looks stunning. In your experience what are some of the things that confer shithole status?

            • David

               /  September 3, 2017

              The facade is just that. It is, at it’s heart, a totalitarian state with the illusion of being more ‘western’.

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