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

 

Cunliffe versus truth

From David Cunliffe Speech to 2013 Labour Party Conference – Building a future for all:

One for the rich and powerful, who don’t pay their fair share of tax because they have smart accountants to ensure they avoid it.

Families who pay tax on every dollar they earn, pick up the slack for the mega-rich and the foreign corporations who don’t.

Five years ago, John Key told New Zealanders, “wave goodbye to higher taxes, not your loved ones’’.

But he only meant it for the privileged few.

He gave massive tax cuts to the rich that they did not need while he put up GST on everyone.

Cunliffe is supposed to be intelligent and financially literate – if so this means he is telling deliberate distortions and lies.

The tax cuts “to the rich” were not massive. Damien Grant writes in NZ Herald:  Poverty isn’t fault of rich

Key to the inequality fantasy is that New Zealand is a neo-liberal rich-man’s paradise but the facts do not support this.

Bill English said the top 12 per cent of households, those earning over $150,000, pay over three-quarters of all tax. To balance this, half of all households take home less than $60,000 and pay $2.7 billion in tax; yet they receive $8.1 billion in transfer payments. Half the population are net beneficiaries.

The tax increases were partly balanced by the increase in GST which costs them more as the biggest spenders.

And GST increases were balanced for lower income earners with income tax cuts, and beneficiaries had compensating benefit increases.

Cunliffe is speaking to an audience which is receptive to his dishonesty. Time will tell whether enough voters buy his bull.

Psychoactive Substances Bill and cannabis

The Psychoactive Substances Bill  was introduced to Parliament on Tuesday with wide support. It is limited to covering new synthetic drugs, but a number of MPs and other people have raised hopes of having a look at how we deal with drugs covered by existing laws like cannabis.

Peter Dunne says this could happen in the future, but not “either under this government, or in the foreseeable future”.

He also points out that there is “no way under the regime in the bill that a substance like cannabis, let alone harder drugs, would ever meet the “low risk” test“.

He says “the pharmacological and toxological evidence of the risk they pose is simply too overwhelming!”.

So the answer is not likely soon, and not without dealing with much bigger  issues.

Background

In NZ Herald Damien Grant praises the Psychoactive Substances Bill but asks whether it could extend to other drugs, including cannabis.

Dunne’s drug bill’s a blinder…

Dunne’s solution is heavy-handed but simple. The bill bans anything that causes a psychoactive effect but, if a manufacturer can prove their product has a “low risk of harm”, they can obtain a licence to sell it.

…but should go further

Like most opiates, heroin is highly addictive, with a number of negative long-term effects, so it may not pass the low risk of harm criteria, but why should it be excluded automatically? Likewise, cannabis cannot be licensed yet chemical substitutes for it can be.

Dunne’s bill is a small step on a long road that may lead to a more rational way of dealing with the human desire to get high.

This was also mentioned when the bill was introduced to Parliament. Ian Lees-Galloway (Labour):

I think this is a very positive step, and we may want to look more widely at how it could be applied to other substances.

Kevin Hague (Greens):

So it is proportionate, health-based, and it is the direction that our drug policy and drug law needs to move in. I would support the comments that have been made by other members in relation to the overhaul that is required for the whole of the Misuse of Drugs Act. We too believe that that is overdue and look forward to that occurring in the near future.

I asked Peter Dunne how he thinks the Psychoactive Substances Bill might affect the addressing of wider drug laws.

I do not think there is any prospect of the psychoactive substances regime being extended to all drugs, either under this government, or in the foreseeable future. It is simply too premature to make that call – before the legislation has even been passed, let alone implemented or evaluated.

In principle, I am not averse to the regime being extended in the future. But people should be wary of asking for something they might get!

There is, for example, no way under the regime in the bill that a substance like cannabis, let alone harder drugs, would ever meet the “low risk” test and thus be allowed on the market. The pharmacological and toxological evidence of the risk they pose is simply too overwhelming!

The Psychoactive Substances Bill is a major step forward in dealing with the introduction of rapidly changing synthetic drugs.

It may lead to re-evaluating how we deal with drugs currently covered by other laws, like cannabis and heroin, but it doesn’t look like happening any time soon, and not without overcoming major issues.