Ardern and English post debate comments

Bill English and Jacinda Ardern were interviewed after their final debate of the campaign.

She wasn’t drilled about Labour policy, just mainly asked about English’s comments on various things, and how she has been attacked, and the nature of the campaign.

Just one Labour policy issue was raised, on renegotiating the trade agreement with South Korea.

TVNZ take:

Ironically English promoted a lot more policy ‘ideas’ than Ardern in his stand-up.

English responds to a number of questions about the alleged fiscal hole. English sticks to claiming that ‘everyone’ agrees that there is ‘a hole’ and is sticking to his/National’s estimate of the size of the ‘hole’.

He says he backs his experience of having delivered eight budgets in making his claims.

Also asked about Nationals income tax claims. English is still claiming Labour will raise income tax. He has an argument with journalists about semantics. English rewords it as Labour needing to pass legislation that will change/raise the level of income tax . They give up and moved on.

Also covered was the prospects of coalition deals with Peters. Nothing new came out of it.

The interview with English was much longer (11 minutes) and more substantial than Ardern’s (3 minutes). English was still in campaign mode.

He said that if returned to government National would not be in a position next week to decide on an appeal of the Teina Pora compensation.

Labour v National on income tax

Labour and National are making claims and counter claims on income tax. They are both sort of right, but it’s not something that Labour probably want a lot of publicity about.

National have already put in place legislation that will bring in tax cuts of up to about a thousand dollars a year for anyone earner the media wage or more. Those earning less will get less of a cut.

Labour have said they will reverse those cuts. National claims that constitutes a tax increase – it is not an increase on current rates but means all income earners will pay tax than they would if nothing was changed.

National: National’s latest ad is for hard-working Kiwis

National’s newest campaign ad “Let’s tax this” highlights the tax burden Labour would impose on hard working New Zealanders, National Party Campaign Chair Steven Joyce says.

“New Zealand’s economy is growing strongly. As a result we’re creating more permanent jobs and growing family incomes,” Mr Joyce says.

“With a strong economy we have the opportunity to meet long-term challenges as with the Prime Minister’s commitment to lift 100,000 more children out of poverty and give 80,000 more Kiwis the chance to get into their first home.

“Labour wants to stall our economic success through heaping at least seven new taxes on New Zealanders just when they’re starting to get ahead.

“New Zealand currently has a broad-based fair tax system. We simply don’t need to impose a Capital Gains Tax, Land Tax, Regional Fuel Tax, extra Income Tax, Water Tax or an Inheritance Tax. We also don’t need to bring farming into an ETS when no other farmers worldwide are included.

“Labour needs to front up and be honest about its tax agenda. It’s quite obvious they have one and they don’t want to talk about it. Real transparency is the least that hard-working New Zealanders deserve.

“Voters are becoming aware of the clear choice facing them this election. It’s between continuing to go forward with Bill English’s strong National team or backwards with Labour and its very different economic agenda.”

Labour:

LabourNoTaxCuts

National: Labour would put up income tax for average wage workers

The Labour Party is misleading New Zealand workers by trying to suggest they won’t increase income taxes, National Party Revenue spokesperson Judith Collins says.

“Labour is simply factually wrong – they would force someone on the average wage to pay $1060 a year more in tax,” Ms Collins says.

“Under the current law in New Zealand, passed by Parliament – including with the support of the Greens – the bottom two tax thresholds will increase from April 1 next year.

“That means annual earnings of up to $22,000 will be taxed at 10.5 per cent, and earnings between $22,001 and $52,000 will be taxed at 17.5 per cent.

“These changes were made in response to rising incomes, and go some way to countering the effects of fiscal drag on low and middle income earners, where they otherwise move into higher tax brackets as their income increases.

“In pledging to reverse the current law, there is absolutely no doubt that Labour is seeking to increase income taxes.

“If they were to be elected and proceed with their changes, people on incomes of $52,000 a year or higher will be paying $1060 more income tax per year from 1 April than will currently be the case.

“National doesn’t believe that someone on the median wage should end up with a tax rate of 30 cents in the dollar. Without our approach, that’s what would happen.

“Labour needs to be upfront with New Zealanders. Under Labour income tax is going up.”

Labour: National’s tax cuts reckless and irresponsible

It is time for Bill English and Steven Joyce to stop the scaremongering and lies, and front up to New Zealanders about the impact of their tax cuts, Labour’s Finance spokesperson Grant Robertson says.

“Bill English has no credibility on tax issues. He was the Finance Minister in a Government that increased GST after specifically ruling that out in the election campaign.

“National has introduced 18 new taxes, levies and charges, including one on the capital gain from an investment property within two years. Again, National never talked about this in an election campaign.

“Today National have an advertisement saying Labour will increase personal taxes. This is completely untrue.

“Let’s set the record straight: Contrary to National’s patently false scaremongering about income tax, Labour’s families package makes 70 per cent of families with kids better off than under National.

“What we will do is reverse the tax cuts proposed by Bill English and Steven Joyce that will see $400 million a year go to the top ten per cent of New Zealanders.

“Those tax cuts are reckless and irresponsible at a time when so many of the big issues facing New Zealand are getting worse.

“How can tax cuts be responsible when homelessness is at record levels and the OECD have said we are the worst in the world?

“How can tax cuts be responsible when hospitals are putting up the house full sign, and our mental health system is collapsing under hugely increased demand?

“How can tax cuts be responsible when our schools are so stretched that they have to ask parents for more and more money to just do the basics?

“New Zealanders know these tax cuts are wrong and that National have got their priorities badly wrong. Even the majority of CEOs in yesterday’s Mood of The Boardroom said now is not the time for tax cuts.

“The reality is that after nine years of National Government the basic services that New Zealanders rely on are running on empty, and many families are being left out.

“We can be better than that and Labour has the plan to make this happen, by rejecting National’s tax cuts and investing in our targeted families package and in the public services Kiwis rely on,” says Grant Robertson.

Labour were already under pressure over tax. This keeps the attention on it.

Cash jobs = tax evasion

Inland Revenue are having another crack at discouraging cash jobs. Avoiding paying GST and income tax is blatant tax evasion, but there has been a general acceptance of it as fair game by many.

It’s not fair on businesses who do things by the book and can’t compete on price. And it’s not fair on those who ‘pay their fair share’.

One News has done a bit of investigating and reports Growing blackmarket in renovations sparks IRD crackdown on tradies doing cashies

A ONE News investigation has revealed a thriving blackmarket in the renovation trade, which is expanding in scale.

They haven’t revealed it, it is well known that it goes on, but they are helping highlight the problem.

We took one Auckland house badly in need of repair and we asked six tradesmen, chosen at random, to quote us for fitting a new bathroom and kitchen, re-painting and installing new carpet.

The work would be valued at between $10,000 and $20,000 depending on the scope of the work quoted by each tradesman.

Fifty per cent of tradesmen provided a cash price, without being asked – and their quotes ranged in value from $10,000 to $18,000.

Apart from cheating the system – and cheating those of us who pay all our income tax via PAYE and pay GST via our purchases – I think it’s very risky paying that amount of tax for that size of job. People who offer cash jobs are more likely to be shady and you are less likely to be protected if something goes wrong.

So who is breaking the law when a cash price is negotiated?

Andrew Stott from Inland Revenue says it’s “the tradesperson breaking the law – the tradesperson is responsible for paying taxes on their income,” while for the consumer “it’s not illegal to pay cash – it’s just silly”.

It’s more than silly. If you pay cash for goods or services knowing that tax evasion is likely then you are aiding and abetting it.

The Inland Revenue is today launching a crackdown on tradies doing cashies, their third campaign in Auckland and Christchurch.

Mr Stott’s advice to anyone doing work for cash and not paying tax is simple.

“Watch out. The holes you can hide this sort of money in are becoming smaller and smaller and we are constantly finding people.  A second piece of advice is just think about your part in New Zealand and your part in your industry, and play your part.”

If GST evasion was eliminated then for the same level of tax take the GST rate could be reduced.

From a few years ago: Cash jobs, crime drive black economy

Cash trade jobs, crimes, wages under the table and online trading are costing the Government more than $7 billion a year in lost tax.

That’s unpaid tax that us tax payers have to subsidise, about 10% of tax revenue.

How much do we pay? If we are on about an average income of $60,000:

taxpaid60000

You can check this for different incomes at My Tax Dollars.

That’s just income tax, add GST and it will be closer to $15,000 in tax per year for an average earner (that doesn’t get Working for Families accommodation subsidies).

Those who evade GST and income tax mean the average income earner pays perhaps 10% more than their fair share, or around $15,000 per year, or about $30 per week, because of dishonest people.

If tax evasion was reduced, and honest tax rates were reduced, there would be less need for WFF type subsidies.

Cash jobs = tax evasion

It costs a honest people a significant amount amount of money.

ACT versus National on tax

This week’s ACT Free Press is highly critical of National “boasting that they’ve increased wealth redistribution”.

From a press release from Steven Joyce – Significant income redistribution after tax reforms:

New data from the Treasury shows that income redistribution across New Zealand’s income tax and support system continues to increase, with the top 10 per cent of households forecast to pay 37.2 per cent of income tax in 2016/17, compared with 35.5 per cent in 2007/08.

“This latest data confirms that New Zealand’s income tax and support system significantly redistribute incomes to households in need,” Acting Finance Minister Steven Joyce says.

The rich are paying a bigger proportion of the income tax:

“Higher income households are paying a larger share of income tax than they were in 2008, and lower income households are paying less – the 30 per cent of households with the lowest incomes are forecast to pay just 5.4 per cent of income tax, compared with 6.3 per cent in 2007/08.

“This is before the effect of redistribution from Working For Families and benefits. The Government has increased support for low income families to help New Zealanders through times of need. So at any particular time, a large number of households effectively don’t pay income tax,” Mr Joyce says.

“It’s appropriate to maintain a tax and income support system that helps low and middle income households when they most need it.”

And 42% of households will pay less income tax than they receive from than they receive from welfare benefits, Working for Families, New Zealand Superannuation and accommodation subsidies. This is up from 39% in 2007/2008.

This won’t include what GST they pay though, which can be where about half of the income of the poor people now goes.

ACT Free Press:

Housing is the Underlying Driver
Also last week the Ministry of Social Development released its update of household income inequality from 1982-2015.  It measures income inequality before housing costs and after housing costs. 

Specifically
Dr Bryce Wilkinson of the New Zealand Initiative says there has been no significant change in income inequality over the last 10, 15, 20 or even 25 years depending on the measure used, before housing costs.  However the bottom 20 per cent of households (by income) spent 29 per cent of their income on housing in the 1980s compared with 54 per cent now.

Free Press concludes:

The National Party is taxing top earners hard, then shovelling the money at low income earners who pay more for housing.  Free Press suspects that it is mostly top earners who benefit from rising house prices, so completing the money-go-round.  This is nuts.

When the money-go-round is spinning fast it can be hard to slow down and difficult to hop off.

What would ACT do?

It is time to give taxpayers relief.  As ACT has said before, the best way to do this is to index tax brackets to inflation (this would have saved the average household $2,500 in tax since 2010 by ending bracket creep).  Ideally we should cut the top rates, clearly the ‘rich’ (read hard working PAYE earners) are paying their share. 

I agree that tax increases by stealth – allowing bracket creep without adjustment – should be dealt with differently.

At the same time, there needs to be serious land use and infrastructure funding reform to get the housing market functioning again.

There’s been a lot of talk but little tangible change on housing, apart from prices continuing to escalate.

However if National reduced income tax for higher earners and if they reduced tax redistribution to poorer people there would be political hell to pay.