Labour's GST-free fruit and vegetables tax policy is being widely panned by experts, who say it is betting on voters' ignorance.
  • @DaveMA
    4•11 months ago

    The problem of GST is it’s regressive, but the benefit is that tourists pay it (unlike income tax) so we can use a lower rate.

    I do wonder if a tax free threshold on income tax would create a better impact (affecting all equally instead of those that can buy more getting a bigger benefit), and would have much less administrative burden.

    I’m starting to wonder if this is just an excuse to crease a commission to monitor the supermarket industry, which I think is a good thing.

    • @Rangelus
      5•11 months ago

      I also think restructuring the tax brackets, including a 0% tax bracket, is something that is sorely needed. Adding a tax free threshold of, say, $20,000 would make a huge difference for those on minimum wage.

      • @DaveMA
        4•11 months ago

        I’d think the easiest would be to just update the lowest tax bracket to 0% (I think this is under $14k?).

        If we are going to change a bracket to $20k, then let’s do an across the board update (e.g. 0% under $20k, 20% under $70k, 30% under $150k, 40% for $150k and up - I just made these up on the spot, they would need to be properly balanced against expected revenue by a working group).

        But if we’re just going for a quick election bribe, make the $14k and under bracket 0% and leave the rest.

        • @Rangelus
          4•11 months ago

          In my perfect, dictatorship world, I would do both. I would find some value that fits the “bare minimum” income someone could make. This could be 0.5FTE at minimum wage, for example, and set that as 0%. I would then fix the tax brackets to inflation, add an extra bracket to the top 1-2% income earners. I would lower GST back to 12.5%, enact a CGT (which I prefer over a wealth tax if it targets assets), and tinker with teh rest of the tax code to close as many loopholes as possible.

    • @absGeekNZEnglish
      4•11 months ago

      It seems to me that this could be much better achieved by targeting the people who need it most rather than a blanket reduction.

      The article (in the other post) states that approx $4 will be saved on $30 of zero-rated goods, this isn’t a great starting point but none the less it is what I am going to use. If we assume that on average $4/week for every household will be saved, that is $4/week that the isn’t being collected by the government per household. Wouldn’t it be better to keep collecting that $4/week of 100% of households and funnel $40/week to the 10% of households that are in need?

      I believe that targeted programs are far more effective then generalist ones; obviously the numbers are very vague, but for the top 50% of the population the $4/week will not be noticed, but I guarantee that $40/week would be noticed by the bottom 10%. Obviously the net is that the bottom 10% are $36/week better off. Everybody else is at the same position as they are now.

      • @DaveMA
        2•11 months ago

        Often targetted programmes miss those who truly need it. A common example given is free school lunches. If the whole school gets free lunch then the kids that really need it are more likely to get what they need, rather than only offering it to students that can prove low income.

        Another example is unemployment benefits. Homeless people often don’t qualify because they don’t have a bank account (and can’t get one without an address), so miss out on support they sorely need.

        With that said, GST exemptions benefit people with more money more than they benefit people with less money, so it’s not great from that perspective.