Are you familiar with 'tax cutting' on 1 April 2009? If you are, is it effect on you? and how it effect on? positively or negatively? or do not effect on you at all? Or you do not care about it?If you do not know much about 'tax cutting', here is for you.
John Key stated that decreasing tax is for people to get benefit from it and the main targeting is middle income New Zealanders.
'The tax cut' table, it has worked from 1 April 2009. According to John Key, there is less than $20 per week tax cut for approximately 280,000 earning people between $50,000 and $70,000 while the highest income earner get 1% dropping in their tax (39% drop down to 38%). New independent earner's credit is introduced for lower earner (about 630,000 people).
There is mixed fortunes for New Zealanders as cutting down tax. To a family, they are getting more $36.92 per week if their average income is $48,500. But they need to pay off ACC levy which cost $5.60 therefore total $31.92 per week them to get.
In the short run, this tax reduction is keeping up economic cycle as supporting the spending of people. In the long term, the government wish is that New Zealanders to clear off their debts such as a mortgage for reinvigorate economy.
It is said by Diana Crossan as a Retirement Commissioner that New Zealanders should spend money, which is from cutting down tax on interest debts instead of daily expense. Add on more, she stated that when people are only clear off the minimum repayments monthly, they take time to clear their debts. So, pay off more than the minimum amount of money to debt is suggested by her for reduces quicker.
Actually, I agree with her suggestion. I think it it better for reinvigorate economy. Even I am international student which means, I have no direct effect on tax cut. But, still I worried about the high ratio of the mortgage.
John Key hopes to people
to charity from their unneeded spending tax cut for active in an American-style culture.
I pretty interesting on whether people will give it to charity or not. For me, honestly, I will only charity if I earn. In fact, I am not working at the moment. But, when I worked previously, if the tax cut appear at that time, maybe I could charity no more than 5 times. What will you do that extra money from the tax cut?
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Interesting, I'm not really interested in tax cuts and whatnot but you make a valid point.
ReplyDeleteTax cuts are a good way of keeping our economy going, even if some people moan about it. People moan all the time, and it's just part of life, especially life in a democratic country, because it means people have the democratic right to moan about tax-cuts and whatever really.
So yeah, extra money from tax cuts would be good.
The Tax Cut is not because the government wanted to do it, is because they have to do it, you should know by now New Zealander have not spend as much as previous years, the economy is so bad even for us, the students, can taste it is well.
ReplyDeleteTax cuts are like putting money in our pocket, everybody loves it, but the question you should ask is it enough? If you compare New Zealand with other countries, we have unbelievable high taxes, just because now the government dropping 1% for the highest income earner and giving the poorer exist $10 a week, doesn’t mean it will help, and not to mention the government are now thinking abandon it’s 2010, 2011 tax cuts.
So I will say tax cuts are not a method to cure New Zealand economy, only a small trick to keep people happy… for now.
As someone who used to work full time, i can fully say that the tax cuts are quite a big load. For someone who was in the lower tax brackets and knows many people who are in it, the tax breaks are simply inadequate, i mean come on 20 dollars a week doesn't really mean much. I can see how it would be beneficial especially to families, but to me personally, they're a waste, when that money could be used on our inadequate transport systems, health and education.
ReplyDeleteThanks for commenting all of you. I understand that New Zealand has high tax on but it reveals a cross section of New Zealand. Of course to compare with other countries, New Zealand has high tax but I think New Zealand is a welfare state as taken the high tax. There is also increasing in student loan by 3.4%.
ReplyDeleteGreat piece, I think the rationale behind tax cuts are quite misunderstood (or purposefully obfuscated). It is a good way to attempt to boost the economy in troubled times, and as you pointed out, our base tax levels are some of the highest in the developed world.
ReplyDeleteAs for them being a ‘big load’, this is short sighted. Cutting the tax of those who will spend it (therefore doing what the government hoped they would do) makes more sense then cutting the taxes of those who won’t – lower income earners are statistically more likely to pay off existing debt (which has little to no effect on the economy as a whole because the repayment of these debts have already being tallied into the companies earnings or sold off) then to spend.
As for “when that money could be used on our inadequate transport systems, health and education”, this is true but if we already have an absurdly high tax rate and these still are inadequate then maybe the problem isn’t with the funding, it’s with the public sector.
N.Z has a high tax rate and yes it does seem like a lot of it gets wasted but we are very lucky to have an unemployment benefit, health provision, student subsidies etc. So they gave us another $10 wow. It would have been better to keep it the same and use it wisely to continue to support the services we have and make N.Z an even better place to live.
ReplyDeleteThere is also a politic reason to be considered when talking about tax cut.
ReplyDeleteTax cut is one of the main factors that National party could win last general election and lead the current government. However, tax cut conflicts with NZ benefits, less tax, the government would have less money to put on benefits. And the benefits mainly for low income people, which are probably the former Labour government stands for. However, John Key, as the wealthiest PM in NZ history and the leader of National Party, who represents middle and high income classes, from the table of the tax cut we can see the more you earn the more you benefits from the tax cut. To maintain the high benefits and operation of the country, government can’t bear too much tax cut, that’s why John Key had to cancel future plan for tax cut after National Party got the power of the country, which has also been criticized for its politic purpose.