Russel Norman
Nats tax bill costs the low paid

Nats yesterday introduced their tax bill. They dropped the bill on parliament without giving anyone a chance to read it before it hit the house and are pushing it through under urgency without giving a select committee or anyone else a chance to examine it properly. Even the Regulatory Impact Assessment stated that they hadn’t enough time to do the job properly. So much for good process. Nats complained about the ETS and the EFA after they went through an extensive select committee process.

The bill replaces the tax cuts voted in by the last parliament. The tax cuts voted by the last parliament haven’t all come into force yet but if left alone would roll out over the next few years.

The Nats tax bill replaces the last bill and reduces the tax cut of low earners while increasing the tax cuts for those earning upwards of $100,000. Yep, you heard it right. The Nats bill means that low income earners will pay more taxes than if the parliament did nothing. And it means that high income earners pay less tax.

To test this proposition, Michael Cullen moved an amendment to the effect that if any taxpayer found themselves worse off under the Nats tax act then they could get their money back. Bill English as Finance Minister put in a financial veto – that is the government can block an amendment if it has a significant fiscal impact – saying that it would cost $750m if Cullen’s amendment got up. What English was admitting was that taxpayers will be $750m worse off under Nats tax bill then under the existing tax cut law.

Then bizarrely English withdrew the financial veto so the amendment could be voted on. National, Act, Maori, United voted against the amendment, effectively admitting the truth that their tax bill take tax cuts off the low paid.

National and Act voting for such a bill makes sense, but the odd thing is that the Maori Party would vote for a bill that takes money off the poor and gives it to the rich. Sitting in the House tonight, National kept a very close eye on the Maori party. Rahui Katene was given very close attention by Tau Henare.

I think the Nats want to rush this through so that people won’t realise the true situation. Most taxpayers will get a tax cut next year and will think National did it. They won’t realise that they were going to get a tax cut anyway and if they are a low income earner they would’ve got a bigger tax cut.

34 thoughts on “Nats tax bill costs the low paid

  1. Russel

    The middle income earner who has been prudent not to have any more kids than they can afford are the very people who deserve a tax cut, if that tax cut comes at the expense of the so called poor then so be it.

    Those who do not qualify for welfare under the WFF package have had enough of be penalised for being prudent and sensible, they want more of their own money in their back pockets and expect others to take care of themselves for a change.

    Tax cuts for middle NZ….about time and lets hope there are many more of them.

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  2. Note that I did say “if the tax cut comes at the expense of the poor” as I suspect that Russel is being economic with the truth.

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  3. Whenever anyone changes the tax system the only consideration must be the merits and fairness of the new regime, not who pays more and who pays less compared to before.

    Maybe “the poor” (sic) were paying less than their fair share under the old regime? Your post doesn’t give us the information to make a decision either way because you don’t mention rates. You just invite us to axiomatically assume that this increase is unfair. Lazy.

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  4. Nats yesterday introduced their tax bill. They dropped the bill on parliament without giving anyone a chance to read it before it hit the house and are pushing it through under urgency without giving a select committe or anyone else a chance to examine it properly.

    When was the last time a tax bill went to a select committee for public submissions?

    You’ve enough complaints to be raising about the process without resorting to meaningless inaccurate ones, Russel.

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  5. I’m a pensioner whose gross income is around 20k. Although I haven’t seen the figures yet, it sounds as if John K Grinch just stole my Christmas.

    Who was it asked us to spend more this Christmas, to help the economy?

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  6. Mouse

    seems to me you went through life expecting a hand-out at the end, and never botherd to save. I’m older than most too, and have a delightful life-style thanks to a bit of foresight.

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  7. Gentlefolk
    Please remember that Russel is a new boy in Parliament, and probably doesn’t understand how these things work, particularly the things related to Tax bills. I seem to remember that during the election campaign, when asked for details on how some of the Green Party policies would be paid for he responded that such an issue was for the senior partner in a coalition to determine, and so no work had been done on that aspect of policy; again, an example of newness. Give him a full term and I’m sure he’ll be up to speed and able to contribute to these discussions with more insight.

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  8. Dave S

    Thanks, but I too enjoy a “delightful lifestyle”, without having a huge amount of money.

    My complaint is that National made such a big deal of tax cuts before the election, and then started asking us to go out and spend this Christmas. It is rather galling now to find out that what National really intended was to REDUCE the tax-cuts that Labour had already given us.

    Fat cats with incomes of around $100,000 or more don’t need bigger tax cuts. They are more likely to put them into savings for their retirement than to go spend to help boost the economy.

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  9. That’s why we voted National, Russel – lower taxes for those who pay most of them.

    Do try to keep up.

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  10. Mouse

    Perish the thought that some people take the responsibility of looking after their own retirement.
    Where do people like you get off?, how dare you decide how much of their own money these people get to keep when you seem to have done little to secure your own retirement.

    Perhaps YOU should be asking yourself where a lifetime of voting for Labour has left you.

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  11. mouse,

    Perhaps the first place to look for “Fat Cats” is the public service.

    There are 47 alone in SPARC.

    How many in ALL the other gvernment, local councils, statuatory boards, etc?

    Think there are many more than in the private sector.

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  12. It’s nice how you folk ignore the basic facts of the post and beat up on pensioners, as if you have any idea how their life was lived.

    The basic fact is that lower income folks are now worse off than they were the day before, and surprise, surprise, they don’t like it. Higher income folks are now better off, and they are likely quite happy with the results.

    All this through a “rushed” process far worse than anything the previous government did, even under urgency.

    Tough bickies, the Nats are hypocrites. That’s a fact.

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  13. The basic fact is that lower income folks are now worse off than they were the day before, and surprise, surprise, they don’t like it. Higher income folks are now better off, and they are likely quite happy with the results.

    All this through a “rushed” process far worse than anything the previous government did, even under urgency.

    Simply not true. The previous Government – supported by the Greens, and under urgency without reference to a select committee – amended the Electoral Act to prevent the holding of an election that the law required to be held.

    That process was worse. Far, far worse.

    Not least because it was electoral law, but also because the situation about which you are complaining is a tax bill – which would never go to select committee anyway.

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  14. “Tough bickies, the Nats are hypocrites. That’s a fact.”

    Pot, Kettle, Black.

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  15. >>All this through a “rushed” process far worse than anything the previous government did, even under urgency. Tough bickies, the Nats are hypocrites. That’s a fact.

    Tax proposals don’t go to select committee.

    The tax cuts were a National election promise, and National has the numbers to pass them. What possible reason can there be for delay, other than the fact you want to delay them?

    And you are?

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  16. I’m not questioning the nature of tax bills and select committees, which I don’t claim to know anything about.

    How about not sharing the text of Bills before debating them? I suppose you consider that democratic?

    Were not even seeking delay here, just due process. Hence the simple fact of National’s hypocrisy.

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  17. Sorry Edge, the EFA went through not just an ordinary Select Committee, but an expanded one to include all parties. How is that the same? Duh!

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  18. How about not sharing the text of Bills before debating them? I suppose you consider that democratic?

    Why on Earth would you suppose that? I think the process they’re using is appalling.

    You may even have noticed that my first comment, above, ended “You’ve enough complaints to be raising about the process without resorting to meaningless inaccurate ones, Russel.”

    My point is not that National is behaving well – they have been behaving exceedingly poorly – but that some of the arguments that have been arrayed in support of that case are misleading or wrong. The argument that the tax changes should have gone to select committee is misguided, and the argument that this process is worse than anything done in the last nine years is wrong.

    The government collapsing the House on a members day by refusing to have a minister in the House was a worse abuse of standing orders than this. The Harry Duynhoven bill passed under urgency was worse than this. National has nothing to be proud of after this week’s sitting, but the Greens cannot assert clean hands when it objects.

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  19. Sorry Edge, the EFA went through not just an ordinary Select Committee, but an expanded one to include all parties. How is that the same? Duh!

    I am well aware of that, I’ve been pointing that out in a number of different threads.

    I’m not talking about the EFA, Frog, but the Electoral (Vacancies) Amendment Bill.

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  20. Frog
    How long did the Labour/NZ1st/Green/Coiffure government allow Members to read the circa 1,000 amendments to the Environment legislation? How about that legislation to retrospectively legitimise illegal spending on the ’05 election?

    Pots & kettles are indeed front of mind.

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  21. DAve S – we were not part of that government. Ever. As one who read all 700 + amendments to the ETS, I can assure you that upwards of 90% of them were spelling, grammar and punctuation changes done by PCO. Get real. Everyone new what they were debating and the consequences of the changes made. Hell, they even got to read them before they debated them! It did make good theatre for Nick to go on about it though.

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  22. There should be massive tax cuts for inventors, innovators and employers.

    No one else should get any cut at all.

    No, I’m wrong. Doctors and other medical professionals should get a tax cut aswell.

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  23. Frog

    If it looks like a Partner, and sounds like a partner and votes like a partner – it’s a partner. Sorry, I accept you had no formal role other than a “Government Spokes personage” that brought a few baubles with it, but perception is reality in the eye of the perceiver.

    Greengeek
    What about the people who teach the Doctors and other medical professionals, and if them why not everyone else on that ‘value chain’. After all, having supported two doctors of medicine through their studies (both to MD and subsequent Master of Economics in Health (LSE & Harvard), shouldn’t I get a tax cut too?

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  24. Dave S…very good question. As my wife is a secondary teacher (and a very good one too…) it pains me to say that we should spend less on our education.

    Why?

    Because we should spend more on our health system.

    People can easily educate themselves (especially in these days of the internet) but can seldom replace their own hipjoints or aortic valves.

    The education costs involved in becoming a medical professional should of course be tax deductible. Which means the doctor should get a tax cut – but not the tutors.

    Now that we have the student loan system, the tutors get their pay, and the doctors pay for it.

    The only tax cut (concession) necessary is at the level of the doctors educational expenditure I believe. (just like any other business cost)

    The sad truth is that we need doctors more than we need teachers.

    Ouch, my wife is going to kill me.

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  25. GreenGeek (may I call you GG?)

    Good on your wife, we need more Very Good Teachers! Having spent some time in the MinEdu I can say, quite simply, that we need to spend MORE on education and less on pontificating about it!

    While I was there (doing a job & finish contract to answer a specific ministerial question, or rather question from a minister,) it quickly became clear that while lip-service was paid to enhancing the teaching capability of our secondary schools, and work was (grudgingly) funded to research evidence based approaches to successful learning by children, there was no real commitment to DOING anything to improve our ability to teach!

    One thing I learned when my youngest was four, was that old-fashioned teaching methods actually work. Having watched his siblings’ growing frustrations at state schools I put them all into a private school that used 1950s teaching methods. When my youngest was 10 we mover to New Zealand, after two weeks (in a Private school no less) he was moved into 5th form because his ‘learning is far advanced over his peers’. Same happened with the others!

    More funding for basics, less funding for meetings with no purpose, and a position in the top 5 OECD countries for the four Rs (Reading, Riting, Reasoning and Rithmatic!) would suit me fine!

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  26. Dave S…yes I agree. A question though: If you were a government official and had only 1 million dollars to spend, what would you focus that expenditure on?

    Education? (at what level?)

    Or medical procedures?

    An unfair question to some extent, I know, but I would spend the lot on medical procedures on the basis that we often cannot health ourselves, and need the help of others to do so.

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  27. greengeek, Spend the first ten thousand on a cost benefit analysis. Preferably one conducted by Transit rather than doctors, teachers, academics or economists, who are all either biased, inexperienced or incompetent in the methods of analysis.

    It might turn out there is objective evidence that health education has the best BCR because it teaches people how to stay healthy so they don’t need as many medical procedures later in life.

    In the context of your conundrum the problem with investing in education is that the outcomes are entirely unpredictable. One of the people educated by that million dollars might end up doing a phd thesis that leads to a dramatic reduction in medical costs. Keyhole surgery and PC-based expert diagnostics systems are good examples of this effect. Of course, we’ll never know how many millions were spent teaching thousands or millions of others before these two bright sparks emerged.

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  28. By the time I’d finished all the committee work, advisory panels, consultation meetings and discussion papers, there’s be enugh left out of a million to buy a pen each for a student and a junior doctor!

    Now if I wasn’t a Government Official, I’d spend the million proving that the teaching methods that were evolved over a few hundren years are better than the ones that have been contrived over the last three decades! Then we would have the potential for a better educated society, and hence more money to spend on health AND education in the future.

    :-)

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  29. Dave S Says:
    December 12th, 2008 at 9:39 am

    > Now if I wasn’t a Government Official, I’d spend the million proving that the teaching methods that were evolved over a few hundren years are better than the ones that have been contrived over the last three decades!

    it’s always good to decide what conclusion you’re going to reach before you start doing the research ;-)

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  30. kahikatea

    Problem is that a little project, about finding out what evidence based best practice is, has already done the research, which is why I’d spend the million proving it to the people who refuse to accent the evidence when it is placed before their eyes.

    It is sad that the head of the research programme is held in higher regard for this work overseas than she is here in New Zealand. When you look at the engineers of the 19th century and the innovators of the 20th century they made great steps of improvement in our lives and lifestyle. THe ‘new’ education approach has taken the number 8 fence-wire determination out of a whole generation and left them desparate to be spoon-fed everything withiut having to put in any effort.

    ANytime you want examples just let me know!

    Merry Xmas.

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