We are being told repetitively that 'most will be better off' when GST goes up on Friday, and the tax cuts come in. This is an accurate statement if you are looking at if one will have more or less in their hand at the end of the week...but if you look at the fairness of the amount you will get you might find another story within this story.
You can use this website to estimate your own finances and to see if you will be better off or not http://www.taxguide.govt.nz/
The people who won't be better off are those that don't pay tax. An example is someone studying living off a student loan, they don't pay tax, hence no tax cut and therefore the extra GST will need to be absorbed within their current budget. Those of us paying income tax, for the most part, will be better off.
My questions are, is the system fair, and, who is the biggest winner in all this?
Well lets have a look at a few scenarios.
If you earn $20,000 you will be better off by $2.16 per week, or 0.56%. On $20,000 you'll end up after GST goes up, and the tax cuts come in, being better off by 0.56%, However the more you earn, the better off you become. We don't work this out by how much extra money you see, but by how much better off you are as a percentage. For $20k you're better off by 0.56%. Below are some more breakdowns.
If you earn $20k, you are $2.16 better off per week or 0.56%
If you earn $40k you are $8.65 better off per week or 1.12%
If you earn $60k you are $15.04 better off per week or 1.3%
If you earn $80k you are $24.92 better off per week or 1.62%
If you earn $100k you are $38.85 better off per week or 2.02%
If you earn $200k you are $108.51 better off per week or 2.8%
As you can see, the more you earn, the better off you will be when it comes to a percentage breakdown. This seems to me to be the definition of 'tax cuts for the rich'. Surely the fair result is if we were all better off on a more equal footing, not as in the amount, but the percentage.
If we did use the 2.8% better off mark the the $200,000 earner receives, this is what the amounts would look like.
If you earn $20k, you’d be better off $10.77 per week @ 2.8%
If you earn $40k you’d be better off $21.54 per week @ 2.8%
If you earn $60k you’d be better off $32.31 per week @ 2.8%
If you earn $80k you’d be better off $43.08 per week @ 2.8%
If you earn $100k you’d be better off $53.85 per week @ 2.8%
I assume that the reason we are not seeing this size cuts is that the country cannot afford to lose that much tax revenue, but why give the biggest benefits to those in society who are better off.
Either the government should make the percentage fairer. or if there was going to be a skew then surely it would be better to give a bigger percentage to those who need it more...at the bottom.