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Public will now judge tax cut-GST merits

Fuseworks Media
Fuseworks Media

Wellington, Oct 1 NZPA - All the arguments about the pros and cons of tax cuts and GST rises have been had and now it will be up to households to decide whether they are better off or not.

Today the Government's tax package kicked in and GST went up from 12.5 percent to 15 percent.

The Government's calculator shows that a $30,000 wage earner from today will get a net weekly gain of $5.29 after GST and income tax cuts are considered, while someone on $120,000 will be $52.78 better off.

The GST increase comes as power and petrol companies also raise prices and unions and the Labour Party say they benefit the rich.

Labour leader Phil Goff said the reforms involved an unfair distribution of freed-up money and that low and middle income earners were not getting enough to give them respite from recent cost of living increases.

"National's tax switch will do nothing to help these people. (Prime Minister) John Key and (Finance Minister) Bill English do not understand the pressure families are under with rising costs and stalling wages," he said.

ACT MP Sir Roger Douglas, who introduced GST when in the Labour Government, said the idea of GST was to bring taxes down and the main parties had failed to do that.

Mr English thinks they have.

"At all taxable income levels, the personal tax cuts will more than offset the rise in GST," he said.

"When other tax base-broadening measures such as tighter property investment rules are taken into account, low, middle and high income groups broadly receive about the same proportionate increase in disposable income."

Tax measures designed to make it less attractive to invest in property, and a reduction in company tax will be implemented from the start of the 2011/2012 income year.

Mr English said if Labour believed New Zealanders were worse off from these changes it would promise to reverse them.

"The fact that it hasn't speaks volumes. Phil Goff simply doesn't have the courage of his convictions."

The Unite Union held protests to mark the date.

"We need a living wage, not new taxes on the working poor. That's why we say $15 per hour, not 15 percent GST," the union said.

Also today the top tax rate will align with trust rates, a move Revenue Minister Peter Dunne said would reduce tax avoidance.

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