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Union not celebrating tax reforms

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Oct 1 NZPA - As some people count the extra dollars in their pay packets resulting from tax reforms starting today, a union has taken the opportunity to organise a rally at a retail chain against the reforms' GST component.

From today, all income earners will get the benefit of across the board income tax cuts, but at the same time GST goes from 12.5 percent to 15 percent.

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

The Government's taxguide.govt.nz 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 reforms have been criticised by some as unfair and pandering to the high earners, but Mr English said they were never intended as a "lolly scramble", and were designed to help strengthen economic growth and get New Zealand families ahead.

"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," he said.

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.

The Unite Union plans to use today to rally against the GST rise and support staff in striking at JB Hi-Fi stores in Auckland.

"Taxes that hit low paid workers hardest are going up, but for the last three years, JB workers have had no pay increases whatsoever," said Unite campaigns organiser Joe Carolan.

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

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. John Key and Bill English do not understand the pressure families are under with rising costs and stalling wages," he said.

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."

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