If Prime Minister John Key has money available for tax cuts then cutting GST must be the first priority.
GST is a nasty tax on low-income families.
People in the lowest-income 10% of New Zealanders pay 14% of their income on GST while the top 10% of income earners pay less than 5% of their income on GST.
The following graph shows just how vicious and unfair GST is as it cuts into low-income families.
Last week MANA Movement showed how unfair and unbalanced our tax system is with a worker on the minimum wage paying a 10 times higher tax rate than the Prime Minister.
Minimum wage worker 28% tax
Prime Minister 2.8% tax
The minimum wage worker on 40 hours per week earns $29,640 and pays $4,207 in income tax and $4,149.60 in GST giving a total tax of $8,356.60 or 28% of income.
On the other hand the Prime Minister earns $428,000 from his PM’s salary along with this year’s $5,000,000 increase in his wealth (according to NBR’s rich list) which gives him a total income of $5,428,000. On this total income he pays just $132,160 in income tax and approximately $21,400 in GST giving a total tax of $153,560 or 2.8% of income.
Low and middle income families are doing all the heavy lifting for the economy and need a break.
Cleaners, fast-food workers, hospitality workers and security guards are all heavily subsidising the lifestyles of the Prime Minister and his superrich mates.
What we need is an overhaul the tax system and as well as abolishing GST altogether we need:
· A robust capital gains tax paid at the same rate as the person’s income tax
· A financial transactions tax on currency speculation to replace
· Higher tax on higher incomes
· An inheritance tax on estates over $500,000. (National abolished inheritance tax in the early 1990s allowing wealthy family dynasties to flourish at the expense of everyone else.