Wednesday, April 26, 2006
Tax Reform, now
Over the weekend and Anzac Day I had the chance to reflect on some possible principles for tax reform in New Zealand. They're not costed, but something needs to be done about the standard of living for people on low-to-middle incomes in this country, so here goes.
1. EDUCATIONAL AND MEDICAL EXPENSES
Frankly, it is ridiculous that income spent on one's health and/or education are both subject to GST and counted as taxable income. At least one of these issues needs to be addressed. The most beneficial would be the Canadian system, where all educational and medical expenses (over a certain low minimum level) are deducted from one's taxable income. No student earning $15,000 - and giving $8,000 of it to a University - should have that $8,000 taxed. The same goes for those with poor health. Perhaps these expenses could be treated in the same way as school fees - i.e., as donations.
2. THE LACK OF GST EXEMPTIONS ON SOCIAL GOODS
As referred to above. GST unnecessarily inflates the cost of already expensive social goods. Most of the countries with which we'd compare ourselves offer GST exemptions on certain things ... we shouldn't sacrifice people's incomes to the god of simplicity. If Australia, Britain, Canada, various US States can manage a system of exemptions, so can we. Of course there's room for debate about social goods, but let's start with doctor's visits, prescription medicines, school and university books, and work from there.
3. INCOME SPLITTING
If a couple's income is counted as shared for the purposes of determing one individual's (in)eligibility for a state benefit, it should be counted together for the purposes of determining the couple's tax burden. Simple as that. Whether they have children or are married should be irrelevant ... take note Peter Dunne.
4. BASIC PERSONAL TAX EXEMPTION
Labour, give everyone a tax break while helping your supporters the most: make the first, say, $5000 of income tax free.
5. NO TAXATION ON TAXATION
A tax is neither a good nor a service, and thus should not be subject to GST. The relevant policy should be rewritten to specify that GST only applies to the price of a good or service prior to other levies being added (think petrol and alcohol here), and cannot apply to local body rates.
1. EDUCATIONAL AND MEDICAL EXPENSES
Frankly, it is ridiculous that income spent on one's health and/or education are both subject to GST and counted as taxable income. At least one of these issues needs to be addressed. The most beneficial would be the Canadian system, where all educational and medical expenses (over a certain low minimum level) are deducted from one's taxable income. No student earning $15,000 - and giving $8,000 of it to a University - should have that $8,000 taxed. The same goes for those with poor health. Perhaps these expenses could be treated in the same way as school fees - i.e., as donations.
2. THE LACK OF GST EXEMPTIONS ON SOCIAL GOODS
As referred to above. GST unnecessarily inflates the cost of already expensive social goods. Most of the countries with which we'd compare ourselves offer GST exemptions on certain things ... we shouldn't sacrifice people's incomes to the god of simplicity. If Australia, Britain, Canada, various US States can manage a system of exemptions, so can we. Of course there's room for debate about social goods, but let's start with doctor's visits, prescription medicines, school and university books, and work from there.
3. INCOME SPLITTING
If a couple's income is counted as shared for the purposes of determing one individual's (in)eligibility for a state benefit, it should be counted together for the purposes of determining the couple's tax burden. Simple as that. Whether they have children or are married should be irrelevant ... take note Peter Dunne.
4. BASIC PERSONAL TAX EXEMPTION
Labour, give everyone a tax break while helping your supporters the most: make the first, say, $5000 of income tax free.
5. NO TAXATION ON TAXATION
A tax is neither a good nor a service, and thus should not be subject to GST. The relevant policy should be rewritten to specify that GST only applies to the price of a good or service prior to other levies being added (think petrol and alcohol here), and cannot apply to local body rates.
Comments:
Post a Comment