Recall the following points (or, if you can't recall, re-read):
• GST up from 12.5% to 15%
• Adjusted income tax rates:
o $0-$14000 at 10.5% (down from 12.5%)
o $14001-$48000 at 17.5% (down from 21%)
o $48001-$70000 at 30% (down from 33%)
o $70001+ at 33% (down from 38%)
So how does this even out? I threw everything into a spreadsheet and came up with some basic numbers:
(Click image for full size view)
The left column represents different gross (before tax) incomes, while the column at the top represents different proportions of income spent on GST-inclusive expenses. The purpose of specifying different percentages is that some things you do with your earnings will be GST exempt (mainly rent, mortgage repayments and savings).
You will thus have more effective purchasing power if you fall into at least one of the two following categories:
You spend 90% or less of your income on GST-inclusive purchases (i.e. at least 20% is spent on other things, such as the aforementioned list of rent/mortgage/savings)
Your pre-tax income is over $20,000 per annum.
Now anyone working full-time (40 hours/week) will fall into the second category automatically (minimum wage equates to $26,000). Of course if you're a poor student who pays neither rent nor mortgage and spends all your money, then I feel sorry for you. Although you most probably live with family and the difference will amount to perhaps one or two beers a month. You'll survive.
NB: I've tried to make sure the formulas are accurate. If your own calculations don't produce the same result as mine, then please let me know.
While I was in a seminar sharing my uninformed views of writing in late-medieval China, the latest New Zealand budget was announced. It coincided nicely with the University's fortnightly pay day.
To summarise the key points:
• Property depreciation will no longer be eligible to offset against income
• GST up from 12.5% to 15%
• Adjusted income tax rates:
o $0-$14000 at 10.5% (down from 12.5%)
o $14001-$48000 at 17.5% (down from 21%)
o $48001-$70000 at 30% (down from 33%)
o $70001+ at 33% (down from 38%)
• Additionally, the business and PIE (Portfolio Investment Entity) tax rates will drop to 28% (from 30%) while trusts remain at 33% (in-line with the top tax-bracket).
• Student allowances, superannuation, benefits etc will increase by 2.2% to offset the GST hike.
Overall, sizeable income tax reductions will more than offset the increased cost of living due to the GST hike. It certainly encourages saving and investment (particularly investment in something other than property) which is currently somewhat lacking in New Zealand. It is important to remember that the GST increase will not apply to things like rent and mortgage payments, or any interest/dividends you earn from savings.
In essence this is very much a pro-capitalist National budget. Where does this leave the socialist conveniences of the welfare state? Additional spending has been announced for the healthcare and education sectors, as well as infrastructure, particularly ultra-fast broadband (yay) and rail networks (good luck with this).
Bearing in mind that various governments, including New Zealand's, are trying to reduce deficit (particularly with the situation in Europe getting progressively worse, and the potential 2012 financial crisis looming), this is one of the better budget announcements in recent years. It provides for more taxation fairness (certainly a good thing), and reduces tax evasion by funneling income through trusts while qualifying for state support. It additionally encourages savings and investment, both foreign and domestic - particularly because Kiwi Saver is still intact.
Personally I don't have a problem with paying tax, as long as the money isn't being squandered and I can see tangible gain, either to myself or the country. I support the idea of a capital gains tax, and compulsory retirements savings/insurance. But on the other hand, I'm not going to complain about a bit of extra money every pay day.
I think my argument is so powerful it's not necessary to talk about it
- Rick Giles
If you haven't seen it yet, this is a quote from Rick Giles, who appeared on New Zealand's Sunrise (TV3 Breakfast show) program at the end of March this year. He's talking (ranting, even) about his support for Edison Hour, an anti-Earth Hour, and... well, you should just watch it:
Personally, I'm not convinced. But there's no need to talk about it. As you may have gathered, Rick is (was) a member of ACT on Campus, the University body associated with New Zealand's delightful liberal party ACT, which is currently one of the country's governing parties.
Of course Rick Giles should not be seen as representative of this party, and was dismissed from ACT on Campus shortly afterwards. Not apparently because he was clearly failing at communication, rationality and maintaining his mental faculties, but because he formulated a response video and the party had ordered him to desist.
It's not that his views are, to put it mildly, fucking batshit insane. His views are still fairly representative of ACT (he was, after all, the president of ACT on Campus), but they canned him because he wouldn't shut up. Which, I suppose, is reason enough.
Rick Giles did, however, have the last laugh: Sunrise was cancelled shortly afterwards and aired for the final time on April 8. Clearly, someone tried to disagree with his overly powerful argument.
Man has earned his right to hold this planet against all comers, by virtue of occasionally producing someone totally batshit insane.
Anyway, on to other matters. After much deliberation, I applied for, got offered and started a new full-time job on April 1. The result has been a substantial increase in income, which I'm not entirely sure what to do with so I just throw it liberally at poorly thought-out schemes until the problem goes away. Man, my life is so hard. Actually, if I was doing anywhere near as much study for my history degree as I ought to be, it'd be pretty hectic. Thankfully, I'm easily-distracted, poorly-motivated and lazy - yesterday was spent playing Chrono Trigger on the DS and flash games. And eating potato chips while hiding from the weather (which was seriously intense, the neighbouring building had a waterfall running down the side of it).
One of the reasons the post stream has been drying up a bit around here is that effort must be saved to write late-night assignments. Also, been thinking a lot without bothering to make the effort to put thoughts into written form and set them in a cohesive, legible and comprehensive order. Eventually either my work or my studies will become less demanding and I can work on other plans.
