#4 Have you looked at Australian living expenses recently? 2.2% is only the difference between NZD being at A77c and A79c. Anyway we'll be getting income tax reductions which makes this all neutral.

#5 Goods aren't constantly repriced at retailers? Why do they keep sending out annoying mailers to let customers know what there current price is then?

#7 You can't get goods delivered from overseas without declaring their value and paying any duties, unless they are gifts. Have you been illegally importing goods Bernard?

#8,#9,#10 Come on, a 2.2% increase is going to increase evasion? Hoards of people will evade a 15% tax who are quite happy to pay 12.5% right now, really?

Now as a residential property developer I stand to be the biggest loser on all of this. If I have $1.5m of stock on the date of transfer, I'll end up paying an extra $33,000 GST which I won't be able to pass on to purchasers as all other residential property is GST exempt.

Despite this I'm not actually opposed to the idea of a GST increase, because there should be some real benefits to the economy.

#6. I'd have thought the bigger political risk is the fact that John Key has proven himself a liar.

@Chris_J: "Anyway we'll be getting income tax reductions which makes this all neutral."

What a dismissal....spoken like someone who's on a high salary so will be better off....and its not neutral...its Neutral or there abouts for the Govn but not for many PAYEers, especially those around that upper tax threshold. Those well above and those well below dont see the extra cost.

The tax change makes no or little fiscal sense and adds to the cost of Govn....I find it interesting that ppl with a similar attitude to you would bitch about the cost of Govn and the complexity the "red tape" every day but then take the $ even though there is an extra cost of Govn to re-imburse the poor.

Two ways to give tax cuts, an actual cut and removing Govn "work" or not doing new Govn work hence reducing the need to up tax in the future...Add that that $200million would get eaten away in time....the Labour cost of re-imbursing is going to rise....Also the black economy makes more sense when you have a higher GST...which will also eat that $200million...so its pointless...

Goods can be imported via airmail and if a low value are not stopped by Customs...also there are only so many Customs officers....but its not apractical bigge because of our water border, unlike a US state say where its trivial.

So it makes no sense on any level other than self-interest.

regards

"9. A higher GST increases the political pressure at some stage for exemptions, which would make the tax less efficient."

this may not be a -ve reason..
Take an exemption on fresh veggies, fruit, milk, tap water, fresh meat, butter, fish, eggs and personal savings.
1/ This would provide some of the tax break to the low income earner...
2/ Make healthy fresh food more competitively priced over unhealthy processed foods, in the long run reducing loads on the health system, obesity, diabetes, heart disease etc
3/ One would assume this would also create a larger local market for producers.

When high sugar products like fizzy drinks are substantially cheaper than milk and even water, something is very fundamentally wrong.

Begs the question, how many National voters feel like they're getting what they voted for?
http://bit.ly/goodbyetax

"5. Retailers face significant costs from repricing goods and changing IT systems which will either reduce profits and dividends, or be passed on to consumers in the form of higher costs."

If you have to change IT systems because of a change in the GST rate then you chose the wrong system in the first place - it should be as simple as changing a single variable in the database...

1. There is more in the tax changes than adjusting between consumption and income taxes (property for one).
2. Competition (where it exists here) will prevent rorting.
3. As a frequent traveller NZ is overpriced anyway, I paid less for accomodation in Sydney than I did in Akaroa, we are not by dint of distance been a price sensitive tourism destination.
4. With corresponding tax cuts a spurious point.
5. One off cost, pain in the neck but prices change all the time.
6. Who cares, they raised gst without compensating tax cuts and lets see if they pledge to reverse it and the tax cuts. Besides I am looking forward to coverage of another Labour party bus trip hopefully replete with a singalong.
7. True but minor and there is nothing stopping customs holding parcels until duty is paid like they do in the UK.
8. True.
9. Both major parties recognize that NZ probably has the best GST system in the world, the UK was a nightmare to comply with because of exemptions.
10. If only, aside from the Queen its the only thing I miss about the UK. "how much for a cash job".

What a lot of rubbish - these are some of the weakest arguments I've ever seen.

#4. Lower cost of living over there - Have you been to Australia lately? As a regular visitor to Australia - lower living cost in Aus is a myth. General goods in their super market are generally 20% higher than here in AUD.

#5 - changing IT system - I've worked with many retail and POS systems - Believe me it takes a few minutes to change GST variable and may be two hours testing.

#3 Tourism: in the UK - their VAT rate is 17.5% - a big drop in their visitor number in recent years? Nope

#6 Maori party already indicated that this will NOT be a deal breaker - Old news...

This is more like TV One sensational news item. We really need more quality and robust arguments - not something from a back of weetbix box.

Who says we will actually get a real tax cut? Trust no politician and it sure will ramp up the black market.

Roger W. said.....The core issue being the government is too big for the economy

in one Roger!! and all the permutations that arise from the wetnursing thereof.

So to all those who say that government spending is too high.... just what are the exact areas of overspending and or are many just being dogmatic and myopic?

Sean........ Social Welfare for one

do you think they are gonna let us in there to scrutinize overspending...? I'd have a bloody field-day.

Outsource consulting is a freakin rort if any of my aquaintances are not shitting me as they stuff the wads in the old pockets.

Commissions/ study groups /think tanks/ logistics I mean holy shite man this is a friggin gravy train and no I probably would keep shtum if I were able to lick me some.

Cripes mate what time is it where you are...?

Might have missed the mark on this one Bernard.

As for sourcing goods from overseas, I certainly buy stuff from overseas below the 400 NZD threshold and with the way the USD has been I refuse to pay the 30-50% premium to "support the local". But I guess that is just market forces at work.

Bernard, this should be reduced to Top 5 only.

#2. It creates an inflationary risk, particularly if retailers choose to throw in other cost increases such as credit card surcharges to confuse customers.

Inflation is pretty much under control currently thanks to the recession. Past experience showed raising GST from 10% to 12.5% had little impact on inflation

#3. It creates a risk for the overseas tourism industry, given a 15% GST rate here would be well above the 10% in Australia, which is our major competitor and provides most of our tourists.

Yes, but our low $NZ(compare to $Au) is far more attractive to tourists.

#5. Retailers face significant costs from repricing goods and changing IT systems which will either reduce profits and dividends, or be passed on to consumers in the form of higher costs.

Minimal costs. Big retailers have barcode scanning, even RFID, technology. Moreover IT systems these days are built to be flexible for these type of changes.

#7. It creates the risk of online leakage as New Zealanders buy anything they can from sites offshore without the GST.

Goods bought from overseas via the Internet will still incur GST if total value is over $300. Also, their are not many Internet retailers that removes their local VAT or Sales tax for overseas buyers, Amazon does but most Euro e-tailers don't.

#6. A big political risk is opening up as Labour and the Maori Party oppose the move.

Well, Labours job is to oppose on anything, but they have no alternative solutions. Maori opposition to GST is weak. ACT and Peter Dunne party support is strong and enough to get legislation through.

we'll probably get a credit rating downgrade if they go ahead with these tax cuts that we clearly can't afford, and that will lead to us borrowing even much more than a billion a month.

If the problem stems from having the marginal rate of tax different to that for Trusts, simply equalise that by say reducing the personal marginal rate to 35% and make the Trust rate 35%.
That will surely be less loss of income tax and could help towards implementing the GST consumption tax at 15%, plus politically won't open the government up so much to Labour etc going on about giving big cuts to the 'fat cats'

SimonD Says:

February 24th, 2010 at 1:13 pm
¨
. The UK recently dropped VAT to 15% as part of a stimulus package which has been subsequently pushed back to 17.5%. So two changes to VAT over the space of a year and not much whinging was heard!

So What.....? who gives a toss about whinging in the UK..... first off it's 17.5 back to 15 then up........ you see the back step there uh. so it came as no surprise...1

SimondD ...the UK has no liscence on Apathy or deaf politicians.

Fungus - establish a home-based business. For example, sell stuff on TradeMe - plenty of folks shop at Sally's etc to purchase their wares and then resell them via the internet for a small profit.

I assume you would register such a business for GST (so can claim back some GST costs) and a number of your living expenses (i.e. part of your power, your internet access charges, transport costs etc etc) are tax deductable. TradeMe's accounting system provides excellent records of your listing/commission costs and your sales (breaking out the GST component for you).

It seems to me with the present overtones of this government - they firmly intend to screw PAYE earners, people living in their own homes and savers. Time for this sector of the population to learn to participate in the system to their advantage.

Nicholas - my suggestion above is to turn the family home into a business, as opposed to a rental (as the latter was always a rort).