Beneficiaries and lower-income groups have been hit the hardest by typical cost rises over the past year as housing and other price increases make their mark

Beneficiaries and lower-income groups have been hit the hardest by typical cost rises over the past year as housing and other price increases make their mark

Beneficiaries and those on the bottom rungs of the income ladder have been hit hardest by price rises over the past year, thanks to cost increases for housing and other necessities like food and electricity.

Stats NZ's latest Household Living-Costs Price Index for the June quarter shows beneficiaries experienced the highest price inflation of 2% over the year, while the top earners in New Zealand only faced a 1.4% price increase.

The index is different from Stats NZ's Consumers Price Index (CPI) series in that it divides New Zealand up by income quintiles and applies different baskets of goods and services to the respective groups with different spending weightings.

For example, rents and basic food items are treated as greater relative costs to beneficiaries and those on lower incomes. As you go up the ladder, higher income groups are faced more with the costs of package holidays and mortgage interest rates. See an article on this in May. Mortgage costs aren't included in the CPI. Latest figures show the CPI rose 1.7% in the year to March. The Reserve Bank's preferred sectoral model rose 1.4%.

“Rising prices for the basics such as rent, electricity, and food had a greater impact on beneficiaries,” Stats NZ prices senior manager Jason Attewell said. “Over half their spending was on these essentials, compared with about a quarter for the highest earners,” he said. The highest income group was helped by falls in prices for high-tech items over the year.

Beneficiaries also faced the highest cost rises during the June quarter, with their overall costs rising 0.3% overall. In contrast, the highest earning group saw its cost of living fall 0.1% over the three months, Attewell said. In the June 2017 quarter, higher prices for vegetables and electricity had a large effect on all groups. This was countered by lower prices for petrol.

“Items such as tomatoes and petrol are commonly purchased by households of all income and expenditure levels, and the impact of large price rises for these goods can be seen across the board,” Attewell said. “In contrast, domestic airfares fell 15% across HLPI groups. High spenders benefited the most from cheaper domestic airfares.”

The regular quarterly release from Stats NZ follows on the heels of the MSD 'Perry report' which showed rising inequality in New Zealand driven primarily by housing costs, which hit the poorest parts of society the hardest as a greater proportion of their income is required to go towards housing.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.



GST is a regressive tax which impacts those on low incomes the most. Why not remove this imposition from non-restaurant food purchases to re-balance inequality somewhat? a word, compliance cost. eg your shop has both item types...who is going to work out everyday how much of your power was used to power the ice cream verse the milk fridge? What say you have both in there one day, not the next??. Same with delivery much gas was for the eggs, how much for the chocolate.

Our gst is admired for its low compliance cost. Start dicking with it and it becomes a mess...and we would have to put an army on to audit and put the gst rate up on all else.

Then perhaps it should be reduced, back to where it started sounds good. Australia manages to do both, no gst on basic food items gst 10%, ours at 15% on everything, no wonder it is hitting the poor so hard.

It has it's merits but is it really re-balancing things?
You just end up with a more complex tax system and I can't see it making the lower income masses anymore richer in absolute or relative terms.
There is no net effect, really.

GST is a terrible form of taxation in the fact that it discriminates against income segments and it applies a tax on consumption to pay for services completely unrelated to consumption.
A not incorrect way to frame it is:
You pay GST on milk, in order to subsidise farmers.
People in Christchurch pay GST on petrol to pay for the Auckland rail link.

Consumption should not be taxed in order to fill the shortfall of corporate/income taxes.

Please explain why income tax should be increased to fund the removal of a consumption tax.

GST is an easily administered tax that provides revenue to the Govt. I don't see how your examples have any relevance as shown in this irrelevant example: Aucklanders pay GST on coffees to pay for Christchurch's earthquakes and failed finance and insurance companies.

Furthermore, much of that revenue from GST is used to fund benefits and working for families (WFF) for low income earners. Scrapping GST paid for by scrapping benefits and WFF would obviously not benefit the poor.

GST doesn't fund Work and Income anymore than any other national taxation does.

"GST is an easily administered tax that provides revenue to the Govt. I don't see how your examples have any relevance as shown in this irrelevant example: Aucklanders pay GST on coffees to pay for Christchurch's earthquakes and failed finance and insurance companies."
That's exactly the point. That should be the realm of income/corporate taxation, not via a blanket tax on your choice of spending.
Sure, it's simple but it is incredibly unfair both on an inequality level and a moral level.
Inequality - lower earners pay relatively more tax for subsistence.
Moral - Unfair for people to make people pay for stuff they don't benefit from directly.

There should be absolutely no tax on consumption unless there is some sort of quantifiable purpose for it.
Fuel tax - improves roads - okay
Cigarette tax to fund healthcare liability - okay.
Tax on sugar, fast food, etc - much the same.

Tax on bananas to subsidise Tiwai point - not okay.
Tax on electronics to bail out AMI insurance - not okay.

The inequlity argument is dealt with by social spending, a much more targetted tool to alleviate any issues for the poor e.g. why scrap GST on luxury items such as sports cars and pleasure craft to help the poor buy a loaf of bread?

The moral argument would apply to all taxes and essentially advocates a user pays system e.g. why should I pay income tax to fund schools when I don't have any kids?

Obviously you misunderstand the point with your comment on luxury goods.

"The moral argument would apply to all taxes and essentially advocates a user pays system e.g. why should I pay income tax to fund schools when I don't have any kids?"
Exactly my point, again.
Why should someone, on a lower income, who will never use tertiary education subsidise the education of tertiary education beneficiaries at a relatively higher rate than those at the high end of income.
GST accentuates this fact.
If you take away GST, and use a progressive income tax system, the impacts of this are less pronounced.

Obviously you don't know what "relative" means if you think the poor pay more GST than the rich.

You could set up a political party that advocates a user pays tax system (or join Act) but I don't see you winning an election anytime soon.

"Obviously you don't know what "relative" means if you think the poor pay more GST than the rich."
When did I say that.

Again, you completely misunderstand.

(ongoing, period on period) In terms of total taxation paid as a proportion of disposable income, the poor pay a huge amount more than the rich.

Nymad misunderstands. The beauty of GST is that it is nothing to do with whether you have a high or low disposable income, and that you might have bags of cash in a big vault.
What it actually is, is a tax on spending. You spend high, you pay more tax. You spend low, and you pay less.
The beauty of simplicity is not just in admin, it's that you catch all spending.

People like you are obviously the reason tax policy like GST exists.
God only help any economist that tried to explain to your what real tax policy should look like.

Enjoy the land of ignorant nominal bliss. You should feel welcome, there seem to be more and more of you going there everyday.

Source for claim (implied statement) economists do not support Value Added Taxes (e.g. GST)...

Some do, some don't.
I don't because of the aforementioned factors, in the New Zealand case.

"God only help any economist that tried to explain to your what real tax policy should look like."

Lol, you mean economists like Gareth Morgan, who favour convoluted, administratively complex, and highly inefficient taxation systems.

Don't get caught up in the rhetoric.
You're better than that.

I am only human.

You do misunderstand nymad. You contributed a pile of abuse to me, but not even to my comment. You offered no argument of any economic basis.

Read the whole thread, then.
Don't be some johnny come lately armchair economist. People say Gareth Morgan and economists are arrogant. It's not that at all. The true reason is because of the aforementioned fact that people believe they always know best in terms of the economic subject matter, when they don't.

Sure, ad valorem has its merits, but it is by no way fair. Saying that it is totally ignores the facts in the context of this discussion.

More abuse from Nymad.

I would add that - in addition to increasing GST after promising not to - National also broke their promise not to increase taxes with another relatively regressive tax on workers. National now takes one third of your employer contributions to Kiwisaver. So while young Kiwis have been told to get into Kiwisaver because the pension won't likely be able to support them very well in future, the National government has in the next breath undermined that by taking a third of their employer contributions.

These things both while leaving alone the unearned massive increases in capital their core older voting bloc has received through land. They've implemented regressive taxation that disproportionately affects the poor.

@nymad ........... MONEY IS FUNGIBLE , once its collected by IRD that Government puts it all in the pot irrespecitve of its source , so you are wrong GST DOES fund Work and Income

Man, you people are so righteous.
And, wrong, like, all the time.

If you actually read and understood what I said, you will find that I never said it didn't go towards transfers. I said
"GST doesn't fund Work and Income anymore than any other national taxation does."


I think you must have picked up an economics primer in the dentist's waiting room and come across the word fungible. It sounds good and indeed,according to basic economic theory,money is fungible. However,out here in the real world,it is not. This is well explained in Richard Thaler's Misbehaving, The Making of Behavioural Economics. I would be happy to explain this more fully to you.

Do you think that's where he also got his understanding of WACC?
I mean, it'd make a whole lot of sense.

Don't waste your time Boatman, Nymad's a lost cause.

The people who buy non-restaurant food to cook at home are time rich, whilst a lot of working poor do not have time to cook at home.

I can make quick healthy meal from $6 of ingredients in 15 minutes...loaf of bread in 20mins + cooking time...time poor what a load of #*%%*#&##!!

Sounds good, what time can you pop around? I can only have you stay for 30 minutes, so please don't be exaggerating.

I can buy a loaf of bread for $1. Why would I waste 20 minutes making it - even at minimum wage that is still $5 worth of Labour ;-)

And you can make a burger at home for about 50 cents ..........

Hate to break it to you, but at that price that "meat" ain't beef.

No , use can use mince ..........

Those working low paying jobs in Auckland are sharing housing between several family units. Sharing kitchens and working multiple jobs, finding the kitchen time is not as easy as it was.

Nowadays between the A-hole PM flooding in more immigrants and the A-wipe Mayor blocking housing development things are getting worse.


Both my wife and I have worked our entire lives and we have gone home every day and cooked a meal for our children , porridge for breakfast , sandwiches for lunch and a simple dinner for tea .

We never went and wasted our money at KFC or MacDonalds , instead we bought shares in Restaurant Brands when I realized how stupid so many Kiwis were , buying fast food every day

@Stephen Hulme ........... bollocks I say , GST is way fairer than Income Tax . Why should me labour be taxed and my ability to spend escape the tax net ?

Because GST captures value (ability to spend) detived from tax free capital gains and not everyone wants to do that. Additionally GST devalues existing savings (favours the young) and encourages savings (building financial stability). I'm very pro GST by the way. I reckon it is the cheaper, fairer way of accomplishing what TOP are turning into an administrative nightmare.

GST captures tax from the black market and tax dodgers as well.
The tax I object to is on interest paid on savings.
You already paid tax earning the money. The govt double dips and then complains that NZ'ers are bad at saving.

You don't pay tax on savings, you pay it on interest which is a new source of income over and above any principal that may have been sourced from an amount that was taxed (and some principal may not have been taxed e.g. capital).

Unless Gareth Morgan gets his way.

It's not just beneficeries our ex middle class working poor are doing it hard as well.
This report from the UK but similar situation here:
"Last week’s report on poverty and inequality by the Institute for Fiscal Studies notes that most of those in poverty (defined as income less than 60% of the median) are now from households where someone is in work. “[R]elative poverty among children and working-age adults has increased and, over the past 20 years or so, has increasingly become an in-work phenomenon due to declines in worklessness, low earnings growth and widening earnings inequality.”

It seems as if NZ hates children. As a goldcard holder I shouldn't complain but the country my grand children will grow up in is not kind. I think TOP may get many more votes from middle-class pensioners than they anticipate. Not every voter is selfish.

Winston has most of the grey vote wrapped up with his obvious bribes for the elderly.


Very effective bribes as well based on the number of times my parents have day tripped to Waiheke, just to fill in a Sunny day. They don't even buy a coffee at the other end.

Our old people built and paid for this countries infrastructure.
Roads, bridges, hospitals and hydro dams are not the natural landscape.
It is a small thankyou that our oldies can catch a bus and a boat to Waiheke for free.

They only go to Waiheke because it's 'free'. If Winston could arrange free transport to the Airport for their yearly European holiday and take away those annoying rules about time overseas they'd be NZ First voters for life.

There's no need to go to Waiheke if you live in 1071.

Multiple generations paid for infrastructure, funded in part by debt (that naturally spreads it to future generations who benefit from it too). That's why we borrow for infrastructure.

I don't begrudge that, at all. The issue we're facing is that we've gotten a bit out of kilter...the advantages the oldies received when they were younger are now not available to the young'uns, while the young'uns are still expected to hold up their end of the bargain and fund the oldies. As a result we're looking like seeing the first generations that are significantly worse off than their parents.

Stats NZ's latest Household Living-Costs Price Index for the June quarter shows beneficiaries experienced the highest price inflation of 2% over the year, while the top earners in New Zealand only faced a 1.4% price increase.


After all, nobody really wants inflation apart from economists who think always like it could be 1929. Even at 2%, that’s enough to rob a slow, insufficient trend of enough to make it that much more painful especially for workers. Read more

And, in other news from the 'Statements of the Bleedingly Obvious' feed, it appears that the total output of Solar PV at Midnight is zero.....

I'd like to see income tax dropped completely for individuals (companies and businesses would stay the same). Then add another 15% ontop of GST to bring it up to 30% or thereabouts.


Encourages hard work = more reward as no income tax... workers get paid every cent they earn. Much easier to regulate GST than it is for income tax (as many people get away with cash / under the table deals).

ALSO (and this is the biggest reason) - it promotes saving as the first choice option, which NZ'ers are notoriously bad at doing.. instead of fueling cheap consumption of things that don't really foster "growth"

Just my opinion.

The main reason that that is a bad idea, is because low income earners spend most of their income. So they will essentially be paying a higher percentage of their income as GST, than higher income earners. So dropping income tax won't have any benefit, and will make things a lot more expensive. Also it means that old people will be hit bad, because their savings suddenly have a lot less buying power.

Promotes saving ? starting with devaluing existing savings by 15% ?

National did this last time they came in, rising GST by 2.5%. I wonder if they will be dropping it, as I believe they did it as an emergency measure with the GFC, and it wasn't in their policies that people voted them in under. Really it should be reversed IMO.

They did it as a tax switch in 2010 - income tax down, GST up;

Don't think it had anything to do with being an 'emergency measure'. Nats won't change it - GST is a more a regressive than progressive form of tax.

I don't believe it was a policy though that voters voted them in on. I wouldn't have voted for them if I knew they would increase it. The end result though was it was a tax cut, which benefits the rich the most, and poor people end up paying more in gst tax due to much of their income being spent on living costs.

No they did not campaign on it - in fact the opposite - John Key campaigned on no GST rises. Another broken promise. Here's the video of him saying no to GST rises;

Thing is as they had also campaigned on lowering that top tax rate (from 38 to 33) - but once they crunched the numbers - they realised the shortfall that the 38 to 33 policy promise would bring.

So they moved all the tax rates a bit (none so much as the top one though) and did the GST tax switch to make up the revenue losses at the top.

Amusing how John Key said "if we're doing a half decent job economically we won't need to raise GST" then raised GST.

@Rob .............. FAKE NEWS PEDDLER ..... The Government DID not raise GST due to the GFC it was to reduce Income tax and rebalance the tax system to something fairer for all of us

actually boatman, it made the overall tax system more regressive. see the charts in that link above.

You need to get your facts right. They actually campaigned on reducing income tax rate (eg tax cuts). They didn't campaign on also rising GST to 'rebalance' the tax take. But they then found they couldn't afford to do this . eg it was just after the GFC. So they raised GST to allow them to still be able to reduce peoples tax rates. 'Rebalancing' IMO was just spin to make it palatable to people.Otherwise why did they have to rise GST when it wasn't a policy they campaigned on? Due to the GFC, I believe people were more accepting of it.

I'm in agreement with you Rob - that's pretty much what happened. 'Rebalancing' was a ruse - just like wadeable rivers and (now) mid-skilled migrants.

With Auckland's abysmally slow building rate (thanks Phil Goff) for new hones we must expect the next economic turn down to be worse than most any other in living memory in Auckland. The rest of us have the resources and transferable skills needed to move away from Auckland, the bottom quartile may not be able.

I didn't know Goff is a builder, or that he is responsible for National's wild claims of hundreds new house builds failing to come to fruition.
But its definitely not the fault of the 3 term National government, yeah righto unaha-closp.

He is the Mayor who continually jacks up land prices and has people living in cars while his council year after year misses housing targets by several thousands. It is definitely not the fault of the National government, because Tauranga and Hamilton both build much faster than Auckland. If I were to blame the government for Auckland, I'd have to congratulate them for Hamilton and Tauranga. I'm not going to do that.

Does he provide the cars for them also?
I would blame Rodney Hide (who was a Nat puppet at the time) for the current Auckland problems, he designed it that way.

Yeah, he designed the Super City with a giant loop hole that says all urban areas in the Auckland region are part of Auckland City. So a truly insane council might now for instance quadruple the size of Warkworth and say look how much land we are opening up for the people of Auckland. Legally it would be completely true (thanks to Rodney Hide), whilst obviously completely BS in the physical sense.

No, Goff doesn't provide cars, just like Auckland doesn't do social housing any more.

unaha-closp, You always miss the point that its not the Mayor or Auckland council that invites in all the immigrants.
They don't have money to pay for the infrastructure that this new population of people need.
Auckland ratepayers don't want to pay higher rates to pay for the infrastructure.
The govt doesn't want to pay either.
Perhaps immigrants like yourself should pay more tax to contribute to the needed infrastructure.

Immigration is as relevant to building rates as it is to ostrich farming. A little bit relevant, but not very.

Auckland City builds slower than Tauranga or Hamilton. Auckland as the massively larger city should be building twice as fast as the others, but actually builds 15-30% slower. Auckland is wasting probably 40% of it's infrastructure spending.

Auckland ratepayers spend more than enough money on infrastructure.

So you actually think the Mayor sets the price for land ?

Oh yeah.

The Mayor says we can't build next to the Swanson Railway Station or on the Takanini Ardmore plains or in Greenhithe or across the valley from the Albany Bus Station or in fact on 90% of the land around Auckland City. If we were allowed to build on this land, the land price would be a lot lower and the cost of infrastructure would be lower as well.

The extreme example is Takanini-Ardmore Plains versus Warkworth. Practically ready for development today, needing only less complicated geo-tech work than Canterbury has been doing for 6 years - Auckland has banned development on the Plains. Warkworth needs a new sewage treatment plant, is covered in hills and requires a truly massive investment in roads - Auckland is paying for development now.

For every $1 infrastructure that would be needed to be spent in Takanini, we already spend probably $4 in Warkworth.

But according to yesterday's article, NZ families are the least stressed they have ever been on record?

@NZXY ....... Yes true thats what was reported ........... go figure !

Perhaps the sample group they questioned weren't the families living in cars and garages.

So the rich get richer and the poor get poorer - surprise sur $#%ing prise

So why is mortgage payment not considered ( included) as an expense when rent is?
cannot see any difference in purpose !! they are both essential for housing both rich and poor... and actually home owner pay much more in rates, Insurance, and maintenance ..

"The CPI stands for a Consumer Price Index. As in the price of things that are consumed (at a particular moment in time). Real estate prices are not the price of something consumed because they contain the value of current housing consumption but also the capitalized value of future housing consumption. As such, including house prices would make the CPI a mixture of consumption at different times, and therefore unsuitable for comparing the price of consumption bundles at distinct times. Instead, they use a purer measure of the price of housing consumption: rents.

Rents reflect the price of consuming a flow of real estate services at a moment in time. Of course, many homes are owned by the occupants and not rented. Therefore, the calculators of national accounts generate something called "owner occupied rents", which is an attempt to calculate what the rents would be on homes that are occupied by their owners. This measure has problems, but for many purposes is quite adequate (Crone, Nakamura, Voith (2004))."

I note that insurance, rates and property maintenance in respect of houses are included in the CPI (see

HeavyG, Ecobird was asking about mortgage interest payment not real estate sales, purchases or values

Not this same question, again.

"and actually home owner pay much more in rates, Insurance, and maintenance .."
I don't see how that makes sense.

I meant much more than renters ..i.e additional expenses of rates, Ins, maint. which renters dont ...

But again, why is weekly or monthly mortgage payment which equate rent payment not considered as an expense, I dont want to include the house price - but surely lodging bares an expense whether it was rent or mortgage interest payment.

You understand what a 'rent' bundle in a property sense is, right?
Because it doesn't sound like it.

Not sure that I understood your reply, how do you mean?

Rent pays for insurance, rates, maintenence, etc.
Well, it should.
If you are renting vs buying, essentially, you are paying someone to bundle those costs for you as a service.

...but Shamubeel said it made financial sense to rent so it must be cheaper, right? Bundle or no bundle.

Nominally cheaper.
Read why he bought. It was a change in the opportunity cost of stability.

lol, No you're NOT ... rent is rent and its not a bundle, if it was considered as such all rents should go up by at least $95 pw --- rent hardly pays only half of the costs of making a property available for renting ( i.e. Mortgage and associated property procurement costs) an example: a $600K mortgaged house ( which is worth more than 900k) owner pays about $600 - 620 pw in interest on that mortgage ( round figures at 5% interest) ... In the best of cases that house would be rented for 480-520 pw ...
So, if I bought that house , It would cost me about $700pw in running expenses while my neighbour renting a similar house only pay $500pw in rent ... Does that explain the Bundle for you? sooo how can CPI exclude my expenses from the Maths ?? and make the richer pay less ???

...So what about the smart investor who nets 7% period yield on their property.
Or are you just going to cherry pick?

In terms of renting versus owning, the calculation comes down to marginal utility of non monetary factors.
i.e. if you value stability highly, the preference will be for owning.
Owning must be cheaper, all utility factored, (at least until recently) because we have always had in excess of 50% home ownership.

lol, My mistake, I shouldn't have replied to you ...

You have no idea of what you are talking about and I shall leave it at that ... this kind of nonsense can be dished out under another relevant article .. it seems that you have missed the plot save this kind of BS for later ...Oh, there was no cherry picking and there is No 7% anymore ..:) ..

I will go and have a drink and enjoy my Stability and Low CPI numbers.

"You have no idea of what you are talking about"
I smell irrrrony...

Case in point.
"Oh, there was no cherry picking and there is No 7% anymore ..:) .."

I see quite a few 7s in there...

Hahahahah ... thank you for proving my point - lol, latest of these numbers are from June 16 , so is the article where there was hardly 7% in any main centre and that has since disappeared ... so get your info and facts updated and relevant to the masses !! ... cheers

Property investors aren't purchasing in this market.
Property speculators hoping for capital gain are the purchasers.
When the market corrects the investors will be back and will feed off the speculators who timed it wrong.

Loaf of bread + GST; Overseas trip = no GST; Broccoli + GST; buy shares = no GST. No wonder the rich are getting richer and the poor just stay poor.

o/sea trip has GST in it whether you pay it here or to someone else... Shares and other commodities are maybe capital items like houses and do not carry a GST component - and that is not why the richer are getting richer

Want to know why the rich get richer? I'll tell you exactly why.

They generally go to school, work hard, get post-school training (trade or qualification), get a job and save. They do this for approximately 45 years and during this time, their investments grow, which gives them time & opportunity to create more wealth.

Simply put, money makes money. That's why the rich get richer.

If only the reality was as straight forward as you suggest

@Ngrrk , yes its really as straight forward as that , work hard , finish school ( free & no cost), get a skill (interest free), find a job ( no cost ) live within your means and stay out of debt, save for a home, dont gamble or smoke ............... all really easy , just needs a plan and some discipline

I would like to agree with you but take a little dose of reality.

A person born into poverty has a much harder road to get to the same spot as someone more well off.

"work hard"
Hard to do when your mum smoked/drank/did drugs while pregnant.
Even harder to do when you are starving hungry, freezing cold, sick, and your dad beats you.

"finish school ( free & no cost)"
Come on... factor in "donations", Uniforms, books, stationary, activities, etc... and schooling is hardly free.

"get a skill (interest free)"
You mean a degree of limited value at a hardly reputable institution, then upon employment taking a mandatory 10% pay cut for the rest of your working life.

Real skills often cost money these days, and on the job training/apprenticeships are almost non-existent.

"find a job ( no cost )"
again no cost? finding a job has a lot of costs, professional clothing, transport, phone bills, not to mention the generic costs of living while waiting for a reply.

The rest of your advice is very sound. Though I would also add, don't drink (alcohol or take-away coffee)

Email Graeme Hart and ask him because from memory he is close to what you just described ...

"Hart worked as a tow-truck driver and as a panel beater after leaving school at 16.
In 1987, Hart completed an MBA from the University of Otago. His research thesis outlines the strategy for Rank, then a small hire company, to evolve into a major corporation. This strategy relies on using the cash flow of well-performing companies to fund debt, which as it gets paid off, increases the equity value of the initial investors, a.k.a. leveraged buyouts." etc etc ...

With all the negative attitude, the person you described will get Nowhere even if wins lotto

I don't disagree, attitude/drive/motivation seem to be the most important thing.

I just think of it like F1 racing. It is a lot easier to win from Pole than from the back of the grid. Not saying it can't be done, just that it is more difficult.

Indeed - totally unfair,regressive and should be banned.

Off topic and drifting into politics, but kind of related.

If the Labour Party were competent, in the realms of pure fantasy obviously, they could have had this election in their hands 12 months ago. Labour could have crashed National Party support by having Phil Goff (LAB) carry out the parts of Phil Twyford's (LAB) initiatives that are open to the council. If Goff (LAB) had carried out the Labour Party RUB policy when it was unveiled last year - land prices would have stalled or even fallen.

Look how jittery National is getting as the market stalls slightly, imagine what would be happening now if we were 12 months into an Auckland correction. Plus there would be the other upsides - more houses, more jobs, lower housing costs - and all down to actions by Phil Goff of the Labour Party.

Instead Phil Goff teamed up with Nick Smith and found new ways to acquire more debt to continue with the same useless plans that Auckland has followed since 2009. The high housing costs are being kept afloat and thus National's poll numbers are being sustained.

Is it just always too much to dream, that someday the Labour Party might competently carry out Labour Party policy? Hopefully after they lose yet another election they might finally...

if they were smart enough to do any of that they would not have joined Labour.

Id like to see income tax raised to 45% for individuals earning over 100K, and a tax free threshold for the first 10K earned. I'd like to see GST dropped back to 12.5% and tobacco tax halved. This would go a little way towards alleviating the strain on poor families and slowing the expanding wealth divide.


Yes I imagined you spat your coffee out. I guess it's hard for neoliberals to make sense of different ideas. What I proposed is basically the German tax system. The Germans have a fantastic economy, health care, & education system. They have a thriving middle class, and cheap food. Their economy is based on producing high tech stuff that the rest of the world wants, in contrast to our economy which is supported by a tax dodging property ponzi scheme.

"German tax system" ? - you clearly have no idea.
45% rate kicks in at 250K EURO ; many deductions are available (education etc.etc.)

Hair splitting - 42% vs 45% whatever, the point is it's progressive not regressive.

yep- two digit numbers are a bit too hard for you ; shooting your mouth comes naturally though.

Anyone monkey can copy a number from a wikipedia page as you did. It’s a little more tricky to grasp the concepts and look at the bigger picture, imagine how all the variables interact, and make projections into the future. It’s also difficult to strike a balance between prioritizing one’s own welfare vs the welfare of your family, your neighbors and countrymen, but these things are all linked. I would encourage you to try and think a little more deeply.

"Anyone monkey can copy a number from a wikipedia page" - obviously beyond your ability.

The common taters who itch to Fiddle with GST need a reality check. Changing the overall rate is something of a mission, but do-able: the change from 12.5 to 15% shows that.

But the core feature of GST is that it has, effectively, only two rates: zero (for financial services and the like) or 15% for everything else.

[Yes, before y'all point to them, there are tiny exceptions, like the reduced rate for long-stay residential care in managed village facilities, but these are well able to be coped with where encountered because those organisations are typically single-purpose anyway].

The moment GST becomes differential for any reason, in any widespread sense (e.g. for food versus petrol) the complications start rolling, as do the domino effects:

  1. Every business exposed to mixed sales which cross the new GST application boundaries, have instant compliance costs. Sales have to be differentiated, GST returns become much more complex (because the possibility of getting it wrong multiplies, and IRD takes a dim view of errors). These costs translate into smaller profits, which lead to price increase pressures, business withdrawal or downsizing, and other direct costs.
  2. Differential GST requires exquisite, certain Description of every possible good or service to which a given rate applies. Supermarkets typically run 20-40K SKU's, and each and every one must be Described accurately and the correct tax rate applied. Maintenance alone is a big overhead, and the effect on typical sales techniques such as 'discount bundles' - buy three 2-litre milks, get 1 free and get a half-price pair of gardening gloves - can be easily imagined. How should this be taxed, because the weighting of the sales is uncertain.
  3. The BOM-explosion issue arises very quickly. I buy Flour, Salt, Yeast and Butter. Are they 'Food'? Not individually but together, they make Bread. How to tax them? Go one step further back. Pepper, bay leaves, cinnamon. Food? Less certain. But a hot-pot meal would be bereft without them. Go a further step back in the BOM. Pepper grinder, pestle and mortar. Food? No, but try making that hot-pot without them. And they cannot be used for much else. Such boundary issues destroy the Certainty which is the hallmark of a good tax system.
  4. The central administration needed to maintain the endless lists of goods, disseminate it and keep up with the constant flow of new product (whoever heard of quinoa a few years back?) is non-trivial. This is pure economic deadweight: it is substantial extra activity in a non-tradeable.
  5. Once differentiation has commenced, the political arguments about stuffing up a nice simple tax, go out the window. The technical term is Defenestration. So every new Bright Idea has a much better chance of being incorporated (because 'It's Good for the Children/Environment/Winnie/our little business segment/our Region/our political cronies/the unions/beneficiaries/the Grey's an infinite list). Do y'all really wanna open That up for grabs? It's a direct path to cronyism and to a tax guide the size of several phone books, updated quarterly, available for purchase for a Modest Fee.

There are two aphorisms worth recording about Tax in general.
- it's like plucking a goose. You want the most Feathers with the least Hissing.
- a high degree of Inequity is preferable to a small degree of Uncertainty.

The short version: don't foobar GST by opening the Pandora's Box of differential rates.....

Bring it all back to where we started - at 10% - and introduce a land value tax (far more efficient than GST as taxes go) as the 'switch'.

There done.

Agreed. And then substantially reduce income tax.

I am also a bit puzzled as to the modern utility of corporation tax. Provided distributions are taxed, do we need it? Given the ability of larger corporates to game it by transferring revenue to lower tax jurisdictions, it seems an unfair burden is placed on companies who don't have that ability.