34 Comments
It makes sense to move the thresholds so that the median kiwi isn't on a 30% marginal tax rate. Such a high marginal tax rate means that even if the median kiwi gets a 2.6% pay raise and inflation is only 2% their income is still going down in real after tax terms.
The capital gains tax is just there to grab headlines at the expense of middle NZ while anyone even just slightly above the middle will easily avoid it (I believe a lot of accountants already structure their client's affairs in such a way as to negate the effect of the CGT, making it effectively dead in the water before it is even implemented!). Middle NZ are the ones who have an investment property not because they have been smart with money but through long term saving.
An FTT is far more comprehensive. It has its detractors, however in this age of online buying and banking and the difficulty of applying GST to overseas purchases, I believe it is the way to go, next. Detractors please note, an FTT would not be an "as well as". it would be an "instead of" especially of GST I think, because of the ease of application as opposed to GST and its % would be so low as to be practically unnoticeable on most things, but its cumulative effect could be very much so.
I agree with the base theory behind a FTT, but I just can't see it actually work in the real world.
There are too many exceptions that would need to be covered in order to define a transaction.
For example.
- Should a $20 a month transfer to my kids saving account be a transaction?
- What about a transfer to my own savings account/Term deposit/etc...?
- Does paying my credit card off, count as a transaction?
- Should my mortgage payment incur FTT?
- Should rent?
- Does a tax payment to the IRD incur FTT?
- Do bank fees count as transactions?
- Do wage payments incur FTT?
- What about donations/fundraisers?
- Second hand market (i.e. trade me, garage sales, etc...)?
- A mate buys tickets to the rugby, then I transfer money to him?
It would be an administrative nightmare to maintain and enforce.
When GST was introduced, & raised, by the Lange government there were compensatory adjustments made to direct taxation accordingly.Next time round for Labour the Clark government simply shoved the income tax right back up again. So income tax is back where it started and on top of that we have GST (which as at now includes Key's increase as well.) Until Labour had some prudent second thoughts it looked certain they were going to repeat the cycle. Governments seem to believe that indirect taxation GST, FTT or whatever are only there to be forgotten so on that basis, and past performances, it would be much better if they would forget about introducing them too.
Yes, everything, but the rate of it would be in the very low single digits, any transfer of money that involves it going through a bank, you could probably get away with it being less than 2%. Even your $20 handed over to the owner at the garage sale would pay it eventually. Gloriously simple if applied to absolutely everything, but of course, what we would need to know is that it would not increase. That is the worst thing about all forms of taxation, to be frank.
So does it get charged if you transfer money between yoru different bank accounts to get a better rate of interest? If it does, then that reduces competition, as people wouldn't be able to shop around, as the cost to transfer outweighs any benefits in the interest rate difference. So banks don't need to offer better rates to get people transferring to them. I am guessing it also applies when you buy a house. It kind of penalises people for saving money.
I understand, but would you be removing income tax as well?
I guarantee an employer will take the 2% charge from the employee. It is effectively taxing gross wages. 2% on your kiwisaver, 2% on their kiwisaver, 2% on the PAYE, 2% on the net amount to your account, not to mention 2% for any other deductions.
It would be open for mass double, triple, etc... taxing.
I make 10 transactions on my credit card. I get charged 2% on each transaction. I then pay off my credit card and get charged 2% on that. That is effectively double taxing me.
Same as if my mate bought ten tickets to the rugby for a group of us. He pays a 2% charge on that, we then have to give him the money, and we get charged on that again.
I don't care what the rate is, I don't want to be taxed twice for the same thing.
Does that not then encourage, if not actually necessitate, a return to the old cash society. In other words there is no way a government can monitor let alone tax cash transactions. So some irony perhaps, some fear a cashless society, overlooking the convenience & security it offers, but a transaction tax would, it would seem , have great potential for a back pocket & money under the mattress way to avoid any tax. Not that simple?
You would rather pay over 7 times the amount of tax on the same money??
But, remember it is the TRANSACTION that is taxed, there I fixed it for you, now you can save yourself paying heaps of tax because it is no longer 15% GST.
Edit. Oh and by the way, have you considered that you are already double taxed, you pay tax on your income then when you go and spend it, you pay some more, quite a lot more. Now, I do not exactly know how GST on fuel is structured, is the GST on top of the excise taxes, or is it applied before excise is added. If it is the former then you (and I) are being TRIPLE taxed on the same money.
When I first heard about a FTT, the rate espoused was 0.001% (0.1% of 1%), the the intake would be more than all the tax the Government takes in today. There would be no exceptions - any time money changed hands. Not sure about an inter-account transfer though, but then how to stop corporations moving money off shore without paying?
At that sort of rate it sure makes you wonder who is not paying their share, doesn't it? I am a great fan, obviously and if that % is correct, then who the hell would even bother trying to dodge it, it would probably cost you more to do that. And yes, I would say that inter account transfer would count as well, everything, you'd still need a microscope to see the taxation paid from it.
You really also have to wonder how come it has not gained more favour. Liking it more all the time.
Are you sure that was the rate being touted?
GO THE FTT!!
I think that is the whole point of it, making the rate so low as to make any attempt to avoid it as costing more. To answer your other question, any applicable rate would depend on the amount of financial transactions, and their value. Over a year I would guess it to be 10s or 100s of trillions, even for NZ. At that it has to be attractive.
On a related point I heard part of an interview on National Radio on Saturday where a UBI was discussed, and I wondered how it would be paid for. Clearly taxation but on whom? If the Government made sure all businesses paid tax, and did not weasel out (like they do today, especially multi-nationals) then the tax would pay for it and wages could drop commensurately. But then to extend that question why not make the tax free threshold say $50K? Essentially the equivalent of $70K taxed. Save a lot of cost at IRD, gather the tax through consumption - currently we are taxed at least twice on the money we earn. Once as PAYE, and then GST, lets not mention rates etc???
CGT is fine and speculators should be taxed. In few countries have long term and short term CGT that is if you sell under 2 years CGT is higher and long term after 2 years less.
Defination of long term and short term and als the percentage could be discussed but definately their is a need of CGT but if we have CGT how will national advertise overseas like Chinal and attract money to NZ.
NZ is a safe heaven for many.
I agree with PockeAces. ALL existing taxes should be replaced by an FTT. It would be a tax on ALL Bank deposits, with the word 'Bank' being widely defined. While theoretically I would say that there should be no other taxes except an FTT my politics means I would also impose an inequality tax on all incomes over say $150k and that threshold would be indexed to inflation. If the Politicians proposed an increase in the FTT rate then the policy that needed that increase could be properly assessed and the people would vote accordingly.
Until that utopia is reached then the Politicians can do what ever they like because one day the people will understand that the Politicians are just all talk; that it is the Banks that create money; that a cashless society is the Banks's ultimate wet dream and, hopefully, they will then revolt..
The problem with the current debate on income tax levels is that it is based on feelings and not a deeper logical underpinnings. For example, the top 3% of income tax payers pay 25% of all income tax. There is no logic to that position just how it happens to be. If we move bands what is the logic of it? Bracket creep is real, despite Labour's protests, but why move any bands to any level?
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