Govt tax talk is thresholds, not rates – Joyce

Budget tax changes would focus on thresholds, not rates, Finance Minister Joyce says; Families package might target transfers in bid to help incomes

27th Apr 17, 3:05pm by Alex Tarrant

The potential income tax focus in the May Budget would focus on New Zealand’s tax rate thresholds, but not the underlying tax rates, Finance Minister Steven Joyce has said.

However, families may still get income relief from a broader ‘families package’ that includes changes to transfers, he said.

Speaking to media after a speech in Wellington in which he announced a new government debt target over the next eight years, and increased expected capital infrastructure spending in the next four Budgets, Joyce was asked specifically on whether the Budget would see tax rate cuts, as opposed to threshold moves.

Joyce has repeatedly talked about tweaks to target bracket creep, where thresholds are raised to account for inflation.

“I wouldn’t be characterising anything we do primarily as tax cuts. But we are having a look at what we can do for family incomes,” Joyce said. “I don’t want to overstate it.”

There were a range of ways families could be supported, including transfers and tax thresholds, he said.

“We’ll be talking about that on Budget day.

“I’ve always talked about threshold shifts rather than cutting rates.

“We’re not planning to do reduction of rates this year, but we haven’t planned that for quite a while. I’ve been quite open about that. If we were to do anything it would be something around thresholds.”

Last weekend, Joyce focussed on how the $48,000 30% tax rate threshold had been overtaken by the median wage.

He mentioned the government was concerned for people looking to save deposits for a first home who might trigger that threshold while potentially still paying off student loan debt.

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.

33 Comments

by Kate | 27th Apr 17, 3:17pm 1493263073

“I don’t want to overstate it.”

Translation: wage slaves will still be wage slaves.

by Ralph | 27th Apr 17, 3:26pm 1493263601

Get your point but that's harsh Kate. Since when did getting paid a wage for your work become slavery?

I dont think anyone should look down their nose at anyone else simply because they get paid a wage.

by Kate | 27th Apr 17, 3:40pm 1493264410

Since when did getting paid a wage for your work become slavery?

Ever since the average wage was too low to live on with any modicum of dignity and security - or if you prefer an economics definition: ever since the circumstance of unequal bargaining power between labour and capital embedded itself in our social order.

by Double-GZ | 27th Apr 17, 3:48pm 1493264898

All New Zealanders should get paid a living wage at the bare minimum especially in Auckland. No-one deserves to struggle while working hard. It is not fair!

by Hamish | 27th Apr 17, 3:57pm 1493265451

If your definition of living wage includes paying off the roof over your head, then as somebody living outside of Auckland....no thanks. Why would I want to subsidise somebody to the same standard of living through their working life so that come retirement when they cash up and move out of Auckland, they are sitting on a hugely inflated asset?

by Double-GZ | 27th Apr 17, 4:01pm 1493265680

No that's not the definition of living wage. See this link:
http://www.livingwage.org.nz/what_is_the_living_wage?gclid=Cj0KEQjwioHI…
It is the hourly wage a worker needs to pay for the necessities of life and participate as an active citizen in the community. It reflects the basic expenses of workers and their families such as food, transportation, housing and childcare.

by Hamish | 27th Apr 17, 4:06pm 1493266018

'housing' is that defined as rented or owning?

So once you stop earning a wage, you are meant to stop living?
Not a great sales pitch. I think we should aim higher than that.

by Double-GZ | 27th Apr 17, 4:11pm 1493266260

Housing is referring to renting for a living wage earner. And yes, a lot of people are struggling to get ahead, and why do you think NZ has one of the highest suicide rates in the world? People do decide to stop living!

by Hamish | 27th Apr 17, 4:13pm 1493266422

I think we should aim higher.

by notaneconomist | 27th Apr 17, 4:36pm 1493267818

And what slaves are you going to use to pay for this living wage Double-GZ?
All the empathy and emphasis gets directed at those who are thought to be less well off financially, without anyone giving any consideration to those who get pushed around in the regulatory regime complying with the extra workload placed upon them by the politicians and bureaucrats in collecting the extra revenues required for the ever increasing costs.

Many of the poor and middle income people refuse to educate themselves and I'm not talking the usual channels. There are literally thousands of books that people can read to gain knowledge to lift themselves out of their personal circumstances yet people choose not to do this. When governments take over 50% of the earnings off people to fund their political and bureaucratic regime then they have created poverty, they have created the suicides, they have created the down trodden, they have created the slaves......yet people here are advocating a living wage........that whole living wage concept is making the poor and others go from the fry pan into the fire!!

by the Joneses | 27th Apr 17, 5:18pm 1493270280

How do you see the world working when the cleaners and garbage men all upskill? Just because a job is low paid, does not mean that job doesn't need to be done.

We can't all get rich buying investment property. There has to be someone paying the rent.

We can't all become managers, we need workers or nothing gets done.

So in that light, you are effectively saying those workers at the bottom just have to suck it up, cos those in better paid positions need to keep more of what they earn.

By the way, take a look at where your taxes go, and you will soon see there is not a lot you can shave off that is not necessary spending. http://www.wheresmytaxes.co.nz/ .

by Kate | 27th Apr 17, 8:49pm 1493282985

Gee, that's the most useful analytical tool I've ever seen!!!!! Why isn't this run every year?

What an amazing service this would be for interest.co.nz to pick up and run with;

https://www.markhansen.co.nz/budget-visualisation/

by Wildcard | 28th Apr 17, 9:26am 1493328373

"So in that light, you are effectively saying those workers at the bottom just have to suck it up, cos those in better paid positions need to keep more of what they earn."

I think what nonaneconomist is getting at is the people at the bottom refuse to educate themselves and to improve their financial and social position. In the age of the internet there is gigabytes of data on self help books, investing FAQs, how to quit addictions and so on that are easily accessible, and they can be read by any lower income earner. In addition, the poorer classes also have large amounts of children, drink, smoke, gamble, take drugs and rely on the Government for handouts. Reliance fosters dependency, and dependency fosters entitlement. You can't force the poor to better themselves, and if they make no attempt then that's on them.

by notaneconomist | 28th Apr 17, 2:25pm 1493346311

I never used the word "upskill" on purpose. One doesn't have to upskill (as in change their job type) to improve conditions for themselves. Sometimes you got to read the dry matter, things like how the systems internal workings are carried out. We are all in the business of labour, goods and service exchanges and it is how you are structured in the system that will deliver different results. Whether you like it or not we are all managers and anyone who thinks otherwise is pulling the wool. We are managing ourselves first. And we had better learn to manage ourselves well or others will fill in the gap and manage us for us.

Anyone who favours the current taxation redistribtion system must have difficulty with maths. You can't take money out of the system and then hope to provide a better standard of living for the less well off. The only people who are improved by this transfer are the politicians and bureaucrats as they get first suck of the cherry. Take a $1000 of tax......what percentage does the system have to take before it reaches the bottom?

I don't see all the government spending as being necessary and could shave this budget in half an still deliver a better standard than what is currently there. Take public healthcare it is the biggest sham of an industry there is. This whole industry is exempted from comsumer law. Education is the same. Why do you think private healthcare, private education, private security etc exist?

It is not in the publics best interest to have a system that takes money off people and then enforces services etc upon the people under the BS guise of we can do it cheaply and more effectively.

by Ms de Meanour | 27th Apr 17, 4:27pm 1493267263

How many of the people earning below the "living wage" level actually do have families to support and housing costs to pay?

by Kate | 27th Apr 17, 8:13pm 1493280817

Most I imagine.

And then you read this from their employers;
https://letstalkabouttaxnz.com/2017/04/24/shy-and-retiring/

by sharetrader | 27th Apr 17, 4:20pm 1493266835

just had a discussion about that and was told would accept a lower wage for two years to get the foot in the door into NZ then try to work there way up, when i said why should you have to do that why should you not get paid a proper wage for your efforts.
answer because its a competition for jobs so i need to take less

so we have a system where bosses get the benefit of making more by importing workers rather than take and train locals

it is wrong on two counts, locals should come first and second immigrants should not be getting ripped off

by steven | 28th Apr 17, 9:38am 1493329113

Agree.

by Ralph | 27th Apr 17, 3:59pm 1493265540

I am not a fan of using such a word as loosely as you do when real slavery still exists in the world today. It demeans both the word and the its victims.

by notaneconomist | 27th Apr 17, 4:22pm 1493266938

At least they are getting paid Kate......I have just spent the afternoon collecting and furnishing a GST return and I am unpaid for this task due to being self-employed. There is no average wage if you are self-employed! There is no equality if one is self-employed. It is all very well to loosely use the word slave but for some of us we are unpaid tax collectors with no bargaining power - real slaves!!

by Ludwig | 27th Apr 17, 8:08pm 1493280533

I think your perspective of the current system we're living under is severely distorted. Before socialism took a grip on NZ in the 50s and 60s, a household could live off one breadwinner. Once big govt took hold and you had to work more than 40% of the year to pay taxes, then disposable income dropped and, surprise, surprise, two breadwinners were required to keep a household afloat. Now we have to import blue collar workers because locals on welfare can't be bothered...sorry, correction, they see no marginal benefit in working as opposed to receiving a benefit. Now you will say that they are underpaid...so, who decides that exactly? Some socialist bureaucrat? Bring in your union controls, your "living wages", etc, and watch this country go down the same hole as France, Italy, Greece, etc.

by Kate | 27th Apr 17, 8:28pm 1493281711

My perspective distorted - try this distortion on for size;
https://letstalkabouttaxnz.com/2017/04/24/shy-and-retiring/

Here we have one of the bigger of the lower-than-living-wage employers - who not only cannot afford to pay its employees a living wage, but cannot afford to pay tax at the same rate on their earnings as that paid by the wage slaves they employ.

NZ is far more a corporate welfare, than a social welfare state.

It's why Income and GST make up 2/3rds of all taxes collected;
http://www.treasury.govt.nz/budget/2012/execsumm/07.htm

by sharetrader | 27th Apr 17, 9:52pm 1493286724

union controls as you put it are almost non existent in NZ today. They have been depowered to such a degree that now they don't even keep stats on it.
membership is now down to 1 in 5, and most are in the public service
http://www.stats.govt.nz/browse_for_stats/income-and-work/employment_an…
what we now have is government filling the void and adjusting and making laws to appeal to there core voter
so when a large accident happens i.e pike river suddenly workplace safety is changed
or when public opinion swings i.e zero contracts

by David George | 28th Apr 17, 9:07am 1493327253

The waste of money and destruction of personnel responsibility by big government is a worry Ludwig but how did we get to the point where government assistance is required for folk on the median income to put a roof over their head or raise a family?
The share of government in the economy has been much the same (although the even more parasitic FIRE sector has increased) for four decades now http://www.theglobaleconomy.com/New-Zealand/Government_size/ , our productivity per worker and workforce participation rates have been rising steadily but modestly, our education achievements are higher than ever, we have powerful productivity raising technology available and we've become more globally connected.
So why is our median income ($32K before tax or $45 for those in full time employment) no longer sufficient to live on and raise a family? Why have so many of our bright young people decamped to (equally socialist) countries elsewhere? It could be a distribution issue but undermining our folks wages with desperate third world immigration and the weakening of workforce protection is a big factor. Large numbers of low wage workers tend to reduce the incentives to increase productivity as well.
Loose fiat money and completely unnecessary population pressures have forced up property prices well beyond the capacity to pay to such an extent that our middle class battlers are giving up on home ownership. They often have significant debt already and can barely make ends meet never mind saving for a deposit. I don't know what's around the corner but this whole situation is not serving our (Kiwis) interests and has the potential for a real mess.

by steven | 28th Apr 17, 9:40am 1493329245

France is actually doing OK. Also in terms of unions in the 50s and 60s NZ had pretty strong ones but then the neo-liberals disposed of them, oh and llok at the mess we are in now.

Just a different perspective of course, but one where there is a bit more evidence to back it up, unlike your opinion.

by abnz1 | 27th Apr 17, 3:52pm 1493265163

Election Year.

Need say more.

by sammnz | 27th Apr 17, 4:50pm 1493268622

Yep this wont last, don't vote Nats if you want some positive change.

by Rob | 27th Apr 17, 8:59pm 1493283543

The problem is there is no good alternative IMO. GLabours policies don't inspire me,

by Plutocracy | 28th Apr 17, 9:05am 1493327103

What policies do you feel strongly about?

- Do you enjoy over-priced houses?
- Do you enjoy rampant immigration?
- Do you enjoy strained infrastructure?

If yes, then stick with the status quo and vote National. If not, read about other parties policies and vote accordingly. Shit, it's not that hard people! It looks like Winnie is going to do well.

by steven | 28th Apr 17, 9:46am 1493329612

Indeed, I am gob smacked that National is still in the game but then look how badly the left are perceived. Yes I think NZF will do well this election, I even think they might pass the Green party for votes/MPs. Personally I am voting TOP as I want central and green, not loopy left and green.

by Trying to build | 28th Apr 17, 8:57am 1493326669

I have just watched a discussion on the Pareto Principle (80:20) rule, its effect on social welfare and immigration. It is an hour long and he waffles a bit, however I think it should be compulsory viewing as basically he puts forward an argument that most money that is given to the poor eventually just rises to the top elite again and the danger of allowing too much immigration.

https://www.youtube.com/watch?v=IivIvop_VPg

by steven | 28th Apr 17, 9:48am 1493329691

The idea is that churning $s through the system constantly makes for a vibrant economic system. From this then we see that an economy does the best when inequality is low as most of the people are participating (and numbers matter) in the economy and we have less parasites sucking the life out of said economy. Right now the opposite is true and surprise surprise the economy is in a bad way.

by Trying to build | 28th Apr 17, 10:21am 1493331669

Understanding this most basic fact for the general population is almost as hard as coming to the realization that God does not exist.