Should we abolish Income Tax and replace it with increased GST ?

Thomas Howard Public Seen by 184

My idea is to replace Income Tax with increased GST. The main aim of this idea is simplify tax collection, leading to cost efficiencies for both Government and Industry.

It would also mean more money for low income households (no GST on food and other essentials) and place the burden of taxation onto the wealthy who can easily afford luxury items such as imported cars, plant and machinery. There would also be no requirement for businesses to operate complicated payroll systems or report to IRD.

A further benefit is that the Government (i.e. taxpayer) would not need to spend any money upgrading its antiquated systems – a significant cost saving.

This would create a much fairer tax system for all – a simple tax on spending with no loopholes to avoid paying one’s fair share.

I look forward to your feedback…

fuck you assholes Tue 10 Jun 2014 9:19AM

An interesting idea for sure.

I'm more interested, though, in seeing a tax-free income bracket of a few thousand dollars, rather than a complete abolishment of income tax.

Dennis Dorney Wed 11 Jun 2014 8:11AM

I'm not sure this proposal makes sense. How can an increased GST, which taxes everything, possibly be of use to the poorer people? As the idea stands the rich will benefit. I would oppose any proposal of that kind.

Anatoly Kern Tue 17 Jun 2014 3:59PM

Why don't go further with that per https://internet-party.loomio.org/d/DPJVyMj9/new-approach-to-taxes?

fuck you assholes Tue 17 Jun 2014 4:26PM

A further benefit is that the Government (i.e. taxpayer) would not need to spend any money upgrading its antiquated systems – a significant cost saving.

I think any argument that relies on short-term savings or benefits should be discarded. It's that kind of thinking that gets us into messes like these.

Damon Horrell Thu 10 Jul 2014 12:40AM

Wouldn't that INCREASE inequality?

Low income households spend ALL of their income and hence would pay a larger share of tax than high income households who can save more money and spend it on things which aren't subject to GST like property and overseas trips.

A fairer system would be to get rid of GST and have more progressive tax rates. i.e. how it was 30 years ago when NZ still had one of the lowest rates of inequality in the OECD.

Dennis Dorney Fri 11 Jul 2014 12:37AM

@damonhorrell. You're absolutely right. There is no place for a flat rate tax in a fair taxation system. At present taxes are needed to pay for services that can't be paid for out of its own earnings eg education, or shouldn't be, in the case of health services. If the Reserve Bank created our money supply that would reduce the need for present levels of taxation but there would still be a useful place for taxes: to reduce the inequaility gap, and to reduce the demand for legal but undesirable things, like tobacco and alcohol.

Nathaniel Currier Sun 13 Jul 2014 9:28PM

Good idea. I don't like tax-and-spend but since the government will get taxes from someone, it pays to think of secondary effects. Whatever you tax, you get less of. The worst kind of tax is a tax on actual work, especially low-income work. Taxes on small businesses are almost as bad. The best taxes are on things with negative secondary effects. Think alcohol, gasoline, foreign imports, inherited mega-wealth. Tax this stuff first. Then get down into taxing consumerism (via GST) and income that doesn't come from work (such as capital gains). I think it's telling that NZ taxes even the lowest paid job but does not tax capital gains. Social engineering by the rich, for the rich. Note that I do not support a capital gains tax or GST increase by itself. The government's main purpose is to steal from the unconnected and piss the money down the rat-holes of those who keep the government in power. But if increasing a lesser-evil tax (such as GST) is bundled with eliminating something like the income tax, then overall it's a step in the right direction.