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…
Rex Newey Sat 2 Aug 2014 6:01AM
Abolish all taxes. Install transaction tax transferred direct to treasury by your bank on all withdrawals.
1% would double treasury income from tax as movement of every $ is taxed.
A 60k income would pay only $600 per year.
Business would squeal about tax on all expenditure but love this wage earner's extra $12k spending power.
Best bit- no need for IRD or tax accountants.
Guntram Shatterhand Mon 4 Aug 2014 7:06PM
"abolish the City of London banking cartel and we gain $6 billion p.a from that."
Would that be possible given that it's located in another country?
Wade Vuglar Tue 5 Aug 2014 10:22PM
I think GST should be replaced as soon as possible.
GST is essentially a poor tax.
Currency speculators, dealing in billion dollar amounts, don't pay GST.
People who play the stock market don't pay GST.
Businesses are generally GST neutral.
But people on low incomes pay a third of those scant dollars in tax, because everything they purchase attracts GST.
So let's abolish it.
FTT, on the other hand, is universal and unavoidable.
Any money moving out of any account gets FTT deducted automatically, just like transaction fees or RWT. The banking software is already in use, so to set up and run FTT will cost almost nothing.
Because FTT is unavoidable (especially in conjunction with a Foreign Transfer Surcharge - FTS - to capture money going offshore) there will be little or no fraud investigation costs. A tiny fraction of each dollar will hardly be noticed by people on lower incomes, but will be significant when levied on speculators.
BUT there is a cautionary aspect to the roll-out of FTT.
Currency speculators use software that can detect movement in currency values, allowing the buying and selling of the NZ dollar several times a second. If FTT is applied, these tiny margins, that can add up to millions of dollars a day, may be wiped out.
That means that the revenue the government can take in FTT could be highly volatile, depending on where the rate is set. With a very low rate, only the very slimmest margins of profit will be affected. A higher fraction could wipe out a lot of speculation, possibly redirecting investment funds into actual goods and services (or to other countries' currencies!). More affordable investment money might be good for the real economy, but putting a whole raft of speculators out of business could mean less revenue over all.
So although I think of speculation as an evil scourge, a stepped introduction of FTT, and a corresponding stepped reduction of GST, would be advisable, so that the effects can be observed and responded to in a timely way.
Adjustments of the rate would be part of that process, and it may be that FTT, carefully managed, can replace most other forms of tax, including income tax.
Imagine IRD as a little caretaker office managing the tax on alcohol, tobacco and petrol, instead of the behemoth it has become!
Julian Warren Tue 5 Aug 2014 11:00PM
In effect the FTT is a form of GST on everything, including the transaction currently escaping tax. Its brilliant but I'm still voting for this motion in the meanwhile as its a halfway house .
Lisa Clark Wed 6 Aug 2014 2:04AM
A tax on your entire income perhaps? And a fair one at that, I have worked two and three part time jobs and the secondary tax I feel is so unfair. It feels as though you are punished instead of rewarded for getting off your proverbial to work hard to make ends meet to fit in and around your family only to pay high secondary tax. So why bother? ( A terrible mentality but practically speaking) So just a tax on a certain income bracket you work at?
Anton Skipworth Wed 6 Aug 2014 9:32AM
I agree with everyone else who has stated that GST is essentially a tax on the poor.
The very notion of using such a tax to replace a scaling income tax system, is absolutely ridiculous.
Even a flat tax rate, as proposed by the likes of Roger Douglas, Richard Prebble, Don Brash, Jamie Whyte, Will Ryan, Kelvyn Alp and Rodney Hyde would be fairer than this.
Income tax should not be replaced. The scaling among the higher tax brackets should be much more severe (Up to a cap of 50%, not 33% for the highest bracket). Also, income tax should be amended to being based on your entire income. Secondary tax is an absolute joke.
Also, this should be supplemented by a 15-20% Capital Gains Tax, as well as a 4-8% Scaling Financial Transactions Tax (averaged based on money spent and assets of spender).
peter martin Mon 11 Aug 2014 8:08AM
Basically sounds like a good idea as it should promote income generation and discourage spending
But the effects of various scenarios should be carefully studied before moving ahead.
Peter Martin
Cohen Glass · Thu 31 Jul 2014 11:16PM
Wipe income tax - yes - keep GST the same, and start taxing the City of London banking cartel and RB/ Rothschild Bank at .005% per transaction- or just abolish the City of London banking cartel and we gain $6 billion p.a from that.