Home > Social Issues, The Body Politic > Tax cuts & school children

Tax cuts & school children

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Source

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Despite recession hitting our economy in 2008, and despite a looming $30 billion deficit, John Key’s government proceeded with tax cuts in April 2009 and October 2010.

To make up for the billions lost in taxation revenue, government borrowed millions every week,  from overseas banks, and began a programme of harsh cost-cutting,

Finance Minister Bill English is is not ruling out an increase to the ratio of students to teachers, saying all Government departments are tasked with finding ways to save money, and staff costs are one of them.

Mr English says there is clear evidence that class size does not affect the quality of students’ education.” – Source

What did the tax cuts cost us?

The PSA published the following report,

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Tax cuts widen the gap between rich and poor

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  •  Government chose to make tax cuts in worst recession in 70 years
  •  Total tax cuts worth $5.5 billion
  •  Top 10% income earners got tax cuts worth $2.5 billion
  •  GST increased to 15% – hurts low and middle income most
  •  Tax cuts + GST left $1.4 billion hole in budget

Since 2008, National has introduced tax cuts that cost New Zealand around $5.5 billion a year in lost revenue. Most of the benefit has gone to the wealthiest.

National’s first set of tax cuts – the personal tax cuts and ‘Independent earner rebate’ taking effect in April 2009 – cost approximately $1 billion a year.

The second set of cuts – cutting the top income tax rate from 38% to 33%, and the company rate to 28% – will cost $4.5 billion a year, according to figures from the 2010 Budget. That gives a total of $5.5 billion.

National claimed that because it was also increasing GST, the tax changes would be “revenue neutral” – that is, the increase in GST would cancel out the income tax cuts. In fact, the losses from the income tax cut will outweigh the gains from GST by $1.4 billion. In other words, the so-called “tax switch” has blown a $1.4 billion hole in the budget.

The tax cuts have also made New Zealand a less fair place. According to Labour, the wealthiest 10% of New Zealanders will get 43% of the tax savings. And the gap in take-home pay between someone on $30,000 and someone on $150,000 a year grew by $135 a week as a result of the tax cuts.

New Zealand’s income tax rates are among the lowest in the OECD, as the Tax Working Group acknowledged.
In Australia , for example, income over $80,000 is taxed at 37%, and income over $180,000 is taxed at 45%.

Figures from the OECD itself show that, before National’s tax cuts, New Zealand’s “all in” top income tax rate – a measure that includes all taxes on income, including local and regional ones – was 38%. In contrast, the all in top income tax rate in Australia was 47%, and in most countries it was higher still.

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Bill English says,

…all Government departments are tasked with finding ways to save money, and staff costs are one of them.”

No doubt as part of government’s desperate attempt to cover the “$1.4 billion hole in the budget“, courtesy of their  ’09 and ’10 tax cuts.

The tax cuts have benefitted the top 10% of our economy, with the top 1% increasing their wealth by a staggering 20%,

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Full Story

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Even John Key did rather well out of the tax cuts,

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Source

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For John  Key,  to suggest that the latest research showed the income gap in New Zealand was actually narrowing, is breath-takingly disingenuous. The reality of every day life for New Zealanders is different from that of a millionaire who has long since lost touch with Mr and Mrs Everyperson,

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Full Story

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It’s abundantly clear: Government is cutting the very social services that we need, to remain a First World nation.

National gave us tax cuts and put a few extra dollars into our pockets – and a whole lot more into the deep pockets of the country’s richest people.

New Zealanders obviously haven’t got their heads around one simple, inarguable fact; we don’t get something for nothing. If we want social services, then we need to pay for them.

Now, the chooks have come home to roost. We are having to pay for those tax cuts – or rather, our children are paying. Children who never voted for this shabby government.

I wonder what the 1,058,638 people who voted for this government are feeling right now? Are you folks feeling warm fuzzies?

Because all I’m feeling is the chill of a society that values tax cuts more than our children and their future.

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  1. Red
    3 February 2012 at 12:45 pm

    I’ve wondered what would be cut to pay for tax cuts. I guess this answers that question, aye? It seems unfair that children should end up paying so that rich people can get more money out of the system. I’ve heard other people asking WTF is going on as well.

  2. Sally S.
    10 February 2012 at 9:17 pm

    Um, I feel kind of guilty now. I thought tax cuts were a good thing. But I can see the downside to them if we can’t afford decent education and healthcare for our children. By the way, it’s much worse here in the UK, where I’m living. No wonder people rioted in the streets. Poverty here is very nasty.

  1. 2 April 2012 at 4:45 pm
  2. 27 May 2016 at 8:04 am
  3. 3 June 2016 at 7:28 am
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  5. 27 November 2016 at 7:53 am
  6. 2 December 2016 at 8:02 am
  7. 20 February 2017 at 12:46 pm
  8. 25 February 2017 at 8:01 am
  9. 20 April 2018 at 7:19 am
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  11. 6 February 2019 at 8:02 am

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