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Tuesday, September 28, 2010

GST: Water torture

UPDATE | Thursday 5PM: A few local body candidates around the country are championing the cause of taking GST off rates:Quoting Waitakere Mayor, Bob Harvey:

"Rates are a tax for goods and services delivered by local government", he said. "That's fair enough. But for the Government to charge GST on top of that is just not on."

Harvey has called on councils to band together to defy the government and stop collecting GST on rates. If councils don't collect it, then the government can't have it.

If it's good enough for New Zealand's most distinguished mayor, then it's good enough for us. Hutt residents deserve councillors with the backbone to say, "a tax on a tax is robbery".
Groups representing people on fixed incomes, like Grey Power, and organisations advocating for social justice such as the National Council of Women have been unwavering in their demand that GST should not be charged on rates.

The Auckland bus fare increases from Sunday:
I note that many magazines for their latest issue have dual prices of pre and post GST rises. Metro goes from $9.50 to $9.75 (although the Whitcoulls at Lynn Mall was having a bob each way - as it were - and splitting the difference with their own price label of $9.60! The TV guide is going up from $2.10 to $2.20. The Listener is static - in so many ways - on $4.00 (but last time I saw it a few months ago it was $3.80). No news on whether the NZ Herald will go to $2. --UPDATE ENDS]

The GST rise - imposed in the middle of a depression - is coming at the worst time. The unavoidable costs for the low income earners (the public transport fares are going up in Auckland on Friday Sunday) will be heavier than predicted and there will be no nett gain for them after inflation spikes to 5% and erodes the miserly tax adjustments down at the bottom rung of the economic ladder. And no doubt the little luxuries like a cup of coffee, an iceblock and so on will also be hiked to a price point in advance of the extra 2.5% we will all be paying come Friday 1 October. The NZ Herald herself will probably go from the outrageous $1.90 to a preposterous $2. NZ Herald on National's response to Labour's fresh fruit and vege exemption policy. It's a flaky side-show that Labour is running and if you spot Mallard's double irony below when mocking the Maori Party's bill you get a sense that it is all bullshit. To use that wonderful line that the Tories kept taunting Labour with (supposedly from Steve Maharey) "It's just something you say when you're in opposition."

Apparently taking the GST off water - as modest as that may seem - has occurred to no-one. Taking the GST off council rates is not on anyone's radar either. I despair.

I know they are all too obsessed with political gimmicks to recognise the simple and achievable possibilities, I know they are all too thick and selfish to organise a bill to implement them, and I know that fundamentally, deep down, they all just don't give a fuck; so for those very few readers of this blog out there who do have a few minutes on hand and care about a practical GST exemption policy I'll humour you with some extracts from past posts on the subject:

Hide's budget ultimatum: no GST on Council rates from 1 November - 15/03/2010:

As for that headline - if it ever came about - the home owners and the landlords would like it, but I doubt any of it would flow through to the tenant. As a sweetener to the ratepayers it would make a little more palatable the rates alignments occurring across Auckland after the Councils are merged - especially since Aucklanders are picking up the tab for transition costs. It would be a good idea for Hide to pursue - or at least be seen to be pursuing - doing his bit to knock the edges off Bill English raising the sales tax by 20%. We expect nothing less from the leader of the association of consumers and taxpayers. If he says he is the minister for ratepayers then here is an opportunity to demonstrate it.

Wiping out the double-taxation - a central government tax on a local government tax - would give back some cred to the singed and scratched Act brand. Doing something like that might reassure the volk that an ACT minister is behaving like one and not like any old Tory, that maybe there is actually supposed to be a difference between the two and it is actually worthwhile for people in Epsom to keep voting him in on that basis. What's the point in being inside government - if you are a right-wing, quasi-libertarian party leader - and not take some initiative to reduce some taxes other than just income tax. Rodney is going to have to vote for GST to go up if English puts it in the budget because that's part of his deal to stay in government. If he's backing ACT principles and backing his portfolio - not the Councils, but the ratepayers - he's going to have to come out of the ignominy of having raised the sales tax with some form of victory. Anything he can. Getting the GST taken off the rates bill might be enough; it would be quite a substantial win.

Maori Party budget ultimatum: no GST on water from 1 November - 16/03/2010:

These positions go to the core values of each party: for the Maori Party it makes the basic necessity of survival a bit cheaper - and giving water the same tax-free status that gold enjoys indicates the unique status of this natural resource; for Act a deal to exempt rates would be the end to an unfair tax on a tax.

I do hope that the two support parties are using their leverage here and are putting up some firm options to ameliorate a 12.5% to 15% rise in GST. The Nats can't get their budget through without at least one of these parties backing them and they have every right to gain at least one concession each on something that is unlikely to be reversed (despite what Labour's "Axe the Tax" campaign might lead people to believe).

GST rise fait accompli - where are the gains? - 23/04/2010:

Mallard rebukes the Maori Party's healthy food exemptions and their support of the budget (because of their coalition agreement).
Well what about water? It doesn't get more necessary or healthy than water. Water should be exempted from GST. That is something that can be done for reticulated water and other supplies of water. It will make it less of a commodity at a time when it is becoming more so every day - witness the Canterbury Regional Council junta the government installed yesterday specifically in order to allocate water to the financial benefit of the farmers.

Once they start putting sales tax up then some alleviation is in order where possible. Charging tax on the water itself is going too far and unlike other products that Trevor Mallard can mock water is something that can be defined clearly.

GST off water - 29/04/2010:

As we can see by the exhaustive Australian list of exemptions - from milk, tea and coffee to penile clamps and everything in between in this part of the list - the system gets very complicated and confusing. The one item that stands out as being very clear however is water:
And I note another code for it here: It appears that bottled water is also exempt:But this must be under another code because there is a tax ruling on water at the ATO which gives more detail, but I suspect this is for reticulated supply issues (it also includes sewerage) and mentions a 100 litre limit:I dare say it can work in this country too - but for reticulated or bulk supplies only to keep it simple and to align it with similar human necessities that are not taxed in NZ, viz: rent.

The next similar class of charge to have removed from the ambit of GST are the Council rates - but that's an Act job.

[UPDATE: A commenter has said that it was United Future - whose sole MP is (always) the Revenue Minister - that had a policy of removing GST from rates in a previous election: "No tax on a tax". I have found nothing on their site to confirm that this is still their policy however, they seem to be silent on it. But it definitely seems to have been a policy. A private members bill from his own caucus member was put up on this exact issue. And this question from another UF MP in 2004:Where's the love now? What's the point of being the Revenue Minister if you can't even implement your own party's commonsense policies that specifically relate to Revenue? What is the point of Peter Dunne? --]

The Crown's budget is delivered on the 20th of May. If GST does go up to 15% there must be some trade-offs for the support parties that are bound to vote for it.

Pre-budget vibe - 19/05/2010:

Both the Act and the Maori Parties have their own legislation already before the House that can work in a water exemption and a rates exemption into the GST Act so that, basically, your local authority rates bill will have no GST. The United Future MP who is Revenue Minister had a party policy and a bill to do exactly that. This is the time to do it.

It can be done and should be done as a permanent trade-off for putting the rate up to 15% (as they will surely do in the Budget - probably to take effect in the last quarter of 2010: 1 October.)



At 28/9/10 2:28 pm, Anonymous anfiled1973 said...

Thank you Tim, the beauty of the blog, holding them to account on previous positions, ditched when it suits them - and you so got nothing but net with:

"fundamentally, deep down, they all just don't give a fuck"

At 28/9/10 5:48 pm, Anonymous Anonymous said...

Can Blinglish explain why, with a gst rise 0f 2.5%, my twelve ounce Speight’s Distinction Ale is going from $3.90 to $4.10

From http://www.kiwitax.co.nz/calc-gst-inclusive-converter.aspx

Old GST Content:
New GST Content:
New Price Including GST:


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