GST % Increase

[Joshlikesfish]

This new GST increase, whats everyones thoughts?

I reckon there will be cost push inflation, followed by a decrease in aggregate demand as prices increase and disposable income decreases. Feel free to prove me wrong fellow economists :lol:

I'm not looking forward to the fact that everything fishy will cost 2.5% more(ish), and the tax cuts don't help me because I don't have a job :lol:

[BikBok]

as the bill payer in my house, I've noticed everything goign up in price and that's even before the GST increase comes in.

The tax cuts are just not going to cover the increased costs we've had to face this year.

[Joshlikesfish]

Inflation :roll: No nominal wage increases yet?

[BikBok]

Inflation :roll: No nominal wage increases yet?

lol, I work in education. hubby in sales .

[phoenix44]

The tax cuts for the average family will exceed the value of the increase in GST for the average family.

some win, some lose, but in total the tax cuts > 2.5% GST increase.

The increase in GST is how most of the funding for tax cuts is being accounted for.

[cessna driver]

it's legalized theft as simple as that

[phoenix44]

:-?

[Morcs]

I dont know how NZ can justify it when the cost of living far outweighs wages in general compared to other countries.

'

It has small country syndrome. 'Oh our GST is less than other countries, so well shall follow suit and increase it.'

[phoenix44]

NZ has spent more than it earned for decades now.

The current account is in shambles and we finally have a govt in place that can deal with the disaster that Labour left NZ in after the 80s.

No one likes it when things cost more and more, but this is what NZ is like. Small economy, few jobs, geographic isolation, small capital market. Put them together and you have the perfect recipe for expensive living.

[Insect Direct]

i think were very lucky to get any tax cuts in the current times. Not sure why the govt bothered tbh but ill take it. Cheers John.

atleast with the gst increase its the same for all of us. 2.5% is diddly squat, compare that to everything else we buy and its not that bad at all.

[Joshlikesfish]

NZ has spent more than it earned for decades now.

We borrow 1bil from overseas, each month

[land_lubber]

NZ has spent more than it earned for decades now.

The current account is in shambles and we finally have a govt in place that can deal with the disaster that Labour left NZ in after the 80s.

No one likes it when things cost more and more, but this is what NZ is like. Small economy, few jobs, geographic isolation, small capital market. Put them together and you have the perfect recipe for expensive living.

Well put. All these people that complain about what national is doing just turn a blind eye to the fact that Labour has put us in the position.

[Scottie841]

new PAYE =

income thresholds

Rates

Total income to $14,000 = 10.5%

$14,001 - $48,000 = 17.5%

$48,001 - $70,000 = 30%

$70,001 and over = 33%

Old PAYE =

income thresholds

Rates

Total income to $14,000 = 12.5%

$14,001 - $48,000 = 21%

$48,001 - $70,000 = 33%

$70,001 and over = 38%

Looking at this you are going to be saving at least 2% if you earn under $14K and then 3.5% for between $14k and $48. After that you will be saving 3% so most people will be approximately 0.5% better off after the change (unless you spend more than you earn)

[DennisP]

This new GST increase, whats everyones thoughts?

I reckon there will be cost push inflation, followed by a decrease in aggregate demand as prices increase and disposable income decreases. Feel free to prove me wrong fellow economists :lol:

I'm not looking forward to the fact that everything fishy will cost 2.5% more(ish), and the tax cuts don't help me because I don't have a job :lol:

Sounds like yr 12 economics to me...

[phoenix44]

Sounds like yr 12 economics to me...

The flaws are pretty apparent.

[Scottie841]

the tax cuts don't help me because I don't have a job :lol:

You could fix that problem by getting a job and earning the money you spend on fish stuff or you could convince your parents that now that they have had a 3% cut in their tax they can afford to give you another 3% to spend on your fish

[Joshlikesfish]

The flaws are pretty apparent.

How so?

[Joshlikesfish]

You could fix that problem by getting a job and earning the money you spend on fish stuff or you could convince your parents that now that they have had a 3% cut in their tax they can afford to give you another 3% to spend on your fish

They'd never give me more money :lol:

[Barrie]

lol, I work in education. hubby in sales .

try owning your own business

costs going up and some people will do anything for a sale

One of my products costs about 5% more but will last 50 years with ease, people still chose the cheaper option that probably wont last 5 years

Average good wage for a glazier is $20 per hour, my daughter as a teacher gets well in excess of $55000 per year

[Barrie]

it's legalized theft as simple as that

Direct taxation is the only fair taxation

save and the total GST will not effect you at all

indirect taxation means you get taxed before you even have the chance to save

[phoenix44]

How so?

cost push inflation, followed by a decrease in aggregate demand as prices increase and disposable income decreases.

It is a statement I would expect to read in a very low level economics text book. While conceptually correct it assumes ceteris paribus and thus cannot be applied to the real world.

It reminds me of a horse wearing blinkers to see only the path ahead and nothing else.

There would be no decrease in aggregate demand given the strengthening NZD and the increase in disposable income given the tax cuts - even if you offset the tax cuts against the increase in GST.

As shown above, the average person is marginally better off. Now assuming ceteris paribus; demand, if any thing would increase given the increase in the disposable income that would range from 0.5% to 3%. Bit more than that if you take interest effects and compounding into effect.

Then there is the added implication of the OCR on interest rates and its effect on the NZD.

[Joshlikesfish]

It is a statement I would expect to read in a very low level economics text book.

Because its not as if I'm learning economics at secondary school or anything...

[phoenix44]

Sorry, I didn't mean or think that you had made that up; I thought that is what your text book would have said.

[Joshlikesfish]

Its just my thoughts about it. Costs for suppliers increase, leading to cost pull inflation. The price increase will lead to a decrease in AD. But if the tax cuts outweigh the GST rise, and people have more disposable income then AD will increase leading to inflation. IIRC an article said that the on average people will get $13 more per week, but spend $45 per week. That was my evidence for a decrease in AD. With the monetary policy, inflation shouldn't get too high anyway. My first statement had no evidence. Would have been a not achieved :lol:

[BikBok]

try owning your own business

yep - been there - done that

One of my products costs about 5% more but will last 50 years with ease, people still chose the cheaper option that probably wont last 5 years

know where you're coming from. hubby facing that now with the high end timber flooring

Average good wage for a glazier is $20 per hour, my daughter as a teacher gets well in excess of $55000 per year

i'm just a lowly paid teacher aide - support stuff get paid less than cleaners in some cases.

I work hard with special needs and behavioural kids, and I mean HARD ! Am exhausted most days and have to go home and do planning in my OWN unpaid time.