ARTICLES > Will the New Tax Scales Mean MORE Money for you?
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Will the New Tax Scales Mean MORE Money for you?
 So, we all gain a tax cut on our earnings. However, we will also have added tax to pay. Of note is the increase in GST which will rise from 12.5% to 15% on October 1 2010. This will, in effect, mean we are paying 2.5% extra for everything we purchase. (By the way, the United Kingdom have just announced that their GST equivalent will soon rise to 20%).Added to this are the price increases we will feel because of the Emissions Trading Scheme (ETS). Under the Kyoto Protocol, New Zealand agreed to reduce its greenhouse gas emissions back to 1990 levels by 2012 or pay for any excess. The Government has chosen the Emissions Trading Scheme (ETS) as the least-cost way of putting a price on emissions and creating an incentive for all of us – especially businesses and consumers – to change our behaviour. This will see an increase in petrol and electricity and, more indirectly, various other consumer products The petrol increase is 3.5 cents per litre and electricity will rise by about 5%. Finally, there is the ACC Earner’s Levy. All employees must pay this levy to cover the cost of non-work related injuries. It is collected by Inland Revenue on behalf of the Accident Compensation Corporation (ACC). It is payable on salary and wages plus any other income that is subject to PAYE, for example overtime, bonuses or holiday pay. This is fixed at 2% through until 31 March 2011 and is payable on income up to $110,018. The question is, will we be better or worse off following these taxation changes? Most people are assuming the worst, however, on a recent Campbell Live programme an economist was given the task of calculating it. He was given the income and spending details of five New Zealanders and asked to determine how they would fare financially after 1 October. Most the people taking part assumed they would be either worse off or nothing would change. The economist showed, however, that they would all be better off under the new tax rates - the more they earned the better. The highest earner was on $100,000 per annum and it was claimed he would be about $40 better off per week. The lowest earner on the programme was on $35,000 and would be better off by about $11 per week. Whether his calculations are accurate or not remain to be seen – it still hurts to know everything is going to cost more though! Click here to read our About Your IRD Charitable Donation Rebate article. |
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