John MacDonald: How would you feel about paying more tax?

How do you feel about the prospect of paying higher income tax rates and more GST?  

I think it’s inevitable. So does the Inland Revenue Department. Because of our ageing population.   

Especially if people think we can have a whole lot more of us 65 and over —which is going to happen— and still provide the same level of assistance and support that is provided now.  

So IRD is making its case for more tax in what’s called its “Long-term Insights Briefing”, which puts ideas on the table for governments to consider and to help the country plan for the future.  

It’s saying cutting costs is one way, but it would be much better to generate more government revenue. To collect more tax. Which I agree with.  

It’s saying today that the future is uncertain, and we need a tax system that can be changed relatively easily, which is why it's focusing on income tax and GST. Because those taxes already exist.  

Income tax makes up 52% of the tax take and GST accounts for 25%. So there’s nearly 80% of the total tax take covered just through PAYE and GST. 

Company tax, by the way, accounts for just 17% of the tax take.   

Here are a few more numbers which IRD is using to justify more tax money coming in to cope with the ageing population.  

At the moment, 16% of us are 65-and-over. But we’re on our way to, eventually, having a quarter of our population 65 and older and somehow, we have to pay for that.  

Because as the Infrastructure Commission pointed out this week, we’re going to need less schools and more hospitals. But as we know, hospitals are a lot more expensive than schools and we’re going to have to find the money somehow.  

IRD isn't giving any specific numbers. So it isn’t saying what it thinks GST could or should be increased to. Likewise, it's not saying anything about what income tax rates could be increased to. It’s just saying that we need to get used to the idea of paying more. 

Which is another demonstration, isn’t it, of how the Government made a mistake reducing the amount of tax revenue it gets. 

Because I know it talked about us paying less tax and reducing costs at the same time. But running a country costs money, you can only cut costs to a certain point.  

And when you throw an ageing population into the mix —and the costs that come with that— we all have no option but to chip in a bit more money to pay for it all.  

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Canterbury Mornings podcast with John McDonald
from News Talk Z'B.

Speaker 2 (00:13):
How do you feel about the prospect of paying higher
income tax rates and more GST. How do you feel
about that it's inevitable? What I think? So so does
the Inland Revenue Department, which are saying today that we
need to get used to that idea. And why is
that one answer the aging population, especially given things like

(00:35):
the expectation that came through loud and clear the other
day when we were talking about people earning truckloads of
money and still getting the pension. Remember that if you
were listening, you would have heard caller after caller after
caller saying that the New Zealand super pension isn't a benefit,
it's an entitlement. And even people who have worked hard

(00:57):
and made themselves a whole lot of money, even they
deserve it once they hit sixty five. Now these are
the people still working, still earning one hundred K or
or more, even two hundred there or more. So IIDA
is saying today, well, if that's what you want, this
is so good. Idea is saying, if that's what you want,
we're going to have to pay for it somehow. And

(01:18):
I hope people sit up and listen to what Ida
is saying today, because this is the rubber heading the
road or reality heading home. And even though I'm like
the next person, just the same, I would love to
pay as little tax as possible, I know that I'm
going to have to suck it up and pay more,
just like you are, especially if people think we can

(01:40):
have a whole lot more of US sixty five and over,
which is going to happen and still provide the same
level of assistance and support that's provided now. So IID
it's making the case for more tax and what's called
its Long Term Insights Briefing, it's the official title of it,

(02:01):
which puts ideas on the table for governments to consider
and to help the country plan for the future, and
ideas saying, oh, well, look, cutting costs is one way,
but it would be much better to generate more government revenue.
Of course it would to collect more tax, of course
it would. And so it's saying today that the future

(02:23):
is uncertain and so we need a tax system that
can be changed relatively easily, which is why it's focusing
on income tax and GST. Why is it focusing on
those two because those taxes already exist. Income taxes make
up fifty two percent of the government's tax take and
GST accounts for twenty five percent, So there's nearly nearly
eighty percent of the total tax take covered just through

(02:45):
PAYE and GST. By the way, isn't a side company tax.
It's just seventeen percent of the tax take. Couple more
numbers for you, and these are the numbers IID is
using to justify more tax money coming into cope with
the aging population. At the moment, sixteen percent end of

(03:06):
us are sixty five and over, but we're on our
way to eventually having a quarter of the population sixty
five and older. And somehow, somehow, we have to pay
for that. Remember the Infrastructure Commission pointed out this week
we're going to need less schools and more hospitals because
of the aging population. And as we know, hospitals there

(03:28):
are a lot more expensive than schools. Gonna find the
money somehow, and that's why IDEA is saying today that
instead of focusing on cutting costs, we need to focus
on getting more revenue through the door for public services.
And it says we could look at creating new types
of taxes, beging to see what labor makes of this.

(03:51):
IOD talks about things like a wealth tax or a
capital gains tax. It says we could look at doing that,
but it reckons the focus should be on doing more
with the taxes we have at the moment, or getting
more through the existing taxes we have at the moment. Now,
it doesn't give any specific numbers, so it's not talking
about what tax rates might be or should be, So

(04:14):
it isn't saying what it thinks GST could or should
be increased to from the fifteen percent that it's had
at the moment. Likewise, it's not saying anything about what
income tax rates could be increased to. It's just saying
we need to get used to the idea of paying
more and I'm willing to accept that. And you know,

(04:35):
this is another example, isn't it of It just shows
how the government made a huge mistake reducing the amount
of tax revenue it gets because you know, I know
it talked about us paying less tax and reducing costs
at the same time, but running a country costs money,
and you can only cut costs to a certain point.

(04:55):
And then when you throw an aging population into the
mix and the costs that come with that. We all
have no option but to chip in a bit more,
chip in a bit more money to pay for it.
All these ideas are out there for public consultation until September,
but let's hear what you think of them right now.
How do you feel about the idea of paying higher
income tax rates and how do you feel about paying

(05:17):
a higher rate of GST so we can afford all
the extra costs that are coming at us at a
rate of knots because of the aging population. Says we've
got to do it. But what's your response?

Speaker 1 (05:30):
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