John MacDonald: How would you feel about paying more tax? - Canterbury Mornings with John MacDonald

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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