City Soapbox Column for Hamilton News, 26 July 2013 Contributed by Tim Macindoe, MP for Hamilton West Fairer tax and welfare arrangements I remain committed to the notion of a decent society. Fundamental to achieving that are fair tax, income support and welfare systems. Over successive Budgets, the National-led Government has introduced changes with this aim. We’re ensuring that New Zealand’s tax and income support systems significantly redistribute incomes to low and middle-income families and help those who are struggling. In 2010 we introduced the most thorough overhaul of tax rates in a generation. As a result, someone on the average annual wage of around $50,000 was immediately about $15 a week better off, while a family with two children on the average household income of $76,000 was about $25 a week better off. Two-thirds of the cost of those income tax cuts went into reducing the bottom two tax rates. Someone earning $48,000 a year now has a top tax rate of just 17.5 per cent. We removed the ability for people to shelter their income in trusts, raised the effective tax rate on property investment, and prevented people using investment losses to make themselves eligible for Working for Families and other government support. This year, households earning over $150,000 a year – the top 12% of households by income – are expected to pay 76% of the net income tax. Half of all households earn under $60,000 a year. They actually pay no net income tax when income support payments such as welfare benefits, Working for Families, paid parental leave, and accommodation subsidies are taken into account. Welfare is costing taxpayers too much – currently $8 billion per year – so we expect people to get back into work when they are able to. Currently, around 310,000 working age people, 12% of the working age population, receive a benefit. 220,000 children live in benefit-dependent homes. Too many people are being trapped in a life of limited choices, deprivation and poor health. We’ve simplified the welfare system, brought in a greater work focus and introduced new social obligation and work preparation expectations. We’re requiring Job-seekers to be drug-free and ready to work. We are stopping benefits of those on the run from Police and placing social obligations on beneficiary parents – to ensure their children get health, education and other services they need. Our investment approach will mean welfare resources are better used to reduce long-term benefit dependency. It will target services to those who are likely to become welfare-dependent long-term, and allow Work and Income case managers to work intensively, one-on-one, to provide effective support to help beneficiaries move into jobs. Supporting more beneficiaries into work and making our tax and support systems fairer, means those who have been struggling to achieve their potential will secure a brighter future for themselves and their families.
Posted on: Wed, 31 Jul 2013 00:06:44 +0000
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