There’s an easy tweak to help the very low paid. Is Government up for it?
The Budget. A theatrical spectacle performed seasonally. Productions include publicity, previews, media build-up and eventually the final performance. At every showing expect glitter, gloss and more spin than you’d get from a ballet academy.
Some see budgets as non-events, sensing no personal benefit infusing their local sphere. But imagine a utopia where central government produced a strategy absolutely on the nail to effectively address the needs and concerns of the masses. Picture that happening every year.
In New Zealand, we could include one simple budget initiative that has worthy potential for society. Because everyone would be covered, it could tick the fairness test. The idea is not new; it has been established in a number of other countries for some time. In fact, some decades back, the concept used to apply in NZ. So here goes.
The first NZ$19,000 of yearly income should be tax-free. Only income above that figure would be taxed, but at rates to keep revenue neutral. In making some income tax-free, all tax-payers qualify, regardless of total income, number of children or size of assets. Yet, whilst all persons would be eligible to benefit, this change would help lift the lowest earners out of the rut. These folk live on the poverty line. They spend every cent to get by. No avoiding GST, as they exhaust their meagre income on food and bills. Surely GST is enough tax from them. Removing income tax for low income earners would make a difference. No enlightened nation “clips the ticket” when those in poverty have insufficient income as it is.
Australia allows $18,200 tax free. That’s the first NZ$19,000 untaxed. The UK allows £11,850. That’s NZ$22,800 tax free income. NZ should follow suit.
In NZ, both the low-paid and Community Services Card holders genuinely endure well-documented hardship. State assistance is inadequate and almost neglectful. Removing taxation in the low zone would grant them an effective increase in disposable income and reduce social welfare support. The IRD would be free to disregard the trivial returns from children and the poor, directing their staff efforts away from expensive attention on paltry sums.
This would benefit all those in poverty, irrespective of category, including single mothers, the unemployed, aged pensioners receiving only NZ Superannuation, people working limited hours, and so on. It would be a simple first step towards using the taxation system towards the wealth distribution advised from various quarters. Since everyone would initially receive the same, few could argue that the move would unfairly benefit any favoured group.
Introducing a tax-free band of income should have some appeal across all political parties. But a government spotlighting well-being, kindness and collectivism might find it easier to introduce. Those sincerely striving to reduce NZ poverty must surely see some value in easing the burden on the lowest paid. Allow the poor a little dignity.