Last year I signed this Open Letter on Tax, calling for wealthy people to be taxed more. But this year, instead of paying more tax, rich and middle income people will be paying less. For me, my tax cut will buy me four or five loaves of bread per week.
I don’t want or need more loaves of bread, although many families do, for example those on minimum wage. But wait, tax cuts provide just $12 a week extra to a minimum-wage worker. That will buy them about three loaves of bread.
And beneficiaries – who need extra bread in the cupboard the most – don’t receive anything at all. Except for superannuitants, whose tax cut will buy about one loaf per week.
So, the changes to the tax system will widen the gap between the rich and the poor, and will do little or nothing to help those who need it most. And this is neither right nor fair.
A small thing we can do is to give away our tax cut. It’s very simple to set up automatic payments through the bank, and regular, predictable, untagged funding is very helpful for struggling not-for-profit organisations.
Where to give it to? The thoughts in my previous blog on giving to indigenous, environmental and equity causes are applicable here too. However, because this is systemic inequity, it also makes sense to support advocacy to change the systems causing this, and/or to support the provision of robust information and analysis to inform critical thinking. Examples of relevant advocacy include Tax Justice Aotearoa’s work to promote progressive taxation, and Action Station’s campaigns for a fairer Aotearoa. Examples of independent information providers include Stuff, E-Tangata, The Spinoff, and the interesting new Institute for Democratic and Economic Analysis. Additionally, because inequity both undermines social cohesion and disproportionately affects Māori, it is great to hear of the Gift Trust’s new Social Cohesion Fund, and personally we will also increase our donations to Te Muka Rau, the trust I co-founded.
If you are also thinking about giving away your tax cut, good on you! I would love to hear your plans and thoughts in the comments.
Great post, Kate. Strongly agree (and not just because I’m involved with one of the named organisations!). The wider picture is even more worrying. In addition to the personal tax cuts you mention, the restoration of property investors’ ability to deduct interest costs from their tax bills will see them paying $2.9bn less in tax over four years. And those investors are largely in the wealthiest tenth of the country. Conversely, poorer families are affected by slower benefit increases than were planned under Labour, below-inflation minimum-wage increases, and in some cases the reintroduction of prescription fees and public transport charges for their children. The burden of getting the government’s books “back into balance” seems to have been imposed on those who can least afford it.
Great points Max – thank you. Income is only one component of wealth, and many other kinds of wealth don’t get taxed much if at all, for example Capital Gains. Some major rethinking of how we ensure everyone in Aotearoa thrives is needed.
Thank you Kate for your mahi.
At a time when major legislative, policy, funding and structural changes are being imposed at such speed and many without a legitimate mandate, it is essential that we support those organisations that are committed to identifying, analysing, monitoring the impacts of these changes and also support those organisations that can take the factual and empirical based information and strongly advocate on behalf of those who for whatever reason are unable to advocate for themselves.
I am very happy to support some of the organisations you suggested and for me it is so important that I will be donating more that my (minimal) tax cut. Nga mihi
Good on you Sue! And agree with your analysis.
Kia ora Kate,
This is a great post and timely, as we at Tax Justice Aotearoa are looking to build on the Open Letter and the campaign on tax that we ran last year. We are a group of volunteers who give a lot of their time to promote the message that we need a fairer tax system and more revenue to tackle the social, infrastructure and environmental challenges we face. Between now and the next election it will be a critical time for us to get the public and the politicians to understand the urgent need for change. Any support will be welcome.
Thanks for this Glenn and for all your amazing work at Tax Justice Aoteoroa (tjanz.org). I hope people reading this will consider supporting your mahi, and I will be too 🙂
Great blog, Kate. At The Gift Trust we have heard so many stories lately about a growing gap between people in Aotearoa: a lack of social cohesion. We’re not sticking together very well! We’re working with other donors and funders to find out which organisations are addressing this and collectively supporting them. Read more about this: https://thegifttrust.org.nz/social-cohesion-fund/
Good on you Gift Trust for setting up this new fund. It is in everyone’s best interest to have a socially cohesive Aotearoa, and I hope many people will contribute to this.