Taxpayer Update: Luxon gets competitive | Cut fuel tax | 30% tax on low wages

February 16, 2022 Louis Houlbrooke

Dear Supporter,

Our latest poll shows National rise under Luxon

The latest monthly scientific Taxpayers' Union Curia Poll is now available for members and supporters here.

Party vote

The headline result: National is returning to a competitive position under the leadership of Christopher Luxon. While much of National's gains appear to have come at ACT's expense, overall the centre-right parties are closing the gap with Labour and the Greens.

It's time to cut fuel tax ⛽️ >> Sign the petition ✍️

About half the price of petrol is made up of Government taxes.

Fuel tax graph

The Prime Minister can blame rising living costs on ‘global conditions’ all she likes, but the cost of fuel is one thing she can control.

Fuel costs filter through to the price of every single household good – and half the price of petrol is made up of government taxes and levies.

We're calling on the Government to rein in the cost of living by urgently cutting the excise tax on petrol.

>> Sign the petition at www.fueltax.nz <<

Taxes on a litre of petrol include:

70.024 cents in excise
6 cents in ACC levy
0.66 cents in Local Authorities Tax
0.6 cents in Engine Fuels Monitoring Levy
18.2 cents in ETS levy
0.076 cents in other levies

And in Auckland:

10 cents in Regional Fuel Tax

And charged on top of all taxes, plus the before-tax price:

15% in GST

This means the total tax on a $2.77 litre of petrol is $1.43 in Auckland and $1.31 in the rest of the country – about 52% and 48% of the average price, respectively.

Minimum wage and paying 30% in marginal tax 😱

High income taxes used to only affect high earners. But thanks to inflation, even minimum wage workers are now threatened with punishingly high tax rates

After the Government's decision to hike the minimum wage by 6%, someone working 44 hours a week on the minimum wage will now pay tax in the 30% bracket.

In fact, in real terms workers on the minimum wage may be worse off than they were last year, because inflation wipes away 98% of the value of their pay hike. The higher average tax rate wipes away the rest (and then some).

While for now they'll only have a small portion of their income in the 30% tax bracket, the real killer is how the high tax rate destroys the incentive to do better. Minimum wage workers will now have a third of the reward for upskilling, working overtime, or achieving a promotion nixed by the taxman.

Bracket creep has been stealthily taking more and more from workers unchecked since tax brackets were set in 2011. If brackets had been adjusted for inflation since then, the 30% tax bracket wouldn't kick in until $56,822.

The ironic part is that while the minimum wage hike was meant to counter inflation, it will in fact feed the beast. Higher costs on employers will filter down to higher prices for consumers – which in turn means more inflation. The only winner from this dangerous spiral is Grant Robertson, who gets even more tax revenue...

Speaking of Government revenues, here's a little known fact for you: a Kiwi on the average income is now paying $2,138 more tax per year since the current Labour Government came to office. That’s after adjusting for inflation – and doesn't account for the unfunded spending/borrowing money printing.

"Man of great integrity" – PM's comments on Goff unbelievable given SFO probe 🤮

This week Jacinda Ardern spoke to the media about Phil Goff's decision not to re-stand as Auckland Mayor, saying: “I can personally attest to the fact Phil Goff is a man of great integrity.”

She's welcome to her personal view, but she seems to have forgotten that Phil Goff is currently the subject of an ongoing probe by the Serious Fraud Office over his 2017 election expenses.

As Jordan put it to media:

It's difficult to believe the Prime Minister would go out on a limb for Goff like this unless she was trying to prod on the investigation.

Of course the Government is in a difficult position. It would be difficult for the Government to appoint Mr Goff to Washington, or any diplomatic post for that matter, while he is still subject to the corruption investigation.

The Taxpayers’ Union reached out to the SFO who confirmed that their investigation is ongoing. Once upon a time, that was the media's job!

Bizarre spending at the Department of Internal Affairs 🛋

The Department of Internal Affairs spent $1.36 million on furniture in a year where few of its staff were even in the office!

That astonishing figure was revealed by National MP Melissa Lee, who grilled the DIA last week in a Select Committee meeting.

$1.36 million is $700 for every staff member. Are we expected to believe that every chair, desk, futon, and beanbag in the department spontaneously combusted at once?

Meanwhile, Melissa Lee also revealed that the DIA's new departmental agency, the Ministry of Ethnic Communities, granted a charitable foundation $60,000 for business training among ethnic communities – which saw $40,000 of the amount spent on a single guest speaker.

What sort of guest speaker costs that much? Did they pipe in Oprah? It's a terrible start for a new agency that was of questionable value to begin with.

Independent report slams taxpayer funding for media 📰

After the Government unveiled its infamous $55 million "Public Interest Journalism" slush fund, the Ministry for Culture and Heritage commissioned an independent report into competition and diversity in the media sector.

This month, the completed report was quietly uploaded to the Ministry's website. Its findings are remarkable.

Here are some of the money quotes from Sapere Research Group, who produced the report:

…given the current state of plurality and the risks associated with public funding of journalism content, we do not see a strong case for any ongoing public funding of commercial news content.

…several stakeholders expressed concern that funding decisions had crossed into editorial decision-making, with New Zealand On Air effectively holding a ‘beauty contest’ to choose which proposed stories/investigations merited support.

Others observed that due to the relatively limited pool of journalists in New Zealand, the PIJF was creating a ‘giant game of musical chairs’ and was leading to salary inflation rather than building new capacity.

Some stakeholders also expressed reservations that public funding of media firms may make those firms beholden to the government of the day and public officials might be reluctant to fund proposals that will be critical of government policies – which would undermine a key plurality objective of the media being able to hold public institutions and elected officials accountable.

Any large-scale permanent funding at a national level risks reducing the commercial opportunities available to firms to create content, risks propping up inefficient business models, and may unwittingly tilt the prospects of success/failure for businesses.

(We have to give credit to BusinessDesk, the first media outlet to cover this report – despite having received Government funding themselves!)

What's wrong with this job ad? 👀

The New Zealand Treasury has the specific responsibility of providing sound economic advice to the Government. It was once the bastion of intellectual rigour in Wellington.

They're currently hiring for a new senior economic analyst:

Treasury ad