Sunday, February 10, 2008

WFF - tax relief or welfare?

Cactus asks the question;

Has anyone done a study about working people receiving working for families such that the amount they pay in tax is lower than what they receive under WFF plus other benefits? These people are by definition beneficiaries as well.

Not quite a study but here are some statistics from Gordon Copeland. He would disagree with Cactus;

Is Working for Families “tax relief” or “welfare”?

United Future MP Gordon Copeland, the party’s spokesperson on Revenue, recently asked Finance Minister Dr Michael Cullen for a break down of the types of families who will receive financial assistance through the Working for Families package.

“I asked the question of Dr. Cullen because, whilst Labour refer to Working for Families as “tax relief”, National habitually characterise it as “welfare”,” said Mr Copeland.

“In response to my question, Treasury have furnished to me the following breakdown:

Families who receive some benefit income 164,400
Families who receive no benefit income, but receive more than they pay in tax 66,500
Families who receive no benefit income but receive less than they pay in tax 125,900
Total 356,800

Clearly the 164,400 families who receive some benefit income could be described as “welfare recipients”. Equally the 125,900 who continue to pay tax are the recipients of “tax relief”. That leaves the 66,500 families who, whilst working and paying tax, receive “top up” assistance from the State.”

“I do not regard those 66,500 working families as “welfare recipients” since, in my view, that terminology should be reserved for those whose principal support comes from the State.”

“It should also be noted that the number of benefit families (164,400) does not increase as a result of the Working for Families package, (although the amount of income available to those families certainly does!).”

“On balance therefore, true to the centrist position which characterises United Future, I think Working for Families can be accurately described as a “tax reduction and family income package!”



5 comments:

spam said...

Families who receive some benefit income 164,400
Families who receive no benefit income, but receive more than they pay in tax 66,500
Families who receive no benefit income but receive less than they pay in tax 125,900
Total 356,800


What does "Families who receive no benefit income, but receive more than they pay in tax " actually mean? How can they receive no benefit, but still receive... err... something in excess of the tax they pay?

Good thing we're not allowed to call them beneficiaries though...

Does this mean that these people have marginal tax rates of >100%?

Lindsay said...

No benefit from Work and income. But more tax back from IRD than they paid. Could call them NITs. Negative income tax-payers. They have tax rates of minus-something.

Dave said...

Does this mean that these people have marginal tax rates of >100%?
No, it means they are overtaxed >100 percent :-)

Many of these families also get the accomodation supplement and qualify for all the add-ons that beneficiaries get - food grants, power advances, contribution to dental treatment,etc

mawm said...

more tax back from IRD than they paid.

Sound like beneficiaries to me!

How many families are there in NZ? This will give us an idea of what proportion of 'families' are receiving support from the government - or how many families the rest of us are supporting.

I'm working hard to support my own family - and then have the burden of other families to support. Somehow this does not seem fair to me!

I don't mind helping out people who are in dire need (after all that is what welfare should be about) but having to fund others who are only slightly worse off than me does hit a nerve.

Anonymous said...

Semantics.

Labour's use of the term "tax relief" is disingenuous.
Why would some people be regarded as paying too much tax, when others on the same income are not?
What those people have is insufficient income to cover their outgoings.
The Government gives them some money so they do not have to prioritise their spending.
This is a subsidy.
If it is necessary to subsidise these people because they cannot pay for the necessities of living (eg for food, clothing and shelter), then clearly this is a welfare payment.

Regardless of what percentage of total household income these payments are, the only accurate term is "subsidy".

Tax surpluses are surely a concession that too much tax has been charged.
If the tax rates cannot be revised downwards, a less competent Treasurer could refund surpluses retrospectively, in an even-handed way, without needing to adjust marginal rates by more accurate forecasting of Government income and expenditure.

Weasel words are the refuge of conmen.