Originally Posted by
Rep
Noting that rental on a residential dwelling is a GST exempt supply (i.e. no GST on residential rent).
Whilst you say that GST is a regressive tax (proportionally, it taxes those who are on lower incomes as they proportionally spend more) - we also have a progressive income tax regimes that has lower rates of income tax for lower earners and arguably with those on Working For Families, even lower rates again to the extent some families with the Family Tax Credit may have very small net income tax obligations.
On the other hand, GST has merits as a tax as it is relatively cheap to collect (the taxpayer is obligated to pay and file returns) and relatively hard to evade paying as most businesses will charge the GST and remit it in accordance with the law, wealthier people tend to spend more so pay larger amounts of GST per capita, it also collects tax from tourists and other folk who don't declare assessable income but may have wealth. And apart from the aforementioned exempt supply of rental on a residential dwelling, financial services, going concerns and exported goods and services it's taxed at the same rate and has relatively few exemptions. Snapping on exemptions for food, local government rates or exempting some persons offers the opportunity for avoidance and the compliance costs are borne by taxpayers to have systems to keep track.... eg if there was an exemption for GST on basic food - if you are a baker how are you going to apportion the flour on a basic loaf as opposed to banana bread - or on the electricity on the oven baking the bread.... or keep track of the GST exempt and inclusive supplies at the farmers market?
On a tangent, the water tax doesn't pass the sniff test - I see merit in creating some sort of mechanism for polluter pays to clean up our rivers but why should say a Taranaki or Waikato Dairy Farmer who has significant nitrate runoff, does no fencing of waterways and no riparian planting but adequate rainfall not pay water tax whereas a horticulturalist with hydroponics using a semi-closed system and reusing runoff (potentially using aquaponics) be charged to clean up waterways?