Originally Posted by
elZorro
Then maybe that's why GST means Goods and Services Tax.
GST on items within NZ is a tax where the final amount payable rests with an end-user in NZ. If the goods or services are exported of course, all the paperwork in the chain results in no net tax being paid at all.
Business operators running out of a leased commercial building usually get charged GST, and then claim it back, as it's an expense for them, not an income. So those sorts of leases are quoted as xxx +GST p.a., and the tenant and landlord largely forget about the GST effect.
At the time GST was introduced, it would have been impossible to just raise all domestic rents (and mortgages?) by 10% without an equivalent income tax or benefit payment adjustment for those affected, and there was already some work needed there that supposedly balanced GST on other items out. I did some maths at the time and posed an awkward question to David Lange on some radio show, which he carefully avoided answering. I figured out that while the effect on low to average income earners might be small, the new tax breaks at the top would greatly benefit higher income earners. This was a moment in time where baby boomers and the generation before them, got one of their big breaks. GST is a regressive tax, especially when the income tax rate at the top end was lowered more in tandem.