The Tax Man Taketh and Giveth...not all that much really!!!

After some thinking about it, I have come to the conclusion that while the budget was over-all balanced and relatively fair, that I am actually going to be losing from it in the long run and I am not happy.

Firstly, the income tax cuts. Sure, who wouldn't want more money in their pocket. The problem I have with it is its not going to be staying there. With the increase in GST its ultimately going to be like pouring water into a pipe with no bottom. With decrease in personal tax sure I get about $19 a week in my pocket, but I will have to use that $19 a week to pay for the increase in groceries, petrol, power, phone, and other bills that all have GST components.

All of the commodities we use in every-day life will increase. Your medications, services you use and pay for, items that are needed for every-day life, bread, milk and other foods, will all be increasing. Even your nastier foods like McDonalds, KFC, Burger King, all will go up.

Then, between now and these tax cuts and hikes, the ETS comes into effect which essentially costs everyone in the country $3 a week. Thats also before any tax cuts come into effect. So when the tax cuts do come in, its still $3 a week, so automatically I only really have $16 additional to pay for everything else thats ALSO going to increase because of charges from the ETS, but then again, at the end of it, its likely to be that I will be either $1 better off or more worse off than I was before.

As it is now we are having a hard time trying to have some serious savings behind us. We have some very serious goals to work towards and bit by bit we are working towards them, it is very hard to do when levies from governments have such wide ranging implications that the added costs of everything affected are not considered. And I am in a household of a full time and a part time wage earner and consider myself lucky. I have a good house over my head owned by a very good landlord, our bills for the most part are paid, we have food in the cupboard and are able to use our car. Our family is happy.

Just two years ago we were looking to buy our own home for the first time. This was before the major onset of the financial meltdown. Even then, with a combined income of just short of $100,000 we weren't able to secure the loan. Now I look at that series of events as a blessing in disguise. Not only would we now be looking at a severe financial meltdown of our own but likely foreclosure and additional problems to boot. Only a massive lotto win would free us from this uncertainty. Other than that, it is very unlikely that we will ever be secure enough to own our own home within the next decade.

With deposits looking to be required anywhere above the 15% mark it would very well be about 10 years before we will be in a position to have enough saved to be useful.

My basic figures don't even take into consideration changes in circumstances such as family sizes, job moves, losses of income and so on. That just takes the snap of the current situation maintaining but thats not very likely to happen.

So overall, I'm disappointed that a wider view of the tax cuts hasn't been seen from the perspective of normal every-day New Zealanders. While yes the rich get a little richer and have to pay the same GST increases as everyone else they have less to lose than those on lower incomes.

Too much compounds on the GST increases that its not a one off hit. Its a hit from every angle of society and each hit chops away at the effectiveness of any income tax reduction.