A West Auckland family with no money to spare are dreading the thought of a GST increase.
Jason Figges, 32, and his partner Melissa Lindsay, 22, earn just $150 a week from the property maintenance and lawnmowing business they are trying to build up.
At the moment they still get their income topped up with a partial sickness benefit, accommodation supplement, other temporary support and a Working for Families tax credit for their 2-year-old son, Tyrone, bringing their total income up to $600 a week.
They pay $305 of that to rent their Massey home, leaving them just $295 a week to live on. All the family are asthmatics, needing medication and frequent trips to the doctor.
"I'm finding it very hard," Mr Figges said. "We live on it. It's not flash, but we live. We are limited in what we get, mainly the necessities."
Rent is exempt from GST, but pretty much everything else the family spend money on includes GST of 12.5 per cent, so the tax currently costs them 11.11 per cent of $295, or about $32.78 a week (12.5 per cent on the pre-GST cost of $262.22 is 11.11 per cent of the gross cost of $295).
Raising GST to 15 per cent would increase that cost by a fifth, or $6.56 a week, if they could afford to pay it.
However, in practice they would still have only $295 a week to spend, so they would have to buy fewer things.
"It would limit what we are able to buy," Mr Figges said.
The GST component of their spending would rise to 13.04 per cent, or $5.70 a week, so the net component of their spending that goes to shopkeepers and other suppliers would drop by the same amount. This fall in their real living standards would be offset by a likely increase in their benefits and a possible cut in their tax rate, but Mr Figges is not impressed by the Government's tax working group recommendations to cut the tax rates on high incomes. "I reckon it should be the other way round. The ones with more money should pay more."By Simon Collins Email Simon