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Anne Mason is pretty underwhelmed by the tax cuts which kick in on Friday but which are up against a rise in GST and increased costs in other areas.
Mason works part-time teaching English to foreign students and lives in Hamilton with husband David Hall, a full-time teacher, and their two young children, Sophia, 4, and Ryan, 6.
We first spoke to Mason in May after the Budget which announced the tax charged on goods and services would go up from 12.5 per cent to 15 per cent on October 1, but would be offset by further personal tax cuts. Back then the family was expecting to be marginally better off.
The cuts mean, in theory at least, no matter what your income you should be better off.
While that pans out on paper Mason now says other costs have already impacted on their life, such as the fact the same Budget also slashed the amount early childcare centres receive.
This has meant her costs for Sophia have already increased.
"When I work that out against my salary it's still worth going to work I suppose, but I lose a lot."
She thinks the Government is giving with one hand and taking with the other.
"It looks good, sort of, on paper but I don't think that it really is that advantageous."
Mason said she had a go at the Government's online calculator at www.taxguide.govt.nz and says her family, on a combined income of about $65,000, would only get about $8 a week extra once the increase in GST and other costs were taken out of the equation.
"It just didn't seem like it was going to be too much when you factored in all the other things that are going up."
Munish Pathak is not expecting great things either.
The Auckland Hospital security guard earns just over $41,000 a year and lives with his wife Sarah, a nursing student, in a room in a hostel.
The couple are set to gain nearly $27 a week from the tax cuts but pay an extra $14 in GST, leaving them about $13 better off.
But Pathak thinks the estimated $13 they are yet to get has already been eroded by price rises in the intervening months since the Budget.
Instead of getting better, he thinks life will get harder.
"GST is going to affect each and everything that we do every day. Anything that you buy is going to go up and bringing down the tax rate is not going to give you all that much money to cover all those costs."
While the amounts people will receive vary greatly, Finance Minister Bill English says an average income family (earning in the mid $70,000s) will be about $25 a week better off, an average wage earner about $15 better off and a couple on New Zealand Super about $11 a week better off.
Naysayers say other factors - such as the Emissions Trading Scheme, the increase in early childcare costs, a hike in ACC levies and ever-growing food costs - mean for those on low incomes and middle incomes the tax benefit won't mean much, but those on high incomes will do very well.
If you are on a very high income, such as Paul Reynolds, head of Telecom, you will get a whopping tax cut.
His $5 million income will bring him a weekly gain of $4800.
We asked English to work out his tax cuts on the online calculator and though he declined, going on the raw data of his parliamentary salary of $276,000 he would get $161 more in his pocket each week.
A spokesman for his office said to bear in mind, that though high-income earners receive more from the tax cuts they also bear the brunt of the base broadening measures - through increased GST, changes to how investment property is taxed and the closing of loopholes allowing people to structure their income for tax purposes - meaning the overall effect of the tax package is broadly even across income groups.
We also tested the budgets of some clients from the Mangere Budgeting Service and found though the GST increases on some of their core weekly items were tiny they quickly added up, but that overall families would be better off.
A fairly representative example of the weekly core costs of a struggling low-income family with little discretionary spending was that of a married couple in Mangere with five children.
The father works full-time as a bus driver, earning $43,564, which is topped up by an $11,760 family credit.
His tax rate comes down from 21 per cent to 17 per cent but GST on a range of items - from an extra 66 cents on the $30 a week set aside for water rates to an extra $4.44 on the $200 weekly housekeeping bill - adds up to an extra $10.78 a week.
This still left the family ahead by $24.40 but Mangere Budget Service head Darryl Evans said people were already struggling and would continue to do so with all the other rising costs.
"The number one request now - it used to be people wanting budgeting and that's still very high - but food is the number one request we get on a daily basis."
Raewyn Fox, a national budgeting spokesperson, fears rents (which like mortgages are not charged GST) could still go up indirectly.
If a plumber's costs go up through GST, the cost to the landlord for repairs goes up and then this will be passed on to tenants, she says.
And some organisations are already taking the opportunity to put prices up higher than 2.5 per cent.
In Wellington, for example, bus fares for one section are going from $1 to $1.50 and a survey run earlier in the year by the accounting firm Accomplish has found many small to medium businesses are planning to raise their prices higher than the GST increase.
One reason given is they have been absorbing costs during the recession and need to reverse falling profit trends.
A broad range of businesses were surveyed - "farmers, butchers, candlestick makers, doctors, dentists, service stations" - ranging from one-man bands to companies employing 40 to 50 people, says Accomplish general manager Grant Hewson.
"But I must say, very much my impression was that while there were some who said they might take the opportunity to almost take advantage of the confusion and get some margin back, if you look at the mood of small business in New Zealand at the moment it's not overly positive, things aren't overly flash, and I think it will take a fairly brave business to get too aggressive on pricing."
New Zealand Institute of Economic Research chief economist Shamubeel Eaqub says on past GST increase experiences, when some retailers lift prices higher, others don't, and price changes will average out. He remains adamant everyone will be better off, albeit some only by a few dollars but others by $80 or $90 a week.
Even with concerns arising out of other costs like the ETS, for most people this was less than $5 a week.
GST is fairer than personal taxes, he says, because you get to decide what to spend your money on.
"You have some control over GST whereas with personal tax it's gone even before you see it so the Government's deciding for you what it's going to do with your money."
On the other hand, the changes are costing the Government billions of dollars and the bigger question is whether can we afford them in the long-term.
"We're effectively borrowing money from our future generations so our future generations might be poorer as a result of it. It's kind of like giving yourself a big pay rise."
Another worry is food prices which are predicted to go up by the end of the year by nearly the same amount as the GST increase, Eaqub says. "If you've got your cost of living going up you'd be much worse off without the tax cuts but it might erode some of the net benefit we were expecting."
