This article was published on 8 October 2005. Some information may be out of date.

Q&As

  • 5 on how different types if families should be taxed.
  • Many readers sent submissions to the government on proposed changes on taxation of international shares.
  • Am I a National Party supporter?

QIn response to “Single, living alone”, who wrote to you last week asking why families should get all the tax breaks….

We have a mortgage, no children and no tax breaks either — although being a couple means there are economies of scale, so perhaps we are slightly better off than “single, living alone”.

I have no problem with the amount of tax I pay or with any tax breaks and allowances made for families. These people are imperative to the future of our country.

Someone needs to be creating the next generation, and it seems only right these people should be compensated, to some degree, for this.

These families are providing the future doctors and nurses to take care of us all in our old age. They are providing the taxpayers to pay for the running of the country when we are in our retirement villages.

No extra tax breaks seems a small price to pay for having the next generation provide for me, and I wouldn’t want to see having a family become a privilege of the wealthy.

AGood point. Such a good point, in fact, that lots of correspondents have made it. The following writer added a further perspective.

QI started a family very late in life, at the last opportunity really, so I’ve viewed the situation from both sides. However, I’ve never resented paying tax to support families for the following reason.

We are all dependant upon the existence of the next generation to provide for us a decent quality of life in retirement. Even if we set ourselves up with a good superannuation fund, we will still be dependant on other, hopefully younger, taxpayers to fund health, transport and other infrastructures.

At the moment, people who have children when they are in their prime childbearing years generally struggle financially for the next 20 years while they support them.

Those who choose to have children later when they are more financially secure suffer a range of problems and risks associated with delayed childbearing, as I experienced.

The medical profession has been encouraging women to have children earlier, but they won’t get far unless the financial burdens are also removed.

APerhaps that means we should give financial help only to younger parents.

This could get nightmarishly complicated.

Then there are opposing views. Almost as many people agreed with last week’s correspondent as disagreed. For example:

QI, too, am single, 40 years of age with no children. I voted for National and for me tax was a key election issue.

There was a clear divide when it came to the tax policies of the major political parties.

I am all for parents getting some tax breaks, but I feel the Working for Families package Labour intends putting into practice is far too generous, and the across-the-board tax rates National proposed were a much fairer way of distributing the surplus we have all currently helped to earn.

I am lucky in that I managed to scrape together a house deposit 10 years ago and own my own home.

However, with house prices they way they are now, and with the current tax policies in place, I fear for single non-parents ever getting the opportunity to own their own homes, never mind trying to provide for their retirement.

Having children is a choice just as not having children is usually a choice. I know that the country needs children but there should be some balance to looking after all members of society and not targeting tax relief as this current government is doing.

ASounds as if a lower cut-off for the Working for Families package would make you happier. But read on.

QYour single, living alone reader is definitely not alone.

I am not single, and have a child but am in the same situation as your reader because the Labour government has decided that I’m not deserving.

To my mind, the role of government is to invest tax dollars primarily in ‘infrastructure’ that the individual citizen cannot achieve themselves. This obviously includes such things as roads, but also reliable power, education, health etc.

I don’t actually mind paying the large amount of tax that I do, if I see it benefiting everyone relatively equally. However, having paid the tax, I am means tested out of the primary healthcare, Working for Families and education (little funding for decile 8–10) etc it should provide.

And as you point out regarding the capital gains tax proposals, after seeking to protect myself from the inability to access these services by investing (including in Australia), I am now going to be unfairly taxed (with respect to similar investment decisions within NZ) again.

And yes, because of all this, I did vote National.

AOh no! You want a higher cut-off.

QBecause I have nieces and nephews and friends with children, I do not object to my taxes being spent on subsidised childcare, free education, free healthcare, the DPB and other general benefits for families with children.

Nor do I mind more of my taxes going to Working for Families which, from 1 October 2004, increased assistance to working families with children in terms of childcare subsidies, accommodation payments, Family Support, Child Tax Credit, Family Tax Credit and Parental Tax Credit.

What I strongly object to is Ms. Clark’s promise of extra tax relief — to families only. This blatant election bribe discriminates against, and alienates, childless couples and single people.

I’m single, income under $40,000, renting, working two jobs totalling 30 hours a week and paying higher tax on the second job because IRD calls it secondary employment. Any hopes I had of getting ahead have now gone with Labour’s re-election.

Ms. Clark has effectively said to us single people and childless couples: “Sod off — you don’t deserve our support”. She and her government should not be surprised when we reply in kind to her and New Zealand.

AYou get the last say on this topic — this week anyway — because you seem to see both the parents’ and non-parents’ points of view.

Thanks to everyone who wrote. I’m not sure if we’re all more enlightened, but at least a few spleens have been vented.

QIn last week’s Herald, your modesty in citing “at least 9” people who sent submissions to the government touched us.

So here’s our contribution, and a reply, which was very prompt.

I have a theory that for everyone who takes the trouble to write on a subject they feel strongly about there are at least 50 who want to do so, but don’t get around to it.

You may well have opened a floodgate. Thank you and well done.

AFor those who haven’t read recent columns, I suggested readers email their comments about proposed changes in the taxation of overseas investments to Inland Revenue, which was collecting submissions.

Last week I wrote that nine people had sent me copies of their submissions, but since then I’ve received copies of lots more.

Hopefully, the government appreciates that many feel strongly but few write, and takes note of all the good arguments you readers have made. Good on you all.

QWhat was missing from your column last week was a big blue “N” at the bottom and “Approved for The National Party by Mary Holm”.

Also you should have added to your exposition of National changing the tax cut-off points: “These will be paid for by borrowing $2.5 billion from overseas, which will cause inflation, and by cutting back on social services — both of which will negate the new cut-off points over time.”

Perhaps too you could give an example of anywhere in the world where a (sane) governmental policy was to borrow money overseas to cut taxes domestically.

ALet’s not get into those arguments again. The election is over. Time for a rest.

I can see your point, though. I did mention National twice last week. I had written the last item a couple of weeks earlier, and didn’t notice the repetition.

But I wasn’t writing in support of National, just noting its policies, which were relevant to readers’ comments.

Would it help to know that I didn’t vote for National?

Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to [email protected] or click here. Letters should not exceed 200 words. We won’t publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.