There's a big tax review in my country at the moment. Looks like we are going to change our tax rates to be more similar to Australia. Obviously because we are so COMMUNIST!!11 at the moment.
The top personal tax rate will be reduced from 38% to 33%. To make this move fiscally neutral, the Goods and Services Tax (GST) - which is levied on every consumer item - will rise from 12.5% to 15%.
The result? A person on an income of $100,000 a year earns $1923.08 per week, before tax. On an MTR of 38%, they earn $1192.31 per week. On an MTR of 33%, they will earn $1288.46. Congratulations to be them, they now get an extra $96.15 per week, or $5000 per year. (EDIT: US$3,482.84, for the guy below me.)
When you're earning $62,000 after tax, and then earn $67,000, what difference are you going to notice?
GST is a regressive tax. You can't not consume, and the less income you earn, the higher proportion of your earnings go to pay GST.
The result of all this? The rich get a couple of thousand more per year - perhaps a new television set - while the poor will have to buy less milk, and more and more kids will go to school without breakfast.
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