Income

For low income, government support matters more than a tax cut

Elle Sun-Min Park lives in Auckland and works as an organizer for the First Union.

OPINION: A recent poll showed the overwhelming majority of Kiwis want a tax cut when the upcoming budget is announced.

But here’s why I oppose the tax cut, even though I’m what you might call a working poor, who could use a little extra cash in my pocket every week.

From what I see, tax cuts generally equate to the reduction or privatization of public services, the reduction of public funding in health, education, housing and public transport.

New Zealand’s tax rates are in the lower range of the 38 OECD member countries. And lower taxes can have real negative impacts on our lives, especially for lower- and middle-class workers.

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Scandinavian countries often rank higher in happiness and quality of life surveys. It is well known that their tax rates are among the highest in the world, at 50-60%, and therefore their education, health, social protection and public services are free and/or accessible to all, regardless of their income.

Imagine if we had the same available and accessible for “everyone” in Aotearoa, with a better funded health care system, funded education from early childhood to tertiary, public transport and enough public housing for people in need.

Pediatric dental surgery in our public health system.  The cost of dental care causes some people to abandon treatment until it is too late to save their teeth.

CHRIS SKELTON / Stuff

Pediatric dental surgery in our public health system. The cost of dental care causes some people to abandon treatment until it is too late to save their teeth.

That may be asking too much of this budget announcement. But a tax cut will take us further away from public funding and the services we desperately need in Aotearoa.

My first year of higher education coincided with the then national government abolishing the student allowance for postgraduate students.

This meant I had to take on more student debt to fund some of my living expenses, as well as work part-time or full-time in addition to my studies.

A cheap bottle of wine was a luxury, and I relied heavily on the salt-laden instant noodles, nearly $1 a pack at the time.

The annual minimum wage increase under National was about 25 to 40 cents an hour. All the emergency expenses such as a doctor’s visit, dentist, textbooks, laptop, car money order, moving, meant I had to go into more and more debt as I worked hard without cease.

Cartoonist Sharon Murdoch's perspective on soaring grocery prices.

Sharon Murdoch / Stuff

Cartoonist Sharon Murdoch’s perspective on soaring grocery prices.

The casual nature of student jobs prevented me from taking vacations, i.e. annual leave, for a few years.

I accumulated a large student loan and a personal loan during my 20s, when I often worked two or three jobs at the same time to make ends meet. I couldn’t be accused of not working hard enough – I had worked over 40 jobs to survive in Auckland.

Over the past year my dental bill has grown to a few thousand dollars which I unfortunately had to use more debt to cover as the pain was unbearable. It’s sad to think that being able to use debt to cover my essential medical bills puts me in a privileged position, compared to someone who doesn’t even have that option.

My former neighbor, who relied on government support, lost several of his front teeth to visible infections. I imagine it’s hard to get a job with bad teeth, which can lock you further into the cycle of poverty.

A tray of groceries ready to be collected by a household in need from a food bank.

DAVID UNWIN/Stuff

A tray of groceries ready to be collected by a household in need from a food bank.

Going to the GP for $60 just to hear that I should drink lots of water and get a medical certificate to get three days off work is a luxury. I once gave up on medical care for ear infections to the point where I suffered from persistent symptoms for a few years.

All of the above happened while I was working non-stop without receiving any help from the government and without any dependent family members or children.

My friends with four kids and an income struggled at the start of the school year with the costs of basic stationery, school uniforms and shoes. With the cost of living and rent rising, their grocery and gas bills are tighter and there is nothing left in the budget for anything else.

My friend who is a single mother is tempted to move to Australia because it would mean she can provide more than the bare minimum for her child, with more disposable income on her hands with cheaper rents and higher wages in Australia.

The halving of the price of public transport has led to a sharp increase in demand and real savings for commuters.

KEVIN STENT / Stuff

The halving of the price of public transport has led to a sharp increase in demand and real savings for commuters.

She works full time, but earns far from enough for two of them. She fears taking time off from work to jump in the long queue at Work and Income to seek the support her child needs. New Zealand has become almost uninhabitable for her.

There is an urgent need for the government to mitigate the rising cost of living for everyone. Better funding of essential services for all, such as health care (GP, dentist, mental health), education and public transport would benefit the working poor, who now extend into the squeezed middle.

As soon as the public transport fare was halved recently, in response to rising fuel prices, it immediately prompted me to take the bus.

She Sun-Min Park

Provided

She Sun-Min Park

Before the reduction, it cost an adult about $54 per week to travel by bus (based on $5.40 per trip, twice a day for five days a week). It’s not a lot of savings by driving yourself, which can also be faster.

Reducing it to $27 per week made an immediate difference – a potential saving of $1,404 per year per person, plus all the other benefits of getting people out of the car, reducing traffic congestion and emissions.

Moreover, a robust budget-backed plan to increase our stocks of safe housing would prevent health problems caused by poor housing and save the working poor from greedy landlords competing to raise rents and house prices.