Me:
I don’t want to get into an extended discussion about how and when to apply GST . This is not the right forum for that discussion. What are relevant are the political implications of workers registering for GST “as a political act”. The main reason the IRD doesn’t chase them is probably more to do with under-resourcing of IRD than anything else, and I’m not advocating changing that :-)

Draco:
“An acquaintance has just been informed by his accountant that he may actually have to pay the GST on his truck because he’s presently on wages rather than on contract. This acquaintance went from being paid $35/hour on contract to $29/hour on wages so, yes, the employer does cover the GST. He is significantly worse off now than he was before because he can’t claim the tax rebates that he could previously.”

Me:
The employer wouldn’t change the person over if it was more expensive to do so. The additional money from being “self employed” is not simply to cover GST. The contractor is responsible for all sorts of other things; insurance (including public liability for example), ACC, down time when not required etc. Employers will weigh these things up and make the decision most beneficial to them.

Draco:
“Yes, you are correct in that by becoming contractors they wouldn’t become capitalists in the traditional sense of the word. But the words meaning seems to be shifting from that traditional definition to one where business people are included. I used the word in the latter sense.”

Me:
I think it’s really important that we use terms like “capitalist” in a precise way. It has a very specific meaning. In a discussion on a socialist blog, I think it is even more important that the term is used in its precise.

Draco:
“There is more than one way to have a revolution. It is my belief that all people should operate under the same rules. At the moment though, bankers, capitalists (traditional sense), business people and workers all operate under different rules. The rules that the capitalists (modern sense) work under are all very similar and give them benefits that the worker doesn’t have. This, of course, biases the market in favour of the capitalists.”

Me:
Having equality under the law (including tax law) is a basic democratic principle to be defended. It doesn’t make turning workers into independent contractors into a radical proposal that will further real revolutionary change.

Draco:
“Now, we could try and get the rules changed through protests and strikes so that every body has all the same advantages and disadvantages. This will take a long time and doesn’t guarantee success. But we have another option and that option is to move all the workers under the same rules as the capitalists.”

Me:
Yes it does take a long time and doesn’t guarantee results. Nothing is guaranteed, but it has the advantage of bringing workers together in struggle rather than dividing them. Making people into individual contractors tends to atomise people. There is nothing about encouraging people to work as contractors that suggests any sense of solidarity between them, which to me suggests it is a dead end in terms of revolutionary struggle. The very fact that you chose to refer to such workers as capitalists (within your revised context) illustrates this.

Draco:
“The latter method, IMO, has a couple of advantages. First and foremost, the workers will become empowered. They will have the choices and the responsibility that the capitalists say are so important (and which I actually agree with). Secondly, the government will have to take note because of the large amount of income that they will be losing but they won’t be able to change the rules without those rules affecting everyone equally as they won’t be able to force the workers back into wage slavery.”

Me:
Never underestimate the ability of the capitalist state to “force people back into wage slavery”. The capitalists have hundreds of year experience devising new imaginative ways to force workers into wage slavery. It’s what they do. In fact the contract workers would actually still be wage slaves. Capitalism wouldn’t have been transformed, only the tax system modified and the working class “as a class” weakened. Far better to empower workers as a collective than to do so as individuals. Contractors tend to be competing with each other also for work. If you’ve got a bunch of contractors the material conditions of their employment will compel them to compete for the work rather than to cooperate. I cannot see how this would be progressive.
Cheers,
John

Yes, you are correct in that by becoming contractors they wouldn’t become capitalists in the traditional sense of the word. But the words meaning seems to be shifting from that traditional definition to one where business people are included. I used the word in the latter sense.

There is more than one way to have a revolution. It is my belief that all people should operate under the same rules. At the moment though, bankers, capitalists (traditional sense), business people and workers all operate under different rules. The rules that the capitalists (modern sense) work under are all very similar and give them benefits that the worker doesn’t have. This, of course, biases the market in favour of the capitalists.

Now, we could try and get the rules changed through protests and strikes so that every body has all the same advantages and disadvantages. This will take a long time and doesn’t guarantee success. But we have another option and that option is to move all the workers under the same rules as the capitalists.

The latter method, IMO, has a couple of advantages. First and foremost, the workers will become empowered. They will have the choices and the responsibility that the capitalists say are so important (and which I actually agree with). Secondly, the government will have to take note because of the large amount of income that they will be losing but they won’t be able to change the rules without those rules affecting everyone equally as they won’t be able to force the workers back into wage slavery.

Reminds me of the saying: Be careful what you wish for as you just may get it. Well, the capitalists have asked for a free labour market – let’s give it to them.

This isn’t actually correct. Going on contract as dracotb suggests does not make a worker into a capitalist. Being a capitalist involves investing money “as capital” which means putting up the money in the expectation that it will be returned at a profit, due to the exploitation, directly or indirectly, of labour. If every worker who became self employed was a capitalist, anyone with money in an interest bearing bank account would also be a capitalist. Actually, playing “Spot the Capitalist” is not a very useful activity anyway as it is capitalism as a social system and capitalists “as a class” that exploit workers “as a class”.

In terms of specifics, dracotb is also wrong about the benefits of workers becoming contractors and benefiting from GST registration. If a worker isn’t using the internet from home for work, s/he can’t claim any of it so if the worker is going to work and doing all their work “at work”, no GST can be claimed. The same applies for “household expenses”. Even getting to work isn’t covered; only traveling between workplaces. None of these are claimable as dracobt suggests.

What would happen is the worker would have to *pay* GST on all income other than the bit that was claimable – in the case of a typical worker, almost nothing. Unless it was possible to convince the boss to hand over a 1/9 pay increase to cover the GST, workers would be *worse off* because they’d be paying GST on income and paying it again every time they go to the supermarket etc. They’d also have to keep all their receipts, record all their income and expenditure and file regular GST returns.

The only way to benefit would be to falsify GST returns by claiming things that weren’t really claimable. While this might leave the individual better off, it’s hardly a recipe for social transformation.
Cheers,
John

This change would also bring about a massive social change for the better. As it stands the wealthy business owners say that they are the wealth producers and everyone else seems to agree with them. This would be a hard illusion to maintain though when everyone is a business owner.

GST itself is a rort though as people in the finance industry don’t have to charge it. This means that they have an advantage over every other industry. So GST either needs to be changed so that the finance industry has to add GST to their services or it needs to be scrapped. I prefer the latter.