Today, a large share of government revenue comes from income tax and company tax. The 20/7 idea is different: you would pay no personal income tax (your gross pay becomes your take-home pay), companies would pay no tax on profits, and the state would instead collect revenue through a 20% goods and services tax on purchases, plus a small 7% operational wedge on business-to-business spending that replaces most of what company tax raises today. The aim is a simpler system, stronger work incentives, and revenue stable enough to keep public services funded—including a projected fiscal surplus in the blueprint’s modelling.
For households For business For the country
- Your paycheck: no PAYE; every dollar you are paid stays with you until you choose to spend it.
- At the shops: a single 20% GST on what you buy—clear at the till, same rate on essentials and luxuries in the model’s design.
- Between firms: suppliers still charge GST, but buyers only get part of it back from Inland Revenue; the rest is the state’s share of each step in the chain—replacing corporate income tax without profit returns and complex audits.
- Fairness buffers: benefits and superannuation can be adjusted upward so vulnerable people keep pace with prices during transition; offshore platforms can face border measures so locals are not undercut unfairly.
No built-in losers—if the safeguards work
The blueprint is not magic; it is arithmetic plus politics. What it does claim is that no major group is meant to be left behind on purpose: households, productive businesses, exporters, and the Crown can all be better off in the model’s scenarios because gains come from different places (pay packets, profit tax removal, export competitiveness, simpler administration) while costs are spread through consumption and a thin B2B wedge, with explicit transition and equity patches.
- Households: keeping 100% of gross pay swamps the one-off GST price effect for typical earners in the series’ worked examples (for instance, a dual-income illustration lands roughly $17,500 a year ahead after higher prices and buffers). At the minimum wage, the same arithmetic—full gross in hand versus a higher GST on spending—comes out at about $1,400 a year ahead in the illustrative scenario used in the series, before any further wage-floor policy. People on main benefits are not treated as a sacrifice zone: transfers are grossed up so that, in the blueprint’s intent, their net position stays in line with the price path (broadly net neutral rather than a real-terms cut), which is why the model describes them as not disadvantaged by design. Any household’s outcome still depends on spending patterns, housing costs, and how closely indexation matches their actual basket.
- Businesses: corporate income tax goes to 0%, so successful firms keep the full bottom line; the replacement is a 7%-of-price operational wedge on inputs (via partial GST recovery), which the series argues is often a net win for high-margin, honest operators and harder to game than profit shifting—very B2B-heavy, thin-margin models need the dedicated cascading / tiered-recovery tools in the full notes.
- Exporters: they still wear the wedge on local rent, power, and services, but pay no tax on export profit; for strong exporters the series describes this as an export paradox where the profit-tax saving can exceed the input cost—low-margin exporters feel inputs more.
- The country: the same framework is budgeted to a ~$3.1 billion surplus while shrinking the most painful tax paperwork (the series sketches a much smaller IRD footprint focused on transactions rather than forensic income audits)—that depends on implementation holding and risks being managed as laid out in the risk pages.
Honest caveat: every reform has edge cases. The intent is a positive-sum redesign—more velocity, less sand-in-the-gears on work and profit—not a guarantee that no individual or sector ever pays more during transition. The long-form series exists precisely to stress-test those edges.
This is a policy proposal, not current law. Trade-offs—price effects, cascading through long supply chains, and how fast to phase in—matter as much as the headline numbers. If you want detail, the full series walks through risks, comparisons with other countries, and sector effects: start at the table of contents or the plain-language explainer.
Bottom line: 20/7 sells a simple story—reward work and success at source, collect tax where money is already moving, and shrink the most painful compliance. Whether that balance is right for New Zealand is a question for public debate and careful design, not a single web page.