Word of the day

February 21, 2019

Schnapsidee –  a usually ridiculous idea which seem like brilliant thoughts when you’re drunk;  crazy or impractical idea that seems ingenious when intoxicated.


Thatcher thinks

February 21, 2019


Rural round-up

February 21, 2019

Urban run-off floods nearby farms :

Farming on the city limits presents a paradox for Papamoa farmer Andrew Dovaston, one that on his bad days farming sometimes has him thinking about the benefits of cashing up to keen developers.

He is one of about a dozen farmers remaining down Bell Road, the boundary between Western Bay of Plenty District and Tauranga City and over the years he has seen the city’s lights creep ever closer as development pushes southwards from the country’s fastest-growing city.

The second-generation Dovaston family property was developed by Dovaston’s parents when they moved from Britain, initially intent on leaving their farming careers there behind and buying a service station.  . .

Golden Bay farmers suffering under one-in-20-year drought – Tracey Neal:

Nelson-Tasman is struggling with its driest weather in decades, with Golden Bay now in a one-in-20-year drought.

The district’s already ailing farmers and growers are in some areas operating on about 30 percent of their normal water allowances for irrigating crops.

In urban areas like Richmond and Mapua, gardens have dried up due to the total ban on watering.

Meanwhile, the State of Civil Defence Emergency will now be extended a further week as firefighters continue to battle the Tasman fire. . . 

The pain of Mycoplasma bovis is not being shared fairly – Keith Woodford:

Anyone reading the official information from MPI would be entitled to believe that the Mycoplasma bovis eradication campaign was going remarkably well. However, amongst the directly afflicted farmers, things remain far from sweet.

MPI has acknowledged that afflicted farmers have taken a hit on behalf of the industry, but as one greatly afflicted farmer said recently to me, this is the only team that he has been part of where, as a team member, he gets left behind.

I know of three farmers who have had to put their farms up for sale due to the Mycoplasma bovis outbreak and its implications.  There are others heading that way. I have yet to meet an afflicted farmer who does not feel hard done by. . . 

A2 more than doubles 1H net profit – Rebecca Howard:

 (BusinessDesk) – A2 Milk’s first-half profit lifted 55.1 percent as infant formula revenue continued to soar.

Net profit rose to $152.7 million in the six months ended Dec. 31 from $98.5 million a year earlier as sales climbed 41 percent to $613.1 million, Auckland-based, Sydney-headquartered a2 said.

Sales of infant formula totalled $495.5 million for the half – an increase of 45.3 percent on the prior year driven by share gains in China and Australia. . . 

It’s not shear luck – Luke Chivers:

Record-breaking shearer Aaron Haynes has sheared his way to land ownership. Luke Chivers reports on his successes.

It was a rare moment at the Central Hawke’s Bay A and P Show in November when the open shearing final was won by a competitor who had never previously a top grade title.

That competitor was Aaron Haynes. And if his name sounds familiar there is good reason why. . .

Drought, pests could force India to grant duty-free corn imports – Rajendra Jadhav:

 Below-normal monsoon rains and an infestation of the fall armyworm, which devastated African crops in 2017, have slashed India’s corn output and boosted prices, increasing the chances the government will grant duty-free corn imports for the first time since 2016. 

The shift to imports in the world’s seventh-largest corn producer, which typically exports to Asia, highlights the breadth of the crop losses due to the drought and armyworm. It also demonstrates the potential harm that the armyworm may wreak on India’s agricultural economy, which supports nearly half of India’s 1.3 billion people.

India harvests two sets of corn crops a year, a winter crop from March and a summer crop from September. . . 

Stop slugs munching your profit margin:

In the last few planting seasons we have seen favourable conditions for slugs, and if favourable conditions occur again this autumn, slug populations will quickly bounce back from the hot and dry summer and pose a risk to autumn-sown crops and grass.

We all know that slugs can be devastating to newly sown crops and pastures, so it makes sense to check paddocks before sowing to see how bad the risk of slug damage is. . .


CGT deliberately harsh so won’t be implemented?

February 21, 2019

The Taxpayers’ Union says the Tax Working Group’s recommendation for a capital gains tax is one of the most aggressive in the world.

Sir Michael’s group was supposed to deliver ‘fairness’. Instead, he’s given something Kiwi taxpayers should fear.

In our recent report, we outlined Five Rules for a Fair Capital Gains Tax, but any notion of fairness has been flagrantly disregarded by the Working Group. It fails most of our tests.

As expected, the Group is proposing a full-scale capital gains tax, among other measures such as environmental taxes.

The only assets excluded from the proposed capital gains tax are small family homes and art – commercial property, businesses, publicly listed shares, and every other type of enterprise will be slammed by this tax:

    • Capital gains will be charged at 33% for the majority of taxpayers – one of the most punitive capital gains tax regimes in the world, and more than twice the rate proposed by the Labour Party at the 2011 and 2014 elections.  
    • There will be no inflation adjustment – even paper gains will be hoovered up by IRD.
    • Revenue neutrality only applies for the first five years: while the group proposes changes to income tax thresholds (see below) most of the revenue from a capital gains tax is forecast to be collected after five years — after ‘revenue neutrality’ has expired.
    • ‘Valuation Day’ is imminent: taxpayers will be forced to value their assets within five years, or must rely on rough and ready evaluations (such as rateable value for land).  

Even though the Government explicitly ruled out taxing the family home, properties larger than 4500m2 will in fact be taxed. The message to regional New Zealand is that their lifestyle blocks, farms, and semi-rural properties don’t deserve the protection given to Wellington and Auckland penthouses and townhouses.

Iwi-owned businesses will pay a discounted rate (17.5 percent, compared to 33 percent for other businesses).

In short, the proposal is as bad as we could have feared.

It is a costly, bureaucratic, and seemingly envy-driven tax grab. It threatens New Zealand’s prosperity, drives up housing costs, and punishes responsible investors.

You can read the Tax Working Group’s final report here.

Proposed sweetener with changes to income tax appear to be spin rather than substantive

While the Working Group supports adjusting the bottom tax threshold, they propose coupling this with an increase in the second tax rate from 17.5% to 20.5% to increase ‘progressivity’.

From an economic incentive perspective, this is a terrible move. Even though many taxpayers will receive a small tax cut, middle-income earners would face a higher marginal tax rate on additional earnings, which reduces the incentive to take on more hours, skill-up, or take-on extra responsibility at work.

45.6 percent of earners fall within the second tax bracket, hundreds of thousands of earners could be affected by this distortion in incentives – the cumulative economic effect would be massive. . . 

What government in its right mind would introduce a tax to fear rather than a fair tax, one that is costly, bureaucratic, and seemingly envy-driven and a disincentive to savings and investment?

If I was a conspiracy theorist I’d say the TWG has deliberately made it too harsh so that it would be political suicide to introduce it, but that’s probably just wishful thinking.


CGT gets it back to front

February 21, 2019

If there’s such a good thing as a good tax, it’s one that discourages things we don’t want and encourages things we do.

That’s where the Tax Working Group was handicapped from the start when the government ruled out any CGT on the family home.

A CGT hasn’t had any impact on keeping house prices down in other countries, but if, as we’re constantly told New Zealander’s over-invest in their houses, taxing other capital gains and leaving houses alone will only make matters worse.

We’re also told, with good reason, that New Zealand lacks savings and investments. Why then would a government introduce a tax which disincentives them?

If has been widely forecast the Tax Working group’s report recommends a CGT on savings, investment and businesses and not on family homes, it will be getting the tax the bad more and the good less rule back to front.

It will almost certainly get a lot more wrong.

The Taxpayer’s Union provided five rules for a CGT:

To be fair, a new capital gains tax must abide by the following:

  1. No Valuation Day: Any capital gains tax regime should exclude a valuation day approach in favour of grandfathering assets into the system upon sale, as was the case in Australia when it introduced a capital gains tax.
  2. Indexation for Inflation: Any capital gains tax regime must discount for inflation, so taxpayers are taxed only on their real capital gains, rather than nominal gains.
  3. Revenue Neutrality: Given the Government’s surpluses, any revenue from a capital gains tax must be used to fund tax cuts in other areas so that the total tax burden does not increase overall.
  4. Roll-Over Relief: Tax should be paid only on sale – not death. Further, there should be roll-over relief when capital raised from a sale is then immediately invested in the same asset class.
  5. Discounted Rate: Any capital gains tax should apply at a discounted rate, instead of at the full personal income tax rate, to avoid New Zealand having one of the highest capital gains tax rates in the world.

The TU has also provided 19 details to look out for in the recommendation for a CGT:

Details to look out for include:

  • Rollover relief:
    • will the capital gains tax apply on death or just on sale of an asset;
    • will the tax apply if capital is simply being recycled within the same asset class (selling a smaller farm to purchase a larger farm, for example)?
  • The rate:
    • will there will be a discounted or lower rate, like in Canada, Australia, the United Kingdom, or the United States?
  • Revenue neutrality:
    • will the revenue be offset with tax cuts;
    • if so, who will receive them;
    • will revenue neutrality be maintained in the medium-to-long term as CGT revenue grows?
  • Family home exemption:
    • will there be exemption exclusions for large properties (will lifestyle blocks be subject to the tax?);
    • will there be a ‘maximum value’ for the family home;
    • how much tax will be payable if there is an exemption exclusion?
  • ‘Valuation Day’:
    • will asset owners be required to value their property and businesses;
    • if so, will it be at their expense, or will the general taxpayer be required to pay;
    • if the general taxpayer is required to pay, what will be the estimated cost of ‘V-Day’;
    • how much time will taxpayers have to obtain asset valuations;
    • if valuations are not obtained, will other ‘default valuations’ be used?
  • Exemptions:
    • are there any sectoral exemptions (e.g. racing, fisheries);
    • will Maori authorities pay capital gains tax, if so, at what rate;
    • how are vehicles, boats, antiques etc. treated?
  • Trusts:
    • at what rate are trusts taxed;
    • will they be taxed on accrued or realised gains?

Fairness, which is the supposed motivation for introducing a CGT, is very much a matter of opinion but if the proposals from the TWG don’t meet the five rules, it will be anything but fair and do more harm by disincentivising savings and investment.

 


Quote of the day

February 21, 2019

 When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left, and could say, ‘I used everything you gave meErma Bombeck who was born on this day in 1927.


February 21 in history

February 21, 2019

362 – Athanasius returned to Alexandria.

1245 Thomas, the first known Bishop of Finland, resigned after confessing to torture and forgery.

1440 The Prussian Confederation was formed.

1543 Battle of Wayna Daga – A combined army of Ethiopian and Portuguese troops defeats a Muslim army led by Ahmed Gragn.

1613 Mikhail I was elected unanimously as Tsar, beginning the Romanov dynasty of Imperial Russia.

1743 The premiere of George Frideric Handel‘s oratorio “Samson” took place in London.

1804  The first self-propelling steam locomotive made its outing at thePen-y-Darren Ironworks in Wales.

1842 John Greenough was granted the first U.S.A. patent for the sewing machine.

1848 Karl Marx and Friedrich Engels published the Communist Manifesto.

1875 Jeanne Calment, French supercentenarian and longest-lived human on record, was born (d. 1997).

1879 An explosion in a Kaitangata coal mine killed 34 men.

Kaitangata mining disaster Kaitangata mining disaster

1885 The newly completed Washington Monument was dedicated.

1903 Anaïs Nin, French writer, was born (d. 1977).

1907  W. H. Auden, English poet, was born  (d. 1973).

1910 Douglas Bader, British pilot, was born (d. 1982).

1913  Ioannina was incorporated into the Greek state after the Balkan Wars.

1916 Battle of Verdun started.

1918 The last Carolina parakeet died in captivity at the Cincinnati Zoo.

1919 Kurt Eisner, German socialist, was assassinated.

1921 Constituent Assembly of the Democratic Republic of Georgia adopts the country’s first constitution.

1924 Robert Mugabe, president of Zimbambwe, was born.

1925 The New Yorker published its first issue.

1927 Erma Bombeck, American humourist, was born  (d. 1996).

1927 Hubert de Givenchy, French fashion designer, was born.

1933  – Nina Simone, American singer, was born (d. 2003).

1935  Mark McManus, Scottish actor, was born  (d. 1994).

1937  Initial flight of the first successful flying carWaldo Waterman’sArrowbile.

1937 – The League of Nations banned foreign national “volunteers” in theSpanish Civil War.

1945 Kamikaze planes sank the escort carrier Bismarck Sea and damaged the Saratoga.

1947 Edwin Land demonstrated the first “instant camera,” the Polaroid Land Camera, to a meeting of the Optical Society of America.

1952 The British government, under Winston Churchill, abolished identity cards in the UK to “set the people free”.

1952 In Dhaka, East Pakistan (present Bangladesh) police opened fire on a procession of students that was demanding the establishment of Bengali as the official language, killing four people and starting a country-wide protestwhich led to the recognition of Bengali as one of the national languages of Pakistan. The day was later declared as “International Mother Language Day” by UNESCO.

1953  Francis Crick and James D. Watson discover the structure of theDNA molecule.

1958 The Peace symbol was designed and completed by Gerald Holtom, commissioned by Campaign for Nuclear Disarmament, in protest against the Atomic Weapons Research Establishment.

1960 Cuban leader Fidel Castro nationalised all businesses in Cuba.

1965 Malcolm X was assassinated at the Audubon Ballroom in New York City by members of the Nation of Islam.

1970 A mid-air bomb explosion in  Swissair Flight 330 and subsequent crash killed 38 passengers and nine crew members near Zürich.

1971 The Convention on Psychotropic Substances was signed at Vienna.

1972 President Richard Nixon visited the People’s Republic of China to normalise Sino-American relations.

1972 The Soviet unmanned spaceship Luna 20 landed on the Moon.

1973  Israeli fighter aircraft shot down Libyan Arab Airlines Flight 114 jet killing 108.

1974 The last Israeli soldiers left the west bank of the Suez Canalpursuant to a truce with Egypt.

1975 Watergate scandal: Former United States Attorney General John N. Mitchell and former White House aides H. R. Haldeman and John Ehrlichman were sentenced to prison.

1986 Charlotte Church, Welsh singer, was born.

1995 Steve Fossett landed in Leader, Saskatchewan, Canada becoming the first person to make a solo flight across the Pacific Ocean in a balloon.

2007 Italian Prime Minister Romano Prodi resigned from office. His resignation was rejected by the President Giorgio Napolitano.

2013 – Two bomb blasts in Hyderabad, India, killed at least 17 people and injured more than 100 others.

Sourced from NZ History Online & Wikipedia.


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