The case against meddling with GST

The steep increase in the price of food has led to inevitable calls to exempt at least some foods from GST.

Good tax is oxymoronic but simple taxes are better taxes and GST is simple.

Australia’s isn’t and here’s a good argument for not following them by complicating ours:

Majority want to keep own money

More than two thirds of New Zealanders want to keep more of their own money:

The latest Newshub-Reid Research poll has found an overwhelming majority want a tax cut from the Finance Minister in this year’s Budget 2022. 

Labour’s dramatic drop in Newshub’s poll has the party under pressure and it’s showing. Meanwhile, the National Party is celebrating.  . . 

The poll put National ahead of Labour. It’s only one poll but does continue the trend of National support growing while Labour’s falls.

It gets worse for Labour because the poll also showed overwhelming support for tax cuts.

It’s bad news for them though, because the Finance Minister appears allergic to the idea. But perhaps the latest results of the Newshub-Reid Research poll will make him reconsider.

It asked: Do you think the Government should give New Zealanders a tax cut in the upcoming May Budget?

A clear majority – 68.7 percent – say yes, hand back over the cash, while only 23.7 percent said no. Even a majority of Labour voters – 54.2 percent – want a tax cut, with 35.7 percent saying no. 

But it’s not going to happen. 

“We do not agree that tax cuts that favour those who earn the most are the priority right now,” Robertson said in Parliament on Wednesday.

The political pressure is piling on from National.

“Kiwis are doing it incredibly tough in this cost of living crisis because of inflation and really what we want to do is be able to give more of their money back to them to spend and save it as they wish,” National leader Christopher Luxon said. . .

That’s an important point.

This isn’t the government’s money, it’s the earnings of the people and it’s no surprise they want to keep a bit more of it.

Having the government which is wasting so much taking more of what you earn, or keeping a little more of your own money?

No contest.

Wasting $s on bureaucratic back patting

Does this government and its agencies hold the record for the most money wasted on propaganda?

If you want to go down a rabbit hole of grift, browse the portfolio of @clemengerBBDO, the creative agency responsible for this ad. https://t.co/jzJn3G1uMZ https://t.co/CMsukLkoFN

— New Zealand Taxpayers' Union (@TaxpayersUnion) March 17, 2022

The worst of it is that the Govt has budgeted a total of $197 *million* for its Road to Zero "education campaign" through to 2024.

This money could have been spent on median barriers, but the Govt has decided it would rather spend the money annoying you with dumb ads.

— New Zealand Taxpayers' Union (@TaxpayersUnion) March 17, 2022

The government and Waka Kotahi are wasting money on advertising what amounts to an admission of failure.

They’re failing to make roads safer and so in an effort to reduce the road toll they’re resorting to reducing speed limits and trying to convince us that’s good.

The advertisement isn’t the only money being wasted on transport mistakes.

The Auckland tram might cost $29.2 billion.

That is $15,000 for every household in New Zealand. So every family in Gore and Hastings and Levin will be paying $15,000 more tax so Auckland gets some trams to the airport!

If it costs $29.2 billion, then that is a cost of:

• $1.22 billion per km
• $1.22 million per metre
• $12,167 per cm
• $1,217 per mm

Think of the opportunity cost. A new four lane motorway costs around $50 million per km. For what the Government may spend on trams in Auckland you could construct a 630 km long four lane motorway. That is approximately the distance from Auckland to Wellington. . . 

Back to annoying advertisements, Waka Kotahi has another that starts by showing a driver swerving to avoid a possum.

It is, as Camryn Brown writes,  a case study in obliviousness :

. . . Consider the TV ad for the new “Road to Zero” campaign. What does that ad want you to do? A typical road safety ad wants you to slow down, be sober, or wear a seatbelt. This ad has nothing for a road user to act on, it simply promotes the idea of an all-of-system approach to road safety. It tells you that road safety depends on coordinated work across enforcement, road design, regulation, and so on.

It shares this big idea that has excited the bureaucrats so you may see how clever they are and so that you may appreciate them more.

That’s what the ad wants you to do – it wants you to know what the bureaucracy is doing to do and it wants you to think better of them for it. The beneficiary of the ad is the public service, not the public. . .

Compounding the waste of money is the stupidity of showing a driver swerving to avoid a possum, which is dangerous.

If the advertisement pointed out that drivers should never swerve to avoid a small animal and that running over a possum would be doing a service to conservation because they’re pests which carry TB and prey on native fauna and flora it might be acceptable.

But it doesn’t to that and it’s not acceptable use of scarce money that would be far better spent on making roads safer.

Instead, they’re wasting millions on an expensive exercise in bureaucratic back patting.

It does nothing to encourage safer driving and it reinforces the growing chasm between the government, its agencies and the public who finance their wasteful spending.

Another economic blunder

The government’s plan to introduce an unemployment insurance scheme is, Dennis Wesselbaum says, another of its blunders:

We do not have details about its precise design, but what we hear is that the new scheme will pay up to 80 per cent of income for up to half a year, if an employee loses their job. In any case, the reform will be a historic turning-point.

This policy, however, will reduce welfare (wellbeing would be more politically correct), increase unemployment, increase the duration of unemployment, reduce income, increase inequality, and lead to higher inflation. This outcome is robust and well-known in the field of macro-labour economics.

Recent experiences in Spain and Germany have shown that increasing the duration of unemployment insurance increases level and duration of unemployment. The probability of being unemployed for 12 months, for example, increases from 15 per cent to 40 per cent, if you move from a no unemployment insurance scheme to a one-year unemployment insurance scheme.

Hence, this leads to more (long-term) unemployment. . . 

The longer people are unemployed, the harder it is for them to re-enter the workforce.

Anything which encourages longer term unemployment is economic and social sabotage.

In Opposition Labour was highly critical of increasing inequality but this policy will make it worse.

Those workers who are employed enjoy a higher wage, but there will be fewer of them. This will increase income inequality in the economy. Importantly, overall welfare in the economy decreases.

Firms face higher labour costs which increases prices and creates inflation.

With less consumption, production falls, and overall income in the economy drops. . . 

More unemployment requires more to be spent on benefits and fewer people working leads to less tax being paid.

This will reduce fiscal space to deal with future recessions and restricts spending for important long-run factors such as infrastructure, education, or health.

Even worse, be prepared to have lower incomes, because all of this will be financed via an income tax increase. Taxes will increase by about 3-4 per cent. This tax hike will damage economic growth, by reducing incentives to invest and work. This will additionally shrink the supply side, which further fuels inflation.

In conclusion, you will be paying higher income taxes, have lower income, and pay higher prices such that the Government can implement a policy which will be harmful for the economy in many ways and reduces welfare – which this Government claims to be its raison d’être.

This reform is against every lesson economists have learned.

In my opinion, this shows the Labour Government does not care about designing useful economic reforms that would lead to better outcomes, but rather does whatever is required to transform Aotearoa into a socialist welfare state with a central government controlling all aspects of life.

Few, if any, people would never have an accident which is a good argument for ACC.

Few, if any, would never need hospital treatment which is an argument for a health insurance scheme, perhaps similar to Singapore’s.

But very few people are made redundant which makes the unemployment insurance scheme just a tax by another name that will do far more harm than good.

The blundering doesn’t stop there.

The proposal to impose UnFair Pay Agreements on employers and their staff  will compound the economic and social damage the government is inflicting on the country.

Taxing times

This really is a taxing government:

The Government’s biofuel mandate will be another cost that will see motorists paying twice at the pump for carbon emissions, National’s Transport spokesperson Simeon Brown says.

“Every litre of fuel Kiwis use already faces an 18 cent cost under the existing Emissions Trading Scheme. Adding a biofuel mandate on top of that will simply be another cost for the same outcome already being achieved by the ETS.

“MBIE stated that the introduction of the biofuel mandate will increase the price of petrol by 0.4 cents per litre, diesel by 7.1 cents per litre, and jet fuel by 7.1 cents per litre (or 11.2 per cent).

“Overall, it is estimated the economic cost of the policy will be over $1.2 billion. Yet as New Zealand already has a cap on our emissions, there will be no reduction in New Zealand’s total emissions.

“Essentially, this is a policy to make it more expensive for New Zealand to achieve emissions reduction targets, and to make petrol and diesel more expensive at the pump.

“At a time when Kiwis are paying more for petrol at the pump than ever before, the Government needs to grant relief to motorists by removing the Auckland regional fuel tax at a minimum.

“The mandate will be particularly hard for farmers who are already facing the introduction of the new ute tax, as the biofuel mandate could increase the price of diesel by 7 cents per litre.

“While National is supportive of biofuels and reducing our carbon emissions, the Government cannot double dip into Kiwis’ pockets by taxing them through the ETS and the biofuel mandate.”

The taxing doesn’t stop at the petrol pump:

Grant Robertson is riding inflation to execute an unjustifiable tax grab, says the New Zealand Taxpayers’ Union in response to today’s Half Year Economic and Fiscal Update.

Speaking from the HYEFU Treasury lock-up, Union spokesman Louis Houlbrooke, “The Government is set to increase its tax take by an extra $7 billion each year for the next five years. That’s perverse in the context of a pandemic that has left businesses reeling and households facing rising living costs. New Zealanders deserve tax relief, but Grant Robertson seems proud to be taking more and more.”

“A major cause of Grant Robertson’s revenue bonanza is inflation, which is now forecast to hit 5.6% next year. Inflation this high should be intolerable – there’s a reason the Reserve Bank targets 1-3%. But rising living costs are made even more painful by the Government’s refusal to adjust income tax brackets to keep up.”

“Someone on the average salary ($58,836) is set to pay an extra $955 in income tax next year, assuming they’re lucky enough to get an inflation-level pay rise. Of course, their real pre-tax buying power will be no higher, so eitherway everyone is left poorer.”

“In response to a question from Brad Olsen of Infometrics, Grant Robertson flatly ruled out the adjustment of income tax brackets, and made no apology for his Government’s contribution to inflation via massive spending.”

“Tax brackets haven’t been adjusted for a decade. National and Labour might have thought taxpayers wouldn’t notice slow, inflation-driving tax creep, but with inflation curving up, the elephant in the room is now impossible to ignore.

“Taxpayers need relief from the corrosive effect of inflation. Grant Robertson’s refusal to acknowledge this is cruel.”

The government’s refusal to adjust income tax brackets adds more tax insults to the other taxing injuries it is inflicting on us:

Today’s Half Year Economic and Fiscal Update (HYEFU) confirms that despite a hot economy where everyone is competing for scarce labour and resources, Finance Minister Grant Robertson isn’t easing off his big debt-funded spend up and that will fuel inflation and hurt Kiwis, National’s Finance spokesperson Simon Bridges says.

“Improved macro fiscals like a higher tax take and lower expected net core Crown debt are all well and good, but that doesn’t wash with Kiwi families who are being burnt by price rises that far outstrip wage increases.

“Core government spending is forecast to run a whopping 68% higher since Labour took office this year. The HYEFU reforecast shows government spending remaining high even post-Covid.

“While elevated spending levels were appropriate through much of the pandemic, many economists and the likes of the Reserve Bank now confirm its an overheating economic picture where adjustments and some easing off is required. Otherwise Labour is just outbidding private players for land, building supplies, and motel rooms, and forcing prices up across the board.

“Not all spending is good investment and you can have too much of a good thing. What’s more, an awful lot of it is being funded by borrowing, which means it has to be paid back eventually.

“The real kicker though is that this spending is pushing inflation higher and that in turn is forcing the Reserve Bank to keep hiking up interest rates. More than half our inflation is from the non-tradables sector and so home grown, and at 4.9 per cent its growing faster than it has in over 30 years, much faster than in Australia (3 per cent), and much faster than wages at 2.4 per cent.

“Inflation is literally taking money out of Kiwis’ pockets and making us poorer. Whether it’s the mum at the supermarket, the tradie at the petrol station or the young person trying to buy a first home, inflation is making things much, much harder.

“With all Grant’s spending, it’s up to the Reserve Bank to come to the rescue, pushing interest rates higher than they might otherwise need to go.

“We are saying ‘rein it in a bit Minister’. Take off some of the pressure on inflation and interest rates and give Kiwis an economic fair go. Your hot economy is burning us.”

Inflation is theft – it steals the real value of money including wages and savings.

The government’s low value spending is adding fuel to the inflationary fire and the increase in interest rates that will follow will turn up the heat even more.

Now they’re coming for the dead

Labour broke it’s no-higher-taxes promise with the extension of the bright line test.

It broke its no-new taxes with the one on utes.

Now it’s looking at bereaking the no-new taxes promise again by taxing the dead :

 There are a couple of pieces of evidence to suggest may Labour may want to go to the next election proposing an inheritance tax.

The first is the Government’s decision to allocate $5 million over two years to Inland Revenue in the Budget to assess the income and wealth of high-wealth individuals.

An IR spokeswoman confirms that work should shed light on issues including the amount of inherited wealth.

If the Government is going to consider an inheritance tax, commissioning such research was probably going to be a necessary first step. . . 

Taxpayers’ Union Campaigns Manager Louis Houlbrooke lays out five reasons against the idea:

Incentives: A death tax would discourage New Zealanders from saving and investing their earnings. Less capital would be built up as older New Zealanders choose to spend their savings instead of building an economic legacy for future generations.

Fairness: A death tax is a double tax. Someone would spend a lifetime giving up their earnings via income tax, only to have their remaining earnings taxed again as savings upon their death.

Complexity: The biggest beneficiaries of a death tax would be accountants and tax lawyers, who would be engaged by the wealthy to thread investments through complex exemptions and loopholes in the tax, such as exemptions for farm assets, trusts, and gifts prior to death.

Gift tax was axed a few years ago because it garnered so little.

Revenue: Any revenue from a death tax would be meagre. Of the OECD countries to have implemented death or gift taxes, an average of just 0.5 percent of total tax revenues is generated by those taxes. This means that even if our government decided to make a death tax revenue neutral by cutting income tax, the income tax cut would be nearly imperceptible.

Problem definition: A death tax, or indeed any kind of wealth tax, fails to address the actual causes of rising inequality: specifically the shortage of housing which has pumped up the value of assets held by the upper and upper-middle class.

Sigh.

If only the government put some effort into carefully managing the money it already gets rather than devising additional ways to part us from more of ours.

Instead of looking at ways to take more money from taxpayers the government should be analysing its own spending and reducing the burden of tax, reducing the amount needed in the public purse and leaving more money in the public’s pockets.

Rural round-up

Farmers tell government ‘enough is enough’ – Wyatt Ryder and Shane McAvinue:

Farmers across New Zealand have told the Government “enough is enough” and are giving it a month to address their concerns.

This afternoon, farmers, tradies and agricultural sector workers began protesting in cities and towns across New Zealand against several Government reforms.

Thousands turned out in the South, with huge turnouts in Gore, Dunedin, Alexandra and Wanaka.

Utes, tractors and farm dogs descended on towns across New Zealand, with a plane and four helicopters taking part in the Gore protest. In the aftermath of the protests traffic is moving slowly throughout Dunedin and in other parts of the South. . .

‘Just bloody over it’: Rural New Zealand makes itself heard – Alex Braae:

More than 50 protests are taking place around the country today, with rural people in particular getting out to oppose the government’s environmental policy. Alex Braae went north to Dargaville.

The roads get a bit more bouncy when you turn off State Highway 1 to head out to Kaipara. Perhaps it was just because I was driving what might be the worst van in the country, but all of a sudden the shallow potholes started to look a lot more threatening. 

Part of that is because the primary industries are succeeding. Milk tankers, stock trucks and logging trucks all put pressure on the roads, and constant maintenance is needed to keep them in shape. Locals believe these repairs have fallen by the wayside. 

The destination was Dargaville, to report on a protest – one of more than 50 taking place around the country, organised by a group called Groundswell. They were bringing together as much as they could of the rural world – “farmers, growers and tradies” – as they put it, to protest government regulation and highlight a sense that too many costs are being imposed on rural businesses too quickly.  . . 

Farmers protest across New Zealand against government regulations –

Traffic was disrupted around the country today, with convoys of tractors and utes with dogs on board arriving in dozens of centres around New Zealand, as farmers protested against government regulations.

Groundswell NZ organised the ‘Howl of a Protest’ in more than 40 towns and cities over recent environmental regulations, the ‘ute tax’ and a seasonal worker shortage.

Co-founder Laurie Paterson said the “ute tax” was the issue people pointed the finger at, but farmers were also unhappy with the bureaucratic approach to the national policy statement for fresh water management.

From July this year, people buying new electric vehicles (EVs) could get as much as $8625 back from the government. The scheme will be funded through levies on high-emissions vehicles from 1 January 2022. . .

And the award for best placard at #groundswell Timaru goes to…. pic.twitter.com/mLwPaYapiU

— Mike Porter (@mikeonthehills) July 16, 2021

Clear message for govt. – MP – Sudesh Kissun:

 MP for Southland Joseph Mooney, National, says farmers sent a clear message to the government by taking to the streets in huge numbers at Groundswell NZ protests across New Zealand today.

Mooney was in Gore with National’s agriculture spokesperson David Bennett where a big number of farmers took their tractors and utes to town to show their objection to the government’s unworkable regulatory approach in the farming sector.

“It is a sad indictment on the government that farmers felt they had to take their tractors and utes to town to be heard,” says Mooney.

“But with the government unwilling to listen to farmers’ concerns they’ve been left with few other options.

Farmers bring cities and towns to a standstill with mass protest over Government regulations – Nadine Porter:

In Auckland tractors drove down Queen St. In Christchurch they circled the cathedral.

In cities and towns across the country, farmers brought traffic to a near standstill as they turned up in their thousands to demand the Government’s ear.

At the largest protest in Christchurch, curious onlookers smiled and cheered as 2000 farmers in utes and tractors filed through Cathedral Square.

Chants of “enough is enough” rang out and the sound of dogs barking reverberated through the square as protesters voiced their concerns.

Groundswell NZ protest co-ordinator Aaron Stark said he had earlier received death threats, but the protest was peaceful. . .

#groundswell #howlofaprotest #nofarmersnofood pic.twitter.com/y8ohVNGyAg

— 𝕊𝕒𝕘𝕖 🇳🇿❤🇳🇿✊ (@Soul_of_a_Sage) July 15, 2021

Howl of a Protest: Thousands of tractors, utes descend on cities as farmers rally against Government regulations:

Thousands of farmers and a fair number of their dogs descended on towns and cities across New Zealand yesterday to protest at increasing interference by the Government in their way of life.

From Kaitaia to Invercargill, convoys of tractors, farm vehicles, trucks and utes took part in the Howl of Protest event, organised by Groundswell New Zealand, against what they say are unworkable regulations and unjustified costs.

The protest was organised against policies like the Clean Car Discount, which will subsidise clean vehicles by charging fees on high-emissions vehicles.

Protesters were also anxious about the eventual pricing of agricultural emissions, which will happen by 2025 – a decade after agriculture was first slated to enter the Emissions Trading Scheme. . . .

Broken promise bad precedent

Labour doesn’t understand tax fundamentals:

Today we accepted a petition from Lindsay Calvi-Freeman signed by nearly 15,000 people. The petition calls for the Government to reverse their decision to remove tax deductibility of interest for landlords, National’s Shadow Treasurer Andrew Bayly and Housing spokesperson Nicola Willis say.

“Labour are misrepresenting interest deductibility by calling it a ‘tax loophole’. They make it seem underhanded and that is not fair to the thousands and thousands of mum and dad landlords who are entitled to deduct their costs from their revenue,” Mr Bayly says.

“This is a fundamental tax principle. New Zealanders should be able to trust that the Government will tax them on their profits. If costs cannot be claimed back, revenue is being taxed.”

There is no loophole. Interest is a legitimate cost of doing business regardless of what the business is. Singling out landlords in this way, breaks Labour’s pre-election no-more-taxes, no-tax-increases promise and sets a very bad precedent.

If the government can tax this legitimate cost, what other costs and businesses will it pick on next?

“This policy will be bad for tenants and landlords alike,” Ms Willis says.

“Ministers were warned by their officials that the changes to these tax laws could cause increased churn in the rental market, meaning there is a risk ‘that households may need to rely on transitional housing or emergency housing, special needs grants’, and that we could see an increase in ‘the numbers on the public housing register’.

Just like the new large vehicle tax, this will hit the poor hardest.

“Perhaps it is time this Government starts listening to the advice of officials and experts as they have proven themselves inept at delivering housing solutions.”

“We thank Lindsay Calvi-Freeman for bringing this petition to us. We wholeheartedly support this call to the Government and will continue to advocate on behalf of mum and dad landlords,” Mr Bayly says.

“The housing market needs rental properties and demonising landlords is unfair and counterproductive. They are selling a service like any small business and to punish them by removing interest deductions is a bizarre singling-out by the Government that does nothing to make house prices more affordable.”  

The government is attempting to paint landlords as villains but it’s the government that is being the baddy – breaking promises, distorting tax law and imposing costs that will feed through to rents and exacerbate the housing crisis.

Complicating tax won’t build houses

Norman Gemmell writes that New Zealand’s new housing policy is really just a new tax package:

Economists like to talk about “optimal policy instruments” – essentially, policies that achieve their objectives more effectively or efficiently than the alternatives, and have minimal unintended consequences.

Judged by those criteria, the New Zealand government’s recently announced package of housing policy instruments is a long way from optimal. You might even call it a shambles. . . 

The aim of the policy is fine, but like so many of this government’s policies, it has several unintended consequences which will almost certainly make matters worse.

Arguably, the primary target of this policy package is stopping the inexorable upward march of (mainly Auckland) house prices. Failing to achieve that would simply put it among a long line of attempts by previous governments (National and Labour) over the past 20 years at least.

In all cases, the biggest problem has been insufficient political commitment to boosting housing supply. . . 

And in spite of its supposed focus on wellbeing, reducing poverty and solving the housing crisis, this government is not tackling the root causes of too few new builds.

All taxes cause “distortions”, mostly unintended, which need to be mitigated. Furthermore, policies that have conflicting objectives are “incoherent” and typically among the most distorting. This applies to the housing package’s removal of interest deductibility. . . 

That wasn’t, as the government claimed, closing a loophole. It was treating landlords differently from every other business which can claim interest as a tax deductible expense.

Making matters worse is extending the bright line test to 10 years.

It would be rare to find a liability based on transactions and timing among the principles of a good tax policy. But the bright-line test manages both – it incentivises delaying property sales to avoid the tax even when selling would otherwise be in the taxpayer’s best interest.

It was originally introduced in 2010 with a two-year threshold, without supporting evidence, supposedly to stop so-called speculators from flipping properties for quick profits. A 10-year threshold cannot be branded an anti-speculation policy, it is simply a back-door CGT.

As with most back-door policies, this CGT is inevitably less transparent and coherent than a policy designed to tackle the problem head-on would be. . .

It might, as taxes can, contribute more to the government’s coffers but it won’t build more houses.

If there are better alternatives, they do not lie in even more ad hoc fiddling with a coherent tax regime.

Instead, like the famous real estate mantra of “location, location, location”, the mantra for New Zealand housing policy should be “supply, supply, supply”. Specifically, supply in Auckland.

Successive governments have aimed policies nationwide when rapid house price inflation is almost exclusively urban and essentially an Auckland phenomenon.

Without policies that reform construction sector regulations and open up more land for urban housing, there is little prospect of Auckland house prices stabilising while current demand-driven trends persist. To make matters worse, the government’s first-home buyer schemes will merely raise demand without incentivising supply.

With too many objectives and the probability of numerous unintended consequences, the government’s housing policies risk being seriously incoherent.

What would help are policies which make it easier, less expensive, and less time consuming for new builds.

Complicating the tax system won’t do that but it will  increase rents thus making life even harder for the poor and those already struggling to save enough for a deposit to buy their own homes.

Stop tax increases by stealth

National is seeking to stop tax increases by stealth:

National is committed to letting Kiwis keep more of what they earn and has proposed new legislation that will end tax hikes by stealth, Tauranga MP Simon Bridges says.

Mr Bridges’ Income Tax (Adjustment of Taxable Income Ranges) Amendment Bill, drawn from the Member’s Ballot today, will require tax thresholds to be adjusted every three years in line with the cost of living. This will mean that within a year, after every election, Treasury will advise the Government on how much the thresholds should be adjusted for inflation.

“This will stop New Zealanders moving into higher tax brackets even when their income isn’t keeping up with the rising cost of living, putting an end to inflation being an annual tax increase by stealth.

“New Zealanders will be able to keep more of what they earn, helping them stay on top of rising costs for necessities like petrol, rent and electricity.

“The Tax Working Group advised the Government that bracket creep could lead to as much as $1.7 billion in stealth tax increases in a given year. The Government is taking more than it needs, only to waste billions on bad spending.

If passed into law, this change will make a real difference, Mr Bridges says.

“It will mean Kiwis can keep more their own money in their own bank accounts,” Mr Bridges says.

“This law change shows how committed National is to helping New Zealanders get ahead.

“There is widespread agreement that bracket creep is a hidden tax increase on hard working New Zealanders, and I urge Finance Minister Grant Robertson to stop taxing Kiwis by stealth and wholeheartedly support this law change through all stages.”

The Taxpayers’ Union applauds the Bill:

. . . Union spokesman Louis Houlbrooke says, “From a taxpayer perspective, this is one of the most important private members’ bills we’ll see in our lifetime. For decades successive governments have exploited inflation to sneakily increase the average tax rates levied on New Zealanders. It’s a stealthy, dishonest tax hike that makes a liar of any politician who promises ‘no new taxes’.”

The Taxpayers’ Union has campaigned against bracket creep since 2016. In a submission to the Tax Working Group, the Union highlighted bracket creep as the ‘under-arm bowling of our tax system’, explaining: Inflation sees taxpayers’ nominal incomes, but not real incomes, increase. Because income tax thresholds are fixed, taxpayers face a higher proportion of their income lost to income tax, without any corresponding increase to their real income.

“Take our 30 percent income tax rate. When it was introduced in 2010 for income over $70,000, that was the equivalent of $83,000 in today’s money. That meant only high earners were hit. But today, $70,000 is an unremarkable salary. It’s atrocious that middle-income New Zealanders are forced to give up 30 percent of any pay rise to the taxman.”

“Labour has no good reason to block this bill. They’ve already rushed through unannounced taxes on housing, so they don’t need extra revenue. In fact, under Bridges’s bill, the Minister of Finance could still veto bracket adjustments on a case by case basis. Of course, he’d have to explain himself to New Zealanders, but he shouldn’t be afraid of accountability.”

Having no good reason to block the bill might not be enough to stop Labour doing that.

But if it is serious about its quest for wellbeing and the need for kindness, it will do the right thing and back this bill to stop the stealthy tax increases by adjusting thresholds in line with inflation.

First they came for the landlords

Business NZ asks: will my sector be next?

BusinessNZ has warned a removal of tax deductibility on interest payments for residential property has other sectors worried whether they will be targeted, likening it to the uncertainty created by the 2018 oil and gas ban.

Kirk Hope, chief executive of the influential lobby group, also accused the Government of being “misleading” in the way it is describing the issue as a “loophole”, because in all other sectors of the economy business expenses are tax deductible.

Defenders of this policy change have tried to justify it by saying home owners don’t get a deduction for the interest they pay.

There’s a reason for that, they aren’t businesses and that difference applies across the board.

It’s just like farms or racing stables being able to claim vet bills as legitimate business expenses but no-one can claim a deduction for vet bills for their pets.

Hope said the move had clear and significant implications for property investors, but now people were left wondering whether it affected other parts of the economy and was likely to see investment decisions paused.

“They’ve removed deductibility [of interest payments] from this group of people. Would that happen for a different sector for a different purpose, in terms of businesses being able to deduct particular types of businesses expenses? 

Now the government has opened the door, what else might they shove through it?

“There are certainly going to be some people thinking about how they make investments, and it will have a stalling effect; there’s no doubt about it,” Hope said.

“The last thing we need right now is probably a stalling in business investment because of a decision made around housing.”

Investors would be worried about whether deductibility more generally was being targeted by the Government, given the lack of signalling on the issue.

“If there are other areas they really need to be upfront about that. There’s no doubt they should have signalled it in advance. It’s a really substantial change.”. . 

It’s a change to tax policy, it’s not as the government claims, closing a loophole.

Tax expert Robin Oliver, a former deputy commissioner at the IRD, described the Government’s move on interest payments by landlords as “out there”.

Oliver, who sat on the Government’s tax working group in the last term said he could not think of an example of a sector being unable to deduct an expense which was available to all other sectors of the economy.

It would amount to “a massive tax penalty on renting out property,” he said.

“You’re taxed on income that you don’t actually have, because your profit is your income minus your expenses, but they just ignore the expenses part,” Oliver said.

“You could have almost no profit, maybe a loss, but you still have to fork out thousands of dollars to the IRD. It’s not an income tax, it’s just a penalty.” . . 

It’s a penalty that will push up rents, hitting the poor the hardest and making it harder still for renters to save for a deposit to buy their own homes.

Bryce Wilkinson explains why the policy is shambolic:

Suppose you have an apple orchard. You hire labour to pick and pack your apples. You sell each box of apples for $40. You deduct labour costs of $30 and earn a profit of $10. After paying tax at 33 cents in the dollar, you have $6.70 per box to live on.

Now the Government announces that it is rushing legislation through Parliament to remove what it calls the wage deductibility tax “loophole”. After this Friday, anyone buying your business will pay tax at 33 cents on the dollar on the $40 per box revenue.

This raises the “income tax” on the business from $3.30 to $13.20. Costs now exceed revenue by $3.20 a box. You no longer have a buyer for your business. Worse, in four years, you will be in the same tax situation. Your business will be bust. Your workers will have to find other work or go on welfare. Your former customers will have to do without apples.

The government is pleased you are gone. Orchardists are speculators; they are hoping that the market value of their business will rise. Speculation is bad. Speculators should be driven from the apple market.

Does this sound far-fetched? Not if you are a landlord. This week the Government closed the “interest deductibility loophole” in rental housing for new investors, effective from this Saturday. For existing investors, it is being closed over four years. The Government explained that it wants to remove incentives for speculators, equating them with investors. . . 

He lists what’s wrong with the policy:

First, an income tax should tax income (ie profits), not revenue. Income is what is left of revenue after all business-related expenses have been paid. The apple orchard case illustrates why it is wrong to tax revenue. If there is little or no after-tax profit, there is no business.

In the extreme, if landlords cannot make an after-tax profit, there will be no houses to rent. Those who cannot afford to buy a house are at the mercy of the only remaining landlord – the government. Former East Germans have experienced that situation. . . 

Second, how can it be that landlords are speculators, but owner-occupiers are not? How many recent home buyers paying high prices have not been expecting prices to go even higher? Why discriminate against rental accommodation?

Third, the tax system was already seriously biased against the supply of private rental housing. Owner-occupiers do not pay any tax on the income they receive in the form of forgone rental payments. . . 

Fourth, speculation is a symptom, not a cause. The Reserve Bank has lowered interest rates and flooded the banking system with liquidity to an unprecedented degree. It has jawboned the banks to lend more freely since Covid-19. These actions must have boosted house prices. Imprudent borrowing is the only game in town, with the Government leading by example. . . 

Perhaps the worst aspect is the signal that the Government cares so little for sound income tax principles or prior public debate or scrutiny. If interest deductibility can be wilfully declared a tax loophole, what category of business expense is not a tax loophole?

This tax change will do nothing at all to address the cause of the housing crisis – a shortage of supply that has several causes, not lest of which is the long, slow and expensive consenting process which didn’t even get a mention in this week’s announcements.

It will also worry other businesses. Now the government has made landlords a special class by preventing them deducting interest costs from their income as all other businesses do, there’s very real fears over what other legitimate costs they might declare loopholes.

There is no good time for this sort of anti-investment tax policy and doing it when the country is in recession makes it worse.

If more tax is the answer . . .

Sigh:

The Treasury says the Government will need to raise taxes to keep providing health and education services, which are becoming more expensive by the year.

It also warned that house prices will continue to rise for some time yet.

The department’s briefing to returning Finance Minister Grant Robertson said the Government’s books weren’t sustainable thanks to rocketing public service costs.

The Treasury warned that the Government’s finances would be “unsustainable in the medium term if the costs of public services continue to increase at historical rates”.

That is unless tax revenue was “increased as a share of the economy”. . . 

If more tax is the answer, have they asked the right questions?

A business faced with this scenario would take a very careful look at every cent it spent, cut out luxuries and reassess exactly what were necessities.

This is what National did when it led the government through the GFC.

Can anyone point to any time since Labour was elected in 2017 where it so much as hinted at doing anything like that?

Despite its warnings about spending, the Treasury warned that the scale of the Covid-19 crisis was so big that in the short term the Government needed to spend more to stimulate the economy.

“At present, the risks of fiscal policy doing too little outweigh the costs of it doing too much,” it said.

The Treasury said carrying higher debt was the right thing to do as it would keep unemployment low and improve people’s wellbeing.

“Too little support will result in more job losses, firm closures and a permanently poorer economy.

“While the economy remains weak, higher debt from expansionary fiscal policy is likely to be welfare-improving, if expenditure is temporary, targeted and timely.” . . 

Temporary, targeted and timely are very important qualifiers.

When so much is being borrowed it is absolutely essential to ensure every cent is spent wisely.

Now more than ever the government should be focusing on the quality of its spending and doing every thing it can to reduce the burden of debt and repayment that future governments and taxpayers will face.

In doing so it should be mindful of Winston Churchill’s observation:  We content that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.

Stick to your word

The Taxpayer’s Union is calling on Grant Robertson to keep his word :

The New Zealand Taxpayers’ Union has today launched its ‘Stick to Your Word’ campaign calling on Grant Robertson to keep his promise made six weeks ago not to touch the bright line test.

Union Campaigns Manager, Louis Houlbrooke, said: “Despite promising prior to the election not to change any taxes beyond what was in Labour’s election policy, Robertson is now asking Treasury for advice on an extension of the ‘bright-line’ test.”

“Extending the bright line test is effectively imposing a nasty capital gains tax – at a rate of up to 39% – for property owners who sell within ten years.”

“Taxing houses will not make them more affordable. What it will do is hammer people who need to cash out of property for personal reasons. It would reduce liquidity in the market, and could even incentivise politicians to drive up house prices further in order to reap tax revenue from the capital gain.”

“If the Government decides it’s okay to break its tax promises, it won’t stop at the bright line test. A Green Party-style asset tax or even a Michael Cullen-style capital gains tax could be back on the agenda. That’s why we’ve set up a tool for New Zealanders to tell Grant Robertson to keep his promises.”

The campaign advert can be viewed here .

New Zealanders are encouraged to write a postcard to Mr Robertson via the website StickToYourWord.nz

 

More debt or higher taxes?

Labour policy is offering voters two bad choices:

Labour’s inability to control their spending means they will either drown New Zealand in a sea of debt or burden hardworking New Zealanders with higher taxes, National’s Finance spokesperson Paul Goldsmith says.

“Labour have a track record of failing to control their spending. When they came to office they said they would spend an additional $1.9 billion in Budget 2019. In actual fact, they blew their Budget and ended up spending an extra $3.8 billion.

“That one failure alone means Government debt will be more than $20 billion higher by 2030. That is irresponsible and reckless.

“A Government that can’t control its spending will inevitably come after New Zealanders for more tax.

“The choice under Labour is clear: higher taxes to pay for all of the uncontrolled spending, or an economy that drowns in a sea of debt.

The sensible course for individuals and businesses facing tough financial times,  is to look at what’s essential and what’s not. Governments should do the same.

There hasn’t been a single sign from this government, or the election policies of the parties forming it, that recognise that let alone plan to do it.

“There is a better alternative.

“National will take a more disciplined approach to Government spending. We will eliminate waste such as Fees Free and KiwiBuild, we will be more careful with new spending each year, and we will put a halt to nice-to-have spending such as contributions to the NZ Super Fund.

“Our plan will restore debt to 36 per cent of GDP by 2034, compared to 48 per cent under Labour. And we will balance the budget and return to surplus by 2028 compared to never ending deficits under Labour.

“Future generations do not deserve to inherit an economy crippled with higher debt and higher taxes because Labour can’t control its spending.

“We need to stop the waste, stimulate the economy with short term tax relief, and trust Kiwis to grow their businesses and create jobs.”

This government wasn’t able to deliver most of its pledges from the last election when it had surpluses and before Covid-19 struck.

Why would anyone trust them to do it now debt is high and growing and while Covid-19 is still very much part of the problem?

Leaving us with more

National is promising tax cuts to help us through the Covid crisis:

National’s massive tax stimulus package will put more than $3000 extra into the pockets of hard-working Kiwis on middle incomes, National Party Leader Judith Collins says.

You can read a copy of National’s Economic & Fiscal Plan here.

Ms Collins has announced the next National Government will let Kiwis keep more of what they earn by lifting the bottom tax threshold from $14,000 to $20,000, the middle threshold from $48,000 to $64,000 and the top threshold from $70,000 to $90,000.

These changes will be in place from December 1, 2020 until March 31, 2022. The total cost of this over the 16-month period is estimated to be $4.7 billion.

“Today we are facing the biggest economic downturn the world has seen since in living memory. But with the right leadership and economic plan we can grow our economy and keep Kiwis in jobs,” Ms Collins says.

“To keep our economy ticking, New Zealanders need money to spend. National will deliver temporary tax relief that puts more than $3000 – or nearly $50 a week – into the back pockets of average earners over the next 16 months.

“This will give Kiwis the confidence to go out and spend, which will be crucial for our retail, tourism and hospitality businesses to survive this economic crisis.

“New Zealand is facing a much longer and more painful economic shock than earlier forecast. We need a serious plan for economic growth to get us back on track.”

National’s Finance spokesperson Paul Goldsmith pointed to higher taxes as Labour’s only plan to get New Zealand out of this economic hole.

“No country has ever taxed its way out of a recession – and this is a big one we’re in now.”

As well as tax relief for households, National will double the depreciation rate for businesses that invest in new Plant, Equipment and Machinery over the next twelve months. This will bring forward the amount a business can claim in depreciation for new investments, which will stimulate investment by increasing the return on capital.

Doubling the depreciation rate is expected to cost $430 million a year for five years, while increasing tax revenues in out years.

“Our stimulus package has been fully-funded and costed, and is included in our independently reviewed Economic and Fiscal Plan released today,” Mr Goldsmith says.

“National’s plan carefully balances the need to drive economic stimulus, increase investment in core public services and restore government debt back to prudent levels.

“Labour, on the other hand, has announced it will increase taxes during a recession. The contrasting approaches to the economy at this election could not be clearer.

“Judith Collins and her strong National team will bring the leadership, experience and vision needed to get our country back on track.”

You can read a copy of National’s Economic & Fiscal Plan here.

You can view a copy of National’s Personal Tax Relief Policy here.

You can view a copy of National’s Double Depreciation Rate Policy here.

🚨 #BREAKING @JudithCollinsMP announces huge economic stimulus programme of tax cuts. See more here: https://t.co/2lmHuZlYUm pic.twitter.com/tuWpcig9qR

— NZ National Party (@NZNationalParty) September 17, 2020

David Farrar has worked out what the tax cuts mean for different income levels and conclude:

This provides New Zealanders with a real choice – a Government that will help people through the tough times by temporarily reducing taxes, or a Government that will increase taxes.

If you’re not sure which would be better, ask yourself who would make better use of the money you earn – you or the government?

If you’re still not sure, think about what’s more efficient, letting us keep a bit more of what we earn and giving us the choice about how, and how much we spend, or having the government take more and absorbing some of that in the bureaucracy before the rest can be spent and only then dribble through the economy?

Fiddling while country burns

Labour’s following its base instinct with its tax policy:

No country in the world has ever taxed itself out of recession, but Labour’s first instinct is to raise your taxes, National’s Finance spokesperson Paul Goldsmith says.

“Today Grant Robertson wouldn’t say if his tax policy is a bottom line in any coalition negotiations with the Greens, leaving the door wide open for other tax increases.

“If Grant Robertson is true to his word, then he will make no other tax increases a bottom line.

“This is just the beginning. Labour will eventually widen the net and come after middle income earners.

“Labour has predictably gone back to old habits after the failure of its Capital Gains tax this term.

“It opens a door for tax avoidance that we haven’t seen for many years, which brings into question Grant Robertson’s revenue estimates.

“National won’t increase taxes and won’t introduce any new taxes.”

Labour’s plan is to impose a new top marginal tax rate of 39% on income earned over $180,000.

It says it will bring in $550 million a year.

It won’t.

Instead it will create work for accountants and lawyers as people find ways to get round it.

Even if it did, it would be a tiny contribution to the public coffers in contrast to the billions that are being borrowed.

We don’t need fiddling with tax rates while the country burns with debt.

We need plans for economic growth which is the only way to put out the fire.

No indexation = tax increase

Labour’s wrong on tax – again:

The New Zealand Taxpayers’ Union is slamming the claim by Labour Party finance spokesman Grant Robertson that the National Party’s policy to index tax brackets to inflation is a “tax cut”.

Taxpayers’ Union Executive Director Jordan Williams says, “It’s dishonest to frame indexation – adjusting income tax thresholds to inflation – as a ‘tax cut’, like Mr Robertson did today.”

“Adjusting tax brackets so that people are not artificially pushed into paying higher marginal tax rates isn’t cutting tax. By definition, it’s keeping the rate of tax paid the same.”

“Mr Robertson is trying to cloud the issue so he’s not held to account for the dishonest way he, and successive Ministers of Finance, have increased tax by stealth through wage inflation. It’s a shame he is choosing to be so misleading about tax at a time many households are facing fiscal crisis.”

Adjusting tax thresholds to account for inflation is not a tax cut but failing to do so pushes people into a higher bracket  and subjects them to paying more which is in effect a tax increase.

Given Labour’s big spending plan with borrowed money is not matched by plans to reduce spending anywhere, encourage growth nor to repay the debt it will almost certainly increase some taxes.

Even if it does nothing more, by refusing to index brackets to inflation it will be increasing tax for everyone who is pushed into a higher threshold.

Need to get NZ working

National has a plan to get New Zealand working:

National Party Leader Todd Muller has revealed the framework for the party’s Plan to create more jobs and a better economy.

At a speech to the Christchurch Employers’ Chamber of Commerce today, Mr Muller outlined the five elements of National’s Plan.

“All the components of the framework are designed to grow our economy and create more jobs,” Mr Muller says.

“The framework comprises five components: responsible economic management; delivering infrastructure; reskilling and retraining our workforce; a greener, smarter future; and building stronger communities.

“National will be releasing each of these components in a series of major speeches through this month and into early August to give New Zealanders time to scrutinise each element.”

The full plan will not be finalised until after the Government releases the Pre-Election Economic and Fiscal Update (PREFU) in August. It will be available by September 2 when overseas voting begins, to be followed by early voting, which starts on September 5.

It’s sensible to await the PREFU and good to know the timetable.

“National has a plan to rebuild our communities, get Kiwis back to work and deal with the economic and jobs crisis,” Mr Muller says.

“With Labour not having anything to offer except ‘borrow, spend and tax’, National understands that responsible government is about creating a deliberate and considered plan – and then following it.” 

Labour and its coalition partners are very good at spending but bad at good spending. In focusing on the quantity of the spend they forget the importance of the quality.

They are also very good at announcements although as Jane Clifton points out, a lot of these policies aren’t shovel-ready, many are only press release ready:

In the full speech here,  Todd outlines National’s commitment to:

• An open and competitive economy;
• A broad-based, low-rate tax system;
• An independent central bank with the primary goal of price stability;
• The Fiscal Responsibility Act, now part of the Public Finance Act; and
• A flexible labour market, underpinned since 2000 by good faith.

Our concern is that that basic macroeconomic framework is being diluted by the current Government – mainly through incompetence than the result of any plan. . .

Jacinda Ardern has admitted her party wasn’t prepared for government and it shows in all the over-promising and under-delivering before Covid-19 hit.

That failure to deliver then was bad enough, it is even worse now with their determination to borrow so much which is likely to deliver far more debt without the financial rigour necessary to ensure the quality of the spend and determination to get back to surplus as soon as possible.

Todd says National won’t panic.

Nor will National cut family incomes. National has already announced that, whatever lies ahead of us through the crisis, we will not raise the taxes you pay or cut the benefits paid to those who need help. We would like Labour to make the same commitment to New Zealand families too.

Nevertheless, National will work to keep borrowing as low as possible. Out of the $80 billion plus they spend each year, all governments have wasteful spending that needs to be trimmed. All finance ministers review all spending each time they bring together a Budget. And we will do the same.

Since the Fiscal Responsibility Act, the economic and political debate in New Zealand has tended to be on the quantity of borrowing or debt repayment each year. These remain critically important. Getting back to fiscal surplus and then paying down debt to 20 per cent of GDP is necessary, not least because New Zealand will inevitably confront another natural, economic or health disaster in the next couple of decades or beyond. But just as important is to focus on the quality of spending.

Labour forecasts net core debt will reach 53.6 per cent of GDP in 2024 under their policies. That’s an eye-wateringly high level. We will work hard to try to keep it lower than that, which would put New Zealand in a better position to recover. But of far greater longer-term importance is that Labour projects that under its policies, but with a far stronger economic environment than we face today, net core debt will still be as high as 42 per cent by 2034. That means Labour intends a mere 11 per cent reduction in net core debt, over a decade. At that rate, we will not get back to the safe 20 per cent mark until perhaps the mid-2050s.

National does not regard Labour’s attitude as anything like prudent. It would leave an enormous debt, not so much to our children but to our grandchildren. And it would leave our children and grandchildren – and also ourselves – profoundly vulnerable were the global economic and strategic outlook anything other blissful for three successive decades. . . .

We learn two lessons from Labour’s economic and fiscal projections and their refusal to rule out higher taxes. First, they don’t have anything to offer except borrow, spend, hope and then tax. Second, and even more important, they don’t think any of their borrowing and spending will actually do anything useful to improve New Zealand’s productivity, economy or the overall wellbeing of every one of us.

I’m not hiding that my Government will borrow large amounts over the next three years, and in 2020/21 in particular. National will always be more disciplined in its spending than Labour. Yes, we will borrow what we need to, to support New Zealanders through the crisis – neither more nor less. But we will not just fling money around, the way the Labour Party is. Instead, we promise to spend it better and invest it better than Labour, in a way that does in fact improve New Zealand’s productivity, economy, the overall wellbeing of every one of us, and which, in turn, makes it easier to pay the debt off. . . .

Labour and its coalition partners have been flinging money round since they got into government.

National went out of office with the government’s books in surplus and forecasts of that to continue.

Even before Covid-19 hit, this government was taking us back to deficit.

If it couldn’t manage the economy well in reasonable times, it can’t be trusted to do it now we’re facing the worst of times.

That matters now more than ever.

It matters because we need a government that knows that taxing more in a recession is counter-productive – making it harder for people to look after themselves and making it harder for businesses to grow.

It matters because we need a government that understands that borrowing for hard times is only the start, it must also plan to pay back the debt, and have a plan that will work to do that.

It matters because we need a government that will get New Zealand working and the failures of this one to deliver on so many of its promises show we can’t trust it to do that.

Tax take vs tax rate

We have a choice.

We can vote for parties that want higher tax rates or for those that foster a higher tax take.

What’s the difference?

Higher tax rates are a hand brake on productivity and economic growth and, hard as it is for some to grasp, often lead to a lower tax take.

A higher tax take resulting from increased productivity and economic growth can, in time, lead to lower tax rates.

Higher tax rates are the equivalent of dividing up the same sized pie – some gain and some lose.

Higher productivity and economic growth, increase the size of the pie, and/or number of pies, providing more for everyone.

The bigger and/or more numerous the pies, the smaller the proportion of each slice that is needed for tax.

We have a choice.

We can vote for parties that want to take more or we can vote for parties that want to help us grow more.

 

We have a choice.

We can vote for parties that think they are better at spending our money than we are or for parties that leave us with more of what we earn.

Reds’ policy path to poverty

The Reds have announced an $8 billion tax grab:

The Green Party have unveiled a sweeping new welfare policy that would guarantee a weekly income of at least $325, paid for by a wealth tax on millionaires and two new income tax brackets on high-earners. . . 

The $325 after-tax payment would be paid to every adult not in fulltime paid work – including students, part-time workers, and the unemployed. The student allowance and Jobseekers benefit would be replaced. . . 

It would be topped up by $110 for sole parents, and the current best start payment would be expanded from $60 per child to $100 per child, and made universal for children up to three instead of two.

This guaranteed minimum income plan would cost $7.9b a year – roughly half what is spent on NZ Super, but almost twice what is spent on current working age benefits.

Paying for all this would be a wealth tax of one per cent on net wealth of over $1 million and two per cent for assets over $2 million. The party expects this would hit only the wealthiest 6 per cent of Kiwis.

This would take the form of an annual payment and would only apply to those who owned those assets outright – not someone who still had a mortgage on their million-dollar home, for example.

That looks like everyone could avoid the tax by never paying off their mortgage, but the party wouldn’t be that stupid, would it?

Any party that thinks up this sort of economic vandalism could be.

The Taxpayers’ Union is slamming the Green Party’s proposed wealth tax as bureaucratic economic vandalism that would hammer job creators.

Taxpayers’ Union spokesperson Jordan Williams says, “The proposed wealth tax would mean the return of the dreaded compulsory asset valuations that made a capital gains tax so unpopular. A bureaucratic valuation scheme would incentivise people to hide their wealth, or shift it offshore. It would be a dream for tax accountants but hell for small business owners.”

“The policy also appears not to differentiate between asset types.  It would tax entrepreneurs creating jobs the same as someone sitting on an art collection. Ultimately it would cost jobs at the very time New Zealanders need entrepreneurs to create them.”

“Wealthy iwi groups sitting on often unproductive land would also be smashed under this scheme.  It’s bumper sticker type policy which is poorly thought through.”

“Any party that says you should raise taxes in the middle of a recession is divorced from reality. It is scary that all the work James Shaw has done to try and make the Greens more economically credible appears to be for nothing.”

Commenting specifically on the Green Party’s income support policy, Mr Williams says, “Under the Greens’ policy, a family of five with both parents on the dole would receive $1180 a week in taxpayer funds, assuming one of the kids is younger than three. That goes beyond generosity: it is using taxpayer funds to encourage long-term unemployment. Combined with the policies to tax job creators, this package would take a sledgehammer to New Zealand’s productivity.”

There’s no good time to increase taxes and a recession is an even worse time.

Recovery from the economic carnage wrought by the Covid-19 response requires investment, expansion and increased employment opportunities.

This policy will be a handbrake on all of those and an accelerator for benefit dependency which is a pathway to increased poverty.

This policy is typical of a party that’s more red than green and doesn’t understand that a greener country has to be well and truly in the black and you don’t there by taxing more.

New Zealanders gained a glimpse today of what a Labour Greens government would look like, and it involves a lot more taxes, National’s Finance spokesperson, Paul Goldsmith, said today. . . 

At a time when we need our successful small business people to invest and create more jobs, the Greens want to tax them more.

Rather than celebrating Kiwis doing well, the Greens seem to want to punish them.

The Greens never have the influence to get their way entirely, but they would push a Labour Greens coalition in the direction of higher taxes.

Labour have so far refused to rule out taxing people more if they win the election.

The very real fear many New Zealanders have is that this current government, which has $20 billion available for election spending, will spend whatever it takes to try to keep its poll numbers up until the 19 September election.

Then on the 20th, if they win, the smiles will drop and New Zealanders will be presented with the bill – higher taxes.

National has committed to no new taxes for Kiwis in our first term.

While the economy is going down, the Greens want to tax us more, and Labour haven’t ruled out doing the same.

That’s another very good reason to vote for a National/Act government that will focus on policies which foster the economic growth necessary to provide a pathway for progress.