Mixed messages

The government is introducing a bill it says could lead to a drop of up to 30 cents a litre in petrol prices.

But, as the Taxpayers’ Union keeps reminding us, around half the contributor to fuel prices is tax, including the one that is supposed to make us use less to reduce carbon emissions.

They’re sending mixed messages.

They’re talking out one side of their mouths by taxing us more to increase the price of fuel to encourage us to use less and then the talk from the other side is a threat to legislate to force  fuel companies to bring prices down because fuel is too expensive.

Rural round-up

Avocado trees killed in Far North orchard :

An avocado orchard in the Far North has been vandalised – alongside the words “water thieves” – in an apparent protest against water usage in the parched region.

Windbreaks have been slashed and graffitied, water pipes have been cut and about 20 trees have been killed over the Christmas period at Mapua Orchard, near Houhora.

Orchard manager Ian Broadhurst said it wasn’t the first time this had happened, but it was definitely the worst.

He said Mapua was part of a wider group of 17 orchards in the region that had applied to the Northland Regional Council for consents to draw water from the Aupōuri aquifer. . . 

Federated Farmers: Mycoplasma Boris tax hit unfair:

Federated Farmers is seeking Ministerial support for a change to tax legislation so farmers whose breeding stock are culled as part of the Mycoplasma bovis eradication effort are not disadvantaged by the tax regime.

“Currently farmers whose dairy or beef breeding cows are valued on their books under the National Standard Cost scheme and whose cattle are culled as part of the Mycoplasma bovis response will most likely end up with a hefty tax bill. This is not a fair outcome for affected farmers and we believe it’s an unintended consequence of the tax legislation,” Federated Farmers economics spokesperson Andrew Hoggard says. . .

Summer is back today! pic.twitter.com/hMmmyXYrIX

— ᖇOᗪ ᗰᑌᒪᒪIᑎ 🌱🐄🥛🥩 (@RodMullin) January 16, 2020

All work and no play for southern food producers – Jacqui Dean:

For most of us, the first days of the New Year are spent resting, reflecting and rueing the excesses of the Christmas period.

The ham on the bone is being whittled away, the recycling bin is housing a few too many empty bottles and we’re all hoping that someone else will take the initiative and tidy away the Christmas decorations for another year.

But for a great many people, the early weeks of January are all about work.

With Central Otago accounting for nearly 60 per cent of planted summer fruit orchards in New Zealand, it’s fair to say that all eyes are on this neck of the woods as the country hankers after its fresh produce. . . 

Native trees supply looks tight – Richard Rennie:

The nation’s Billion Trees target by 2028 might be missed by a quarter because of a lack of capacity and resources to meet it.

The goal includes having 200 million native trees planted by 2028. 

However, a survey commissioned by the Forests Ministry survey indicates only 160m native seedlings can be supplied by then. 

That is based on a sustainable growth rate of 7.5% a year for a sector that has had 12-15% growth for the past three years but that has been described unsustainable over any length of time. . . 

‘Unusable’ plastic sitting at Smart Environmental has future in fence posts –

Change is on the way for the classic Kiwi fencepost, with a new venture making them out of recycled plastic.

Future Post has joined forces with Smart Environmental’s Kopu site, collecting bales of recycling which will then be turned into fence posts.

The Smart Environmental plant services Thames-Coromandel, Hauraki, Matamata-Piako and Waipā, and Future Post is expecting to save around 15 tonnes of plastic a month.

“It means there’s a reasonable percentage of plastic now being reused; however, there’s still a hell of a lot that is unusable and still has no market,” Smart Environmental’s Waikato and BOP regional manager Layne Sefton said. . . 

It’s sunflower season again @FARarable and @pureoilnz high oleic crop pic.twitter.com/3UaBsGPU9Z

— Ivan Lawrie (@IvanLawrie_FAR) January 15, 2020

Food made from ‘bacterial dust’ is ‘ludicrous’, beef group says :

British beef producers have called a proposal to feed the population with synthetic lab food made from bacteria as ‘ludicrous’.

George Monbiot claimed in the recent documentary ‘Apocalypse Cow’ that conventional farming will end in 50 years time.

Instead of food produced from farms, the human diet will eventually rely on synthetic food made in laboratories, the environmental activist claimed in the show.

Monbiot visited a team of researchers in Finland who unveiled their process for food production – made out of bacteria and water. . .

Higher wages fewer jobs

The  increase in the minimum wage costs jobs:

Confirmation that the Government’s unbalanced minimum wage rise could cost 17,000 jobs and lump taxpayers with a $125 million bill is an alarm bell for small businesses, National’s Workplace Relations and Safety spokesperson Todd McClay says.

MBIE’s recently-released Minimum Wage Review 2019 reveals the Labour-led Government’s proposed change to $18.90 per hour on April 1 will cost the economy 6500 jobs and increase Government expenses by $62m a year, as well as drive up inflation.

Moving to a $20 an hour minimum wage by 2021, which the Government is proposing, could cost the economy 17,000 jobs and increase expenses by $125m a year.

“The minimum wage changes will see small businesses struggle more at a time when the Government should be supporting them, not working against them,” Mr McClay says.

“The Government is making it harder for small businesses to employ people, harder for them to invest in training and development, and harder for them to get ahead.

“These projections could prove to be much larger if our economy continues to slow and the labour market weakens, as it has already under the Labour-led Government.

“Everyone wants high wages for workers, which is why National increased the minimum wage every year in Government. But we believe the minimum wage should go up in a balanced way that doesn’t go too far, too fast.

Employers expect modest increases in the minimum wage but this government’s fast-tracking bigger increases is too much too quickly, at too high a cost.

“Hard-working Kiwis are already doing it tough because of the Labour-led Government’s poor policies, which are driving up the price of petrol, rent and other living costs.

“The best way to put more money in workers’ pockets is to let them keep more of what they earn. What good is raising the minimum wage if workers are being taxed to the eyeballs?”

Would tax cuts be better than increasing the minimum wage?

An orchard owner in Central Otago is rallying against minimum wage increases, arguing reducing the income tax of a portion of low-wage earners would help them more and do less harm to small businesses.

But a tax expert says it makes more sense to give low-wage earners more social support than to ‘‘tinker’’ with the tax system. . .

The business owner said she did not want to be named out of concern people might react angrily to her view the minimum wage should not be increased.

‘‘I’m all for people getting more money in their pocket.

‘‘The Government needs to look at how they can ensure lower-paid people get more in their wage packet, without damaging especially smaller companies.

‘‘What is the point of more money in a pay packet if the result of that is that it is going to cost jobs, and it gets swallowed up by higher prices for the basics, like fuel and electricity and rents and groceries?’’

Wage rises are a cost to business . If they’re not at least matched by a gain in profit businesses have to increase prices to compensate. That feeds into the economy and soon eats into any increase in pay. If people are paid more but have to pay more for goods and services they’re no better off, and if there are fewer jobs those who lose, or can’t get, a job are worse off.

She said she had a better idea of how to get more money to low-wage earners.

‘‘If they’re going to up wages all the time why don’t they bring the PAYE [rate] down?

‘‘Lower-paid people can have an immediate solid increase in their take-home packet.’’

If you follow the principle of less tax on things we want to encourage and more on things we don’t, tax cuts on wages is good. The trouble is most lower to middle income people pay little or no net tax.

Tax specialist and managing partner at Findex in Dunedin Scott Mason said he had a lot of sympathy for business owners struggling with the increasing cost of wages.

He agreed with the orchard owner the increase in minimum wages could lead to employers not hiring new staff.

‘‘They’ll defer taking an employee on for a longer period of time. Which then has a counterintuitive impact on the economy, accepting of course we’ve got pretty full employment at the moment.

But reducing the income tax low-wage earners paid was ‘‘tinkering with our overall tax settings’’.

‘‘The reality is those on minimum wage — when you take into account their tax rate and their social benefits — aren’t generally net taxpayers anyway.

‘‘We’re basically using the tax system, the people who are net taxpayers, to subsidise [low-wage earners] further.

‘‘It may or may not be right — it’s just a much wider debate is the point I’m making.’’

He said it would be a better idea to increase social welfare to help those more in need.

‘‘If you were going to use the tax system to do it, you’d be better off tinkering with the likes of Working for Families or those sorts of things rather than changing tax rates.

‘‘If you change the tax rate then it affects all taxpayers.’’

If you increase WFF it affects all taxpayers too because that’s who pays for it.

What we need is increased productivity and profits and a reduction in business taxes could help that.

That in turn could lead to sustainable growth in the economy which would, in time, lead to sustainable increases in wages.

That would be much better than wage increases by government decree which have nothing to do with the value of the work employees do, nothing to do with a businesses ability to pay that additional cost and a lot to do with job losses.

 

 

 

 

 

Mixed messages

The government is sending mixed messages on fuel prices.

It’s imposed a carbon tax as part of its climate change strategy while it’s also criticising fuel companies for charging too much.

In doing the latter they are conveniently ignoring the fact that nearly half of the cost of fuel at the pumps is tax.

The Government’s fuel hoax in one graph. (Credit to @MBIEgovtnz and @dbseymour) pic.twitter.com/XK4LjSKL5f

— Taxpayers' Union (@TaxpayersUnion) December 5, 2019

Fact check on tax

Some people think the tax rate and the tax take are linked so if the rate increases or decreases the take follows.

That isn’t always the case.

A cut in tax rates can lead to less effort put into avoidance so productivity improves, a cut can also lead to more spending and both feed into a higher tax take.

Some people think more is better when it comes to taking tax and spending it.

That isn’t always the case either.

The quality of the spend is often, maybe always, more important than the quantity.

Some people are confused about the relationship between tax and services. For example, Associate Health Minister Julie Ann Genter says tax cuts would come at the expense of the fight against measles.

Is she right?

Fact-checking @JulieAnneGenter's false claim that lower taxes cause measles. pic.twitter.com/OCzxy38B5u

— NZ National Party (@NZNationalParty) October 22, 2019

Too much of a good thing

The government has posted a $7.5 billion surplus:

The Government has unveiled a bumper $7.5 billion surplus and the lowest debt levels in almost a decade, the latest Crown accounts reveal.

That level of Government surplus has not been seen since at least 2008, just before New Zealand felt the full effect of the global financial crisis. . . 

It’s taking all that money yet failing to deliver on its promises.

Almost two years in and Labour has well and truly failed to deliver on its promises to Kiwis.

You can't trust Labour. pic.twitter.com/4XKyscQz1C

— NZ National Party (@NZNationalParty) October 8, 2019

Surpluses are good, but $7.5 billion looks like too much of a good thing.

The government is either taking too much, spending too little, or both.

National’s Economic Development spokesman Todd McLay says:

“The Government should be looking to stimulate the economy by letting New Zealanders keep more of what they earn.

“Instead, it has piled on more and more taxes to the point where Grant Robertson is sitting on a big surplus while those living outside Wellington’s beltway struggle with rising living costs.

“One of the reasons debt is lower than forecast is because the Government is failing to invest in the infrastructure New Zealand needs.

“It has cancelled or delayed a dozen major new roading projects right across the country and replaced them with projects that weren’t ready, and won’t be ready for some time yet.

This isn’t just taking more tax and doing less with it. Stalling new roading work risks a loss of skilled people who will head overseas if there’s a gap between current projects finishing and new ones starting.

“Meanwhile, the Government has been piling on taxes. It has legislated to milk an extra $1.7 billion from motorists through fuel tax hikes and extra GST, while its misguided housing policies have pushed up rents and burdened landlords with extra costs and regulation.

“National legislated for tax relief that would have put more than $1000 a year extra into the back pockets of New Zealanders. This Government cancelled that. 

“We will index tax thresholds to inflation so that New Zealanders aren’t taxed more by stealth every year because of the rising cost of living.”

Sound economic management requires much more than creating surpluses.

The government must take enough, but not too much, and it must scrutinise all its decisions to ensure its spending effectively and prudently.

The large surplus suggests the government could be investing more in infrastructure and filling some of the gaping holes in the health system.

It also shows it is taking far more than it needs and it could be leaving us all with a little more of our own money by way of tax cuts.

Cost of higher fuel tax

An extra four cent tax was imposed on motorists yesterday.

The direct cost is obvious – it will be more expensive to buy fuel.

The indirect costs won’t take long to take effect – higher prices for everything that has a transport component.

That will hit individuals, community organisations and businesses.

And for what?

. . .Half-way into the “year of delivery,” and all we’re seeing is key projects delayed, down-sized or discarded. The public are seeing noticeable asset deterioration at a rate we haven’t seen previously. It’s across New Zealand, Forum members advise, not just Auckland. . . 

Where’s the money gone? What exactly has it been spent on? Auckland transport users certainly aren’t seeing the benefits.

The rest of New Zealand isn’t seeing any benefits either.

We’re paying higher prices for fuel and getting less spent on roads.