Fact check on tax

October 24, 2019

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?


Too much of a good thing

October 9, 2019

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.

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

July 2, 2019

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.


Time to target tourists?

June 17, 2019

Cataclysmic headlines tell us we’re facing a climate crisis.

Councils are declaring climate emergencies.

People are marching demanding action to reverse climate change.

But how many are actually doing anything that will make a real and sustainable difference?

In spite of what it’s trying to tell us our government isn’t.

Its carbon zero bill is largely political and bureaucratic posturing that ignores the science.

If it was really serious about doing something that made a real difference it would stop trying to reduce farm production here which will only increase emissions as other less efficient producers increased their production to fill the gap.

Instead it would target tourists, taxing travel for any but essential reasons.

Farming produces food which people need for survival.

The benefits from tourism are purely personal.

Tourist taxes high enough to compensate for the emissions from travel aren’t being imposed and haven’t been suggested as a serious solution.

Does this mean that the government hasn’t got the courage of its climate change convictions, has got another plan it has yet to tell us, or doesn’t really believe there’s a crisis?


Tax Freedom Day at last

June 1, 2019

We’re nearly half way through the year and have only just got to Tax Freedom Day:

A media release from the Taxpayers’ Union says:

From today until the end of the year you are finally working for yourself, and not the taxman, says the New Zealand Taxpayers’ Union.
 
‘Tax Freedom Day’ marks the day on which New Zealanders have collectively worked enough to pay off the cost of government for the year.
 
Taxpayers’ Union spokesman Louis Houlbrooke says, “For the average New Zealander, getting to work on Monday represents the first day they’re working for themselves.”
 
“This year’s total government expenses have been forecast to suck up 41.5 percent of the economy. That means, if a taxpayer wanted pay off their share of government expenses as soon as possible this year, they would have to work sacrifice all their wages from January the 1st, until today, June 1st.
 
“Today is worth celebrating, but it’s a shame we had to wait so long to pay off the politicians’ expense card. Unfortunately, government spending increasing faster than economic growth means the continuation of the trend of a later Tax Freedom Day.”
 
“Some other groups chose to observe Tax Freedom Day earlier this year. But our chosen date – based on OECD figures – takes into account local government and spending paid for with debt, meaning it reflects the full burden of government on taxpayers.”

And on the eve of Tax Freedom Day, the government pushed through an increase to fuel taxes under urgency:

The Taxpayers’ Union is slamming the passage of legislation hiking the price of petrol at the pump to see that more than 50 percent of the price paid will soon be tax. Union spokesperson, Jordan Williams says:

“Clearly ‘wellbeing’ is just marketing fluff.  Petrol taxes are highly regressive – they hit the poor, those in regional New Zealand, and those who live on outer suburbs the hardest. It’s one of the cruelest forms of tax.”

“Rushing these new petrol taxes through Parliament under urgency is disgraceful. They are a total breach of the Prime Minister’s ‘no new tax’ election promise.  And Labour know it.”

“Pain at the pump underscores the fact that big-ticket Budget announcements come at a real cost, regardless of the fuzzy wellbeing language the politicians use to promote them.”

Petrol was more than $2.45 a litre when we passed through Omarama earlier this week. Tax is already too big a contributor to that.

Taking more money from everyone and adding to the cost of everything will not contribute to wellbeing.


Rural round-up

May 1, 2019

Gas tax won’t cut farming emissions – Neal Wallace:

A capital gains tax is off the agenda but farming leaders are warning the imposition a suite of new taxes and regulations is pending.

In addition to farmers paying a greenhouse gas emissions tax of $50 million a year the Government is expected to impose tougher regulations on freshwater quality, aerial cropping, winter grazing and feedlots.

“When you look at everything else coming down the pipeline, if I was asked to pick one we were prepared to lose it would be this one, the one we have won,” Federated Farmers vice-president Andrew Hoggard said of the capital gains tax.

Prime Minister Jacinda Ardern also ruled out water and fertiliser taxes as suggested by the Tax Working Group. . .

Top dairy title revealed tonight – Yvonne O’Hara:

Dairy farmer Emma Hammond, of East Limehills, felt honoured when she was nominated for this year’s prestigious Fonterra Dairy Woman of the Year award.

The only South Island-based finalist, she and the other three women will hear if they are winners during a dinner this evening at the Allflex Dairy Women’s Network’s conference in Christchurch.

”For us to be recognised for what we do and get that acknowledgement is humbling,” Mrs Hammond said. . .

Farm management whizz ‘well on track‘ – Sally Rae:

At 19, James Matheson set a goal of having $1 million equity by the time he was 30.

Now 26, the Gore farm manager is ”well on track” to achieve that, sitting at between $700,000 and $800,000.

It has been a meteoric rise for a young man who had never previously considered a career in the dairy industry.

Now he and farm owner Chris Lawlor were endeavouring to help other young people follow a similar path through an innovative initiative. . . 

Highlife on top of the world – Andrew Stewart:

Setting up a tourism venture on a farm not only provides a second income but also acts as a public relations exercise to help bridge the rural-urban divide. And when it includes luxury glamping and breathtaking views the visitors cannot fail to be impressed. Andrew Stewart took a look.

In terms of spectacular views, Angus and Sarah Gilbertson’s farm is up there with the best. 

Rising to 600 metres above sea level at the highest point, the panorama on a clear day encompasses all the mountain peaks of the central plateau, Mount Taranaki to the west and the clear blue waters of the Tasman Sea far to the south. 

Between these stunning landmarks are great swathes of some of the most productive farming country in New Zealand that connect the landscape in various shades of green. It’s the sort of view you can’t help but stop and enjoy and this is part of the reason the Gilbertsons created their glamping business five years ago. . . 

The 10 biggest stories in farming over the past 25 years – Jamie Mackay:

My final chat on Newstalk ZB with the laconic Larry Williams was a great excuse to take a trip down memory lane.

Larry was stepping down after 27 years at the drive helm on ZB, while I was blowing out the candles on an accidental radio career spanning a quarter century in rural broadcasting.

For our penultimate ZB cross the week earlier I’d turned the tables on Larry and, without warning, asked him some unscripted questions. Much like his metronomic golf swing, he’s sometimes hard to get off script, but on this occasion he took up the challenge with good humour. . . 

Hunt on for ‘M.bovis’ study project manager – Sally Rae:

The search for an assistant research fellow to project manage a study on the impacts of Mycoplasma bovis on farmers and their communities has attracted a high level of interest.

In January, it was announced the University of Otago would undertake a study on the emotional, social and psychological impacts of the bacterial cattle disease on southern farmers and farming communities.

The two-year study, due to start this month, will look at the impact of the eradication programme on farmers specifically and the wider community more generally. . . 

Medicinal cannabis firm Pure Cann New Zealand gets $6 million investment– Rebecca Howard:

Pure Cann New Zealand, which counts former Air New Zealand boss Rob Fyfe as its executive chair, has secured $6 million from Australia’s Cann Group for a 20 per cent stake in the local medicinal cannabis company.

The investment will be made over stages with the initial 10 per cent to be completed on or before August 30 and a further 10 per cent when New Zealand regulations come into force and Pure Cann’s board approves the construction of its commercial cultivation facility.

The New Zealand government anticipates introducing new regulations, licensing requirements and quality standards governing medicinal cannabis usage by the end of this calendar year. . . 

 


No CGT but . . .

April 18, 2019

The government is not going to adopt a capital gains tax .

The backdown has cost $2 million and 18 months of uncertainty but Simon Bridges point out there will be more taxes:

“While the Government has backed down on a Capital Gains Tax, there are still a range of taxes on the table. They include a vacant land tax, an agricultural tax and a waste tax.

“Prime Minister Jacinda Ardern says she personally still wants a Capital Gains Tax and that our tax system is unfair. New Zealanders simply can’t trust Labour when it comes to tax. 

“The New Zealand economy has suffered while the Government has had a public discussion about a policy they couldn’t agree on. Put simply, this is political and economic mismanagement. . . 

The government asked a question, the answer to which its three constituent parties couldn’t agree on.

Remember James Shaw saying:

“The last question we should be asking ourselves is, ‘can we be re-elected if we do this?’ The only question we should be asking ourselves is, ‘do we deserve to be re-elected if we don’t?'”

Labour and the Green Party had to swallow a big dead rat, served to them by Winston Peters:

. . .It wasn’t even an hour after the Prime Minister had put the final nail in the coffin that is the capital gains tax (CGT) when RNZ asked Mr Peters whether Labour will be expecting his party’s support on another issue in return for losing this flagship policy. Mr Peters fired back: “May I remind you, the Labour Party is in government because of my party.”

No reading between the lines necessary. . .

New Zealand First is polling under the 5% threshold, it couldn’t afford to alienate the dwindling number of its supporters.

The capital gains tax, if not dead, is buried while Ardern is Prime Minister, but the threat of other niche taxes is still live.

 


%d bloggers like this: