Business

Hosking points out the obvious flaws in Labour’s wood policy

Mike Hosking sees right through Labour’s wood policy…another that they will no doubt claim is a “game changer”.

In what the Labour Party will hope is some sort of turning point in their poll run, they’ve started talking wood. They’re pro-wood. They’re getting into and involved in the wood industry.

The potential upside of this is it differentiates them from the Government. It gives them a point of difference. What they’re up to is incentivising the industry – there will be tax breaks for it.

Now the immediate problem I had with the idea is that it originated from their manufacturing inquiry they held a couple of years ago. That was the cross party ‘crisis’ inquiry where Labour, the Greens and NZ First wandered around the country listening to people complain about manufacturing. The big problem being that while they were all in a room together wringing their hands and moaning, manufacturing was going gang busters. Manufacturing has been expanding for the past 18 months in a row and across all sectors. Manufacturing levels are at record highs.

The single best thing Labour could do is declare that the wood industry in crisis and hold an investigation into it.  Read more »

Fairfax columnist recommends Fairfax be shut down

Dave Armstong has written a column that is online at Stuff.co.nz.

He thinks that, though loony, Labour’s Facebook Ban is actually on the right track. apparently the new standard for corporate tax isn’t the law, it is some sort of arbitrary moral code dreamed up by leftists.

Labour’s revenue spokesman, David Clark, a bright young star under David Shearer but a supernova under Mr Cunliffe, decided that if Facebook didn’t pay its fair share of tax (it paid $28,000 tax in 2012 – less than is paid by a demoted backbench Labour MP), a “back pocket” threat would be to shut them down.

Mr Clark’s Facebook facepalm quickly had the libertarians up in arms – avoid all the tax you like but banning internet sites only happens in despotic Third World regimes. New Zealand does far more civilised things like helicopter raids on residents we think may have breached US piracy laws.

Mr Clark was quickly defriended by his colleagues, who doubted Labour would take such draconian action. His relationship status within Labour quickly dropped from “liked” Dunedin MP to “single”.

Mr Key found Mr Clark’s comments “interesting” and Bill English called them “nuts”. However, the finance minister conceded that multinational companies like Facebook should “pay their fair share”.

At present many multinationals don’t. They avoid tax by various legal ways, including creating subsidiaries in low-tax places like the Cayman Islands. It is these subsidiaries that receive most of the company’s revenue, on which they pay negligible tax. The company’s expenses are channelled to relatively high-tax countries like New Zealand, where a loss is made.

Like Fairfax? When did they last pay tax in New Zealand?   Read more »

Herald hypocrites busted again

hypocrites

The NZ Herald likes to point the finger at other companies and accuse them of being tax cheats.

They did it last year in March and I busted them then. Their IRD dispute is still ongoing and IRD reckon they owe $48 million. Then there is the $611 million of accumulated losses meaning that they pay bugger all tax in New Zealand anyway.

Yesterday David Farrar came out of the blocks and kicked them fair in the cods too.

The Herald editorial:

Many firms that practice tax avoidance probably do feel wretched about it. But they owe it to their shareholders to pay no more tax than their lawyers and accountants say they must, and they transfer the blame to the legislators who leave loopholes for them, or who set taxes too high or spend the revenue unwisely. With the company tax rate at 28 per cent in New Zealand, lower than the top personal income rate, it is hard to justify corporate avoidance here.  Read more »

David Clark’s comment not just dumb, also wrong

David Clark’s comment not just dumb, also wrong

This morning’s post about slapping GST on Amazon covered on David “rising star” Clarkson’s dumb comment that:

 ”It seems it would be pretty simple to speak with Amazon and other suppliers to ask them to collect GST since they collect, as I understand it, sales taxes for individual states in the US. If that’s true, then it’s obviously an ideological decision from the Government not to collect it.”

Looks like the comment was not only dumb, it was wrong. Amazon is refusing to collect state sales taxes, even taking New York State to the Supreme Court.  The Taxpayers’ Union has blogged:

How Mr Clark thinks that the New Zealand Government has any tax jurisdiction over companies operating in and domicile in the United States is unclear. Is he meaning that as Minister he would seek agreement from the large online retailers like Amazon to charge just New Zealanders more, and pass the money on to the government? If so, he is being optimistic. Amazon for example is challenging New York State’s attempt to force it to collect its sales tax. Why would Amazon (and it’s competitors) take any different view to New Zealand?   Read more »

Crowd-scorning an accountant

Heard of crowd sourcing? …yeah..thought so..boring, much more fun is crowd scorning and a perfect example of that happened yesterday.

In this article, Steve Waite, partner at accounting firm BDO, has taken it upon himself to argue that GST should be applied to all online transactions, to level the playing field and to “give our retailers on Main Street a bit more time to adapt to the brave new world confronting them”.

Not surprisingly, the accountant has been treated to concentrated vitriol of a sort previously only applied to district court judges who believe that blogs are devil-spawn and not news media.

A couple of samples, of crowd-scorning in full scowl mode:

I must say that I am disappointed to hear comments like this from a supposed expert.

I am buying online not because it’s tax-free but because some retailers charge ridiculously high prices, and it is their own greed that is causing the problem.

For e.g. USD298 Marc by Marc Jacobs bag (NZD360) is being sold for in excess of NZD700. Why would I pay this much when I can buy online for NZD360 – it’s still going to be NZD414 with 15% tax, much cheaper than what the high-end boutique store on High Street charges me.

Read more »

More good news

The good economic news just continues to roll in.

This is the problem that will face Labour as the economy continues to boom.

New Zealand’s merchandise terms of trade rose 7.5 percent in the September 2013 quarter, Statistics New Zealand said today. The latest increase was due to export prices for goods rising more than import prices.

“Dairy export prices helped lift the terms of trade to their highest level since 1973,” prices manager Chris Pike said. “Both the terms of trade and export prices have been on the rise since the start of this year, reflecting higher dairy prices.”

Terms of trade is a measure of the purchasing power of New Zealand’s exports abroad. An increase means New Zealand can buy more imports for the same amount of exports.  Read more »

MBIE investigation into building products likely to resolve nothing

Lately the Housing Affordability politicking has turned its attention towards building materials – manufacturing and supply and how the industry is contributing to high prices through what appear to be significantly more expensive materials than are available overseas. The questions have led to an enquiry that seeks feedback from the industry.

Whilst the likelihood is a low turnout on submissions due to fears of being black listed by the big suppliers it is interesting that much focus is upon incentives and price fixing and what happens within the building materials industry to fix prices high, maintain that equilibrium and shit out competition.

Section 4 of the enquiry questionnaire entitled: ‘competition impact of strategic conduct in construction markets’ notes the following issue.

Issue: Lack of Transparency of Strategic Practices

‘Strategic practices such as the provision of rebates or targeted discounts have the potential to constrain access to distribution channels for building materials. The lack of transparency around their use also means the benefits that result from them are less likely to be passed to end consumers’.

What this is about is such practices as ‘cover pricing’ – the act of having a face price but offering rebates and incentives, loyalty schemes between merchants and tradespeople as well as other schemes.   Read more »

Is the FMA corrupt?

miscarriage of justice

When you get a former Acting Supreme Court Judge saying there has been a grievous miscarriage of justice, people tend to wonder what’s going on.

Sir Ed Thomas has smacked the convictions of the directors of Lombard Finance with the line

“the Court of Appeal’s grasp of the facts was incomplete and it’s reasoning suspect or flawed in a number or respects.”

In legal circles that’s giving them a right shellacking.

The Lombard Finance case is worth looking at. The MSM tend to conveniently forget that as a result of the GFC over 60 finance companies in New Zealand collapsed. Some were run by dodgy crooks and they’ve been rightly hurfed into jail for completely ripping people off. Others like Hanover, well, the directors look as though they escape court all together.

But in Lombard’s case, there was no finding of fraud, negligence or mismanagement and the governance of the company was not questioned. Thomas says that the Lombard’s directors had been held to be honest and says:    Read more »

Time for a proper investigation into building costs

A reader emails about this story in the NZ Herald about the need for transparency in construction and building costs.

Builders may be forced to disclose any overseas holidays, new vehicles, tickets to sports events and other gifts they receive as rewards for buying building products as part of government moves to drive down building material costs.

Housing Minister Nick Smith and Commerce Minister Craig Foss yesterday released a series of options for cutting building costs as part of the Government’s suite of measures to tackle the high price of housing.

The options were released as new legislation was introduced to Parliament to constrain building costs by limiting development contributions paid by developers to councils for infrastructure such as sewerage, roading and water.

Dr Smith said building costs were too high, as much as 30 per cent above those in Australia.

The reader comments:

You watch in weeks to come the spin from the lobby group formed to protect product suppliers. They will make Len’s team look honest.

I spent have spent much time researching this for my job.

I have found that Fletchers for instance makes framing that it exports and sells in Australia cheaper it sells the same grade timber framing here despite the obvious transport costs. Some builders have tried importing it back in from Australia and been stamped on.   Read more »

Little Frog rooster scored own goal on tax changes

This is what happens when you let socialists near the levers of power.

David Cunliffe’s mad cap ideas would likely go the same way as Francois Hollande’s daft taxation plans.

For a flabby Left-winger often mockingly referred to as a caramel pudding, François Hollande has a pretty mean right foot.

His rivals on the football pitch have likened the French President to a mixture of Colombian playmaker Carlos “The Kid” Valderrama, sans his blond perm, and Paul Gascoigne, without the drink problem.

Yet, in politics, the embattled Socialist has captained a team scoring a string of spectacular fiscal own goals. Faced with the threat of a pitch invasion by disgruntled fans, the panic-stricken government has this week enacted two humiliating tax climbdowns.

The rot began on Sunday when Bernard Cazeneuve, the budget minister, announced the government was shelving a 15.5pc charge on home loan, employee and equity savings plans that would have applied to savings all the way back to 1997.

The Elysée had been confident the law would pass because Mr Hollande’s predecessor, Nicolas Sarkozy, had raised the tax rate on such savings from 11.5pc to 15pc in his last two years without getting into hot water.   Read more »