Public economics

Taxpayers’ Union slams Joyce for his expanded corporate welfare programme

Since the opposition is asleep at the wheel the job of holding a spendthrift government to account falls upon the shoulders of the Taxpayers’ Union.

They are holding Steven Joyce to account for his expanded corporate welfare programme.

Responding to Economic Development Minister Steven Joyce’s defence of corporate welfare, Jim Rose, the author of Monopoly Money, a Taxpayers Union report on corporate welfare since 2008, says:

“Mr Joyce defends over $3 billion in subsidies to KiwiRail and Solid Energy under his watch by saying that they are state owned. Bailouts are not the role of ministers as shareholders. Since 1986, state-owned enterprises have had a statutory duty to operate as a successful business and to be as profitable and efficient as comparable businesses not owned by the Crown. The whole idea of the State Owned Enterprises Act 1986 was to bring an end to bailouts and permanent deficits.”

“Instead of putting a failed business in the hands of receivers, Mr Joyce defends throwing good money after bad by blaming the previous government for buying KiwiRail. That was three elections ago. Elections are supposed to count for something. $3 billion in taxpayers’ money cannot be handed out in subsidies with ministers bobbing and weaving about responsibility for the amount and wisdom involved. The Treasury Benches come with a full ministerial responsibility for every single dollar of taxpayers’ money spent under your watch.”    Read more »

Using tax cuts to revive the economy – How the poms see NZ

The opposition likes to talk down the economy and the government, yet New Zealand has recovered faster than the rest of the world from the global financial crisis, without the need to slash and burn.

Our economy is the envy of the world.

Even the Poms see that:

In New Zealand, John Key’s National Party romped home to victory on a platform of cutting taxes and balancing the budget, trouncing a Labour opposition that promised to put up taxes. Slashing the top rate of tax has revived the economy, and been rewarded with electoral success as well. True, there are lots of differences between New Zealand and this country. And yet the truth is, there are a fair few similarities as well – and if tax cuts can work there, they can work here.

For a small place a long way from anywhere, New Zealand has a fine history of leading the way with radical experiments in economics. While we were battling over Thatcherism, and the Americans were debating Reagan-omics, the Kiwis had “Rogernomics”, created by the Labour finance minister Roger Douglas. What had been a very 1970s, state-dominated mixed economy was swiftly transformed under Douglas into a laboratory for free market ideas. Financial markets were deregulated, the money supply was brought under tight control, the currency was floated, and industries were privatised. It was a mix that was to become orthodoxy by the 1990s, but Douglas was implementing it while our Labour Party was still planning to nationalise the top 100 companies.

Now it is doing it again – except this time without any encouragement from the US or the UK. Ever since the financial crash of 2008, even centre-Right governments have followed a very narrow path, buying into high taxes, and near-zero interest rates, and allowing budget deficits to balloon, even when financed by printed money, to keep the economy afloat. No one has strayed far from the orthodoxy. Except, that is, New Zealand.

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An economic lesson for Labour they seem to have forgotten

The Labour party wants to raise taxes, add in the Greens tax increases and their fondness for keynesian stimulus spending, you really wonder if they understand basic economics.

You simply cannot tax a nation to prosperity.

Who better to explain the Laffer Curve than the guy who it named after, Arthur Laffer:

The IEA was delighted to host renowned economist Dr Arthur Laffer on 27th June. He was in the UK advocating lower and flatter taxes as the key to economic growth. He suggests high tax rates alter people’s behaviour and act as a disincentive to work.

Laffer Curve from Institute of Economic Affairs on Vimeo.

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How many Tax Commissars and Stasi operatives will Labour need?

Labour's new tax commissars line up outside IRD's Stasi HQ

Labour’s new tax commissars line up outside IRD’s Stasi HQ

Labour’s newest great idea is to establish a Tax Stasi, filled with Tax Commissars who will be “embedded” in businesses that Labour thinks are bastards.

They will be observing what is going on and reporting back to the Tax Stasi Gruppenfuhrer

This is an outrage…you can’t tell me that once the Tax Stasi have finished doing over multi-nationals that Labour won’t suddenly decide to implement more snitches and stasi agents and lower the threshold and rules down to businesses with say $30 million turnover.

What is more of an outrage is labour have exempted banks from the snoopy activities of having Tax Stasi agents roaming the corridors looking for evasion.

If National had done something like that Labour would be accusing them of cosying up to bankers, and corporate cronyism…like they do now over insurance companies?

You do have to wonder though if one of labour’s aor David Cunliffe’s major secret donors is bank or someone associated with banks.

There are serious questions though…surely if they are targeting tax dodgers and rorters then the unions should have Tax Commissars assigned to them, in particular Unite Union, with their history of non-compliance. Or will Labour except unions from having Tax Stasi Agents sitting in their offices.

In other matters you can tell they don’t know what to do about almost everything because they have retained their promise for us to trust them, they know what they are doing, look we will appoint an Expert Panel.

Expert Panel : An Expert Panel will be established to deal with issues that are technical in nature and involve areas where a high degree of specialised knowledge is required before a final decision can be reached.

This policy will raise an additional $25 million in its first year, growing in outyears to reach $1 billion a year by 2020/21.

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Sin taxes and stealth taxes affect the poor more

All sorts of people are proposing taxes on sugar, fat and other supposedly bad things.

They are modelling their taxes on tobacco taxes without thinking through that in the case of tobacco it is the smoker who pays With sugar taxes it will be everyone who pays and the burden for these stealth taxes falls disproportionately on the poor.

Chris Snowden explains this very well in this video:

[T]he IEA’s Director of Lifestyle Economics Chris Snowdon examines the extent of the burden of indirect taxes and government sin taxes on the poorest groups in society and how these have changed over time. This film is an excerpt from a recent IEA panel debate event on the ‘Cost of Living’ crisis, in which Chris was outlining the findings of his recent paper ‘Aggressively Regressive’.

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Green solar scam is a “dishonest subsidy”

The Green party launched their now thoroughly discredited solar power plan on the weekend.

It involved ‘loans’ in order to buy and retro-fit your house with solar power. It is a bizarre policy that will directly undermine their support for the joint Green/Labour power policy, but that isn;t the worst aspect of the whole scam scheme.

Jamie Whyte, the new Act leader, explains.

“The Greens’ Energy Policy announced today shows how dangerous they are to the New Zealand economy,” says ACT Party Leader-Elect Jamie Whyte.

“Cheap loans for solar panels are actually a dishonest subsidy.  The subsidy is hidden in the terms of the loan.  More honest would be to simply subsidise the panels, but in that harsh light people would see the policy for what it is – an election bribe ultimately funded by the taxpayer.

“Policies of subsidising biofuels have failed around the world – economically and  environmentally. There is no reason to think that subsidising solar panels will be any more successful.  Read more »

Let’s have a living tax on companies

David Farrar discusses a “living tax” proposal for offshore companies who pay little or no tax in New Zealand…like APN and Fairfax.

This old fashioned concept of paying tax on profit must be disposed of. We should demand a fair tax system. Let’s calling it a living tax – the level of tax a company should pay so that it no longer feels wretched and is helping fund a civilised society.

I think a 15% tax on revenue would be a fair living tax.  Both the Herald and the Dom Post have repeatedly run stories and editorials comparing tax to turnover, not profit. So we should start the living tax campaign with them. Here’s how it would work:  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 »

6 in 10 think people like David Clark are ‘tards

The NZ Herald has surveyed people and they have found that 4 in 10 Kiwis are dumber than a sack of hammers…including Labour’s revenue spokesman David Clark.

Nearly 40 per cent of New Zealanders believe GST should be charged on all purchases made on foreign shopping websites, a survey has shown.

The Government is estimated to miss out on up to $300 million in sales tax each year.

But New Zealand retailers struggling to compete with overseas sellers – whose sales are exempt from GST when they are for less than $400 – will have to wait for any decision on a potential crackdown.

Revenue Minister Todd McClay says the Government wants to see what other countries do first and a discussion document on the issue, due before Christmas, has been delayed until next year.  Read more »