Public economics

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 »

Guest Post – Lindsay Mitchell on Working For Families

WFF

Yesterday I blogged about a reader’s experience with Working for Families. I asked Lindsay Mitchell, being an expert on welfare, to write a guest post about it.

“My husband earns a low salary, it’s a family choice we make because he works for a charity that supports people in poverty to lift themselves out.  He loves his job, it’s very rewarding.

I was recently offered some work, a small part time job.  I am a SAHM of two little ones.  I knew that some of our working IRD tax credits and WINZ benefits would drop but when I did the calculations I was staggered.  For every dollar I would earn I will lose (in tax or via drop in funding) 70 cents in the dollar.    

It was a disheartening discovery.”

Labour’s 2005 Working For Families vote-buyer began the process of transferring annually $2 billion plus of taxpayer money to families with children. Their incomes were boosted and greater lifestyle choices were also enabled.

Whale Oil’s  correspondent illustrates this. WFF allowed her husband to choose spiritually rewarding work over economically rewarding work. That choice came with a sting though. Financial assistance – or tax credits – has to cut off at some point. If the total family income rises through either her taking a job, or him getting a rise or working more hours,  a high ‘effective marginal tax rate’ will be incurred. A substantial portion of any extra earnings will be lost

What would a WFF system that let them keep 70 percent of extra earnings look like? One that cost a lot more than $2 billion! One that would impose higher taxes on, amongst others, the childless.   Read more »

Useless subsidises bugger up housing market in Australia

Subsidies are evil, they suck cash and they almost never work as intended often distorting the market terribly.

Beware of any politician who thinks subsidies are a solution. Especially for affordable housing.

High-income earners are the overwhelming beneficiaries of government support for housing, a report has found, turning on its head the popular perception that low-income Australians get the greatest subsidies through rent assistance.

”Only 25 per cent of renters get any support from the government,” the cities program director at the Grattan Institute, Jane-Frances Kelly, said. ”They get none of the support that homeowners get. Even landlords get more.”

The report, Renovating Housing Policy, found homeowners received $36 billion a year in government subsidies, landlords about $7 billion and renters less than $3 billion.  Read more »

Good onya Joe, he takes “show me the money” literally

I wonder if we could swap Bill English for Joe Hockey.

In one of his first acts as Treasurer, Mr Hockey will instruct the Australian Tax Office to send taxpayers a personalised and itemised receipt thanking them for their tax dollars and detailing where the money was spent.

The receipts will show, in dollar terms, how much of a person’s tax bill was spent on welfare, health, education and other areas.

The level of gross government debt will also be displayed prominently with a break-down per person.

Treasurer Hockey said the receipts, which will be sent at tax time starting next year, would boost transparency and hold government to account.  Read more »

Bob Jones on Capital Gains Tax

Bob Jones is derisory of the efforts of Labour in pursuing rich prick envy taxes, and in particular capital gains tax.

I reminded my friend Stuart Nash of that three years ago after, as shadow revenue minister, he telephoned me triumphantly about gaining the front page of Wellington’s Dominion Post newspaper. His plaint: farmers pay little or no tax.

“There’s a bloody good reason for that,” I told him. “They don’t make any money.” Their constant reinvestment of their income in productivity enhancement to stay up with the play, be it fertilisers or whatever, benefits us all.

Much of the current clamour arises from the false perception that residential investors are creaming it, buying and selling houses and paying no tax on profits. If they’re doing that, namely trading, then their gains are taxable. Permanent investors, however, are akin to farmers, constantly reinvesting in their properties and achieving lousy net returns but looking to long-term security. Show me a rich residential investor and I’ll eat my arms uncooked. As with farmers, be grateful for residential investors, for if they didn’t exist we’d all be paying to meet the cost of the state filling the ensuing rental housing gap.  Read more »

Cunliffe lies on Tax

David Cunliffe is becoming something of a liar in his quest to lurch left.

In the Q+A debate he stated:

DAVID I’d raise the top tax rate, and I would also bring in a capital gains tax. And I would also close tax evasion and avoidance loopholes. Of the hundred wealthiest New Zealanders, the IRD says less than half of them are even paying the top tax rate.
What we did last time round was 39 cents with a pretty high threshold of $150,000, so we weren’t hitting middle New Zealand. We had a top rate for the wealthiest. We’ve got to be very careful to make sure that the trust rate is at or close to the top marginal personal rate, because we don’t want to create an avoidance-

This is a lie.  Read more »