Public finance

Labour plans to let local bodies tax you even more

Now this has to be an election winning strategy….for National.

Labour is going to let local councils tax ratepayers even more than they do now under their local body proposals.

Labour plans to reinstate the power for local bodies to raise revenue through extra levies such as a ‘pillow tax’ on visitors and regional petrol taxes.

Labour’s Local Government policy will also require a referendum to be held before any local council amalgamations can go ahead.

Local communities would also have to be consulted before council services were contracted out or privatised.

Local Government spokesman Sua William Sio said Labour was not opposed to amalgamations, but did not believe they were appropriate in all cases.

He said the Auckland supercity model was opposed by many Aucklanders “and designed to take control away from the hands of the many and vest governance in the hands of the few.”

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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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More good news

The good economic news keeps on coming in, destroying the opposition and their trash talking of the New Zealand economy.

The latest piece of good news is from the IMF who have given our economy a big tick.

Macroeconomic policies are moving in the right direction. With excess capacity largely exhausted the RBNZ has begun tightening monetary policy. The government’s plan to return the budget to surplus is on track. With public debt low and interest rates above the zero bound, the authorities have monetary and fiscal policy space to respond to shocks, and the free-floating New Zealand dollar provides an additional cushion against terms of trade and other external shocks. The well targeted macro-prudential policy framework should allow the RBNZ to take additional measures if needed to guard against the financial sector risks that would arise from an unsustainable acceleration in house price inflation.


Growth is forecast to increase to about 3½ percent this year and moderate to a trend rate of 2½ percent over the medium term. Strong construction activity is expected to remain an important driver for near-term growth (text figure), although the speed of the Canterbury post-earthquake rebuild and its interaction with the wider economy are less certain. The terms of trade are projected to ease somewhat due to an assumed moderation in global dairy prices, but remain high relative to historical levels and continue to boost growth in national income. The current monetary policy stance remains well below neutral, and with leading indicators pointing to an economy that is set to grow above trend in the near-term, pressure on core inflation should follow, particularly from the construction sector.

[...]   Read more »

Labour’s ‘big tool’ policy turns out to be a big dog


Aside from a half hearted attempt from the Labour Party spokesman for Fairfax, Vernon Small, and Brian Fallow who has taken time off looking around the globe for catastrophic global warming and a carbon trading system that works it’s not been a particularly welcomed policy release. The exporters love it though with a free lunch on the backs of the working poor.

We wait for the endorsement and backing of Labour from the Property Council, first of all Labour are going to drop their tax rate from 28% to 15% by introducing a CGT and now they are going to give them the gift of lower interest rates which is generally the biggest cost by taking money out of the lowest paid who will now be earning more in retirement than when they are working.


Labour’s proposals to allow the Reserve Bank to adjust KiwiSaver contributions rather than interest rates to control inflation could hurt savers and see debt repayment delayed until retirement, KiwiSaver experts warn.

The Labour Party this morning announce proposals to change New Zealand’s monetary policy tools by introducing a variable savings rate for KiwiSaver.

The policy would require the Reserve Bank to use changes to the rate of people’s KiwiSaver contributions rather than interest rates to control inflation while taking pressure off the over-valued kiwi dollar.

Labour would also make KiwiSaver compulsory and increase contributions from the current 6 per cent combined employee and employer contribution to 9 per cent over time.

According to  if you earn $600pw and you save at Labour’s compulsory rate you will enjoy a retirement income of $496pw and when added to the super payment of $366 you will be earning $262 a week more in retirement than when you were working and struggling to get ahead.   Read more »

The new big tool is likely to be little better than politicians snake oil

The ANZ Bank is having none of David Parker’s posturing and mistruths.

In their latest Market Focus of 28 April 2014 they basically call out Parker as a snake oil salesman.

The monetary policy framework has served the NZ economy well. Tweaks have been made from time to time to ensure that the NZ framework has evolved in line with global best practice, with the use of macro-prudential policy adding more ammunition to the RBNZ’s policy arsenal. However, the mandate has remained price stability, as this is the best contribution monetary policy can make to delivering better outcomes.  Read more »

Good news on tax

The good news keeps on coming, this time it appears research shows that our tax burden is amongst the lowest in the world.

New Zealand is among the minority of developed countries where the tax burden on wages has lightened over the past three years.

The tax burden or wedge is measured by taking the total taxes and social security contributions paid by employees and employers, minus family benefits received, as a proportion the total labour costs for employers.

In its latest Taxing Wages report the OECD says that across its 34 members the tax wedge increased from 35.1 per cent of labour costs in 2010 to 35.9 per cent last year.

In New Zealand it dropped slightly from 17 per cent in 2010 to 16.9 per cent in 2013.

That is for a single person on the average wage and without dependent children and is the second lowest (after Chile) in the OECD.

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More lies of the left exposed

Lindsay Mitchell exposes the lies of the left over unemployment.

In February the Daily Blog screamed the headline,

EXCLUSIVE: Billions of dollars stolen from the unemployed

which claimed a hundred thousand plus people were being denied an unemployment benefit.

The number of those on average receiving a benefit compared to the number of unemployed in the household survey is now about 130,000 fewer than it was in the late 1990s.

The missing 130,000 are the reason why so many social agencies are being inundated for help for food, clothing, shelter despite the so-called recovery in the economy over the last year…
tax cuts for the rich have been paid for by denying entitlements to the poorest and most vulnerable is theft from working people of about a billion dollars a year. It is time to get angry.

The tax cuts for the rich have been paid for by denying entitlements to the poorest and most vulnerable is theft from working people of about a billion dollars a year. It is time to get angry.

Then Labour’s Chief of Staff, Matt McCarten, still writing for the Herald on Sunday, picked up the accusation:  Read more »

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 »

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 »

A Guest Post – Equality vs Inequality

A reader emailed this today:

Labour and the Greens are making a lot of noise at present about the widening gap between the rich and the poor.  So I have put a few thoughts down on this matter.

1.       Labour and the Green Taliban talk much about the rich getting richer and the poor getting poorer.  What they are in effect doing is driving a wedge  into our society as they harp on about this and are in effect creating a divide in our society.  Those who are poor should hate those who are successful because the implication the left want to spread to their useful idiots is that those who are successful must have done so by taking the resources off the poor and exploiting them.

2.       The left harp on about the fact that those who earn the high salaries are not paying their fair share of tax.  This is utter bulls**t.  Those earning $100,000 are paying significantly more multiples of  tax than the people earning $40,000 or $50,000.  Someone earning $200,000 per annum is probably paying in excess of $60,000 income tax per annum.  It is bulls**t to say that person is not paying his / her fair share.  The reality is that the 12% are paying 75% of the tax.  Effectively to prop up the spending promises of successive Governments, but especially the last Labour Government.

3.       The rich cannot help but get richer.  If I have $1,000,000 in assets and invest those assets at 5% (very modest I know but hold with me) then in 12 months I will have $1,050,000 in assets.  If I have $1,000 invested a 5% then in 12 months I will have $1,050. The rich cannot help but get richer. That is a fact of life.  Of course those with the $1,000,000 use their money to create jobs and capital investment so the whole pie for society can grow bigger.  22 years ago I came back to NZ without a cent to my name.  In that time with very hard work, careful management and setting goals I have managed to accumulate a reasonable asset base. More about that that later.

4.       The good news is that here in NZ we generally have equal opportunity to succeed.  That is what counts.  True some have more opportunity than others and different circumstances.  But I ask this.  Is it possible for a kid from NaeNae or Otara to become a partner in a law firm, a business owner, a policeman, a teacher, an artist, a member of the military, a civil servant, or even the Prime Minister.  The answer is yes. That kid can do whatever he/she wants so long as they have a game plan, some life goals and the intelligence.  All jobs have different pay scales and the outcomes will be different, but it is the opportunity that counts.  While Labour and the Greens seem intent on focusing and splitting the nation with their envy of success, and hatred of the poor,  the National Government is getting on with doing what it reasonably can to ensure all our kids can follow their life dreams.  What the Labour/Green envy and hatred does is tell the kids from Otara and NaeNae that you can’t be successful because you are poor.  The Labour and Greens suppress self-responsibility and ambition and think only the Government can help those at the bottom of the heap.    Read more »