Taxation

Rodney Hide explains why the Taxpayers’ Union is so important

Rodney Hide discusses why organisations like the taxpayers’ Union and presumably the Auckland ratepayers’ Alliance are so important.

Recently they have been highlighting waste in government departments; that while they are small in the overall scheme of things these small amounts add up.

But that spending is peanuts compared to the true waste of government. Try explaining to a journalist the deadweight cost of tax. That’s the loss of all the wealth-creating trades nixed because of tax.

Taxes hike the cost of everything. That means fewer people employed, less bought and sold, and a multitude of investment projects that never get off the ground. In the absence of government all those trades would fly. The cost is in the billions. The waste is horrific. And it’s never seen, nor remarked upon.

Think of the businesses and projects that never happen because of red tape. That’s the waste of government.

The kids who can’t read, write and do arithmetic. That’s because the state runs the schools. Think of the lost human potential because of that.

Look at the families, broken and busted, neighbourhoods, indeed entire communities, left without hope and opportunity because the government thinks it a good idea to pay mums to have children and dads to do nothing.

The resulting hopelessness and despair, and their tragic consequences, are the true waste of government.   Read more »

Now they’re fighting the dictionary?

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My good friend John Key reckons he is honouring his election pledge about no new taxes.

When is a tax not a tax? When the Prime Minister says so.

John Key has denied going back on his word by introducing a “border clearance levy”, which will sting travellers with $22 in arrival and departure taxes.

Key deflected questions on the matter from reporters following his annual post-Budget speech.

Asked what the difference was between a tax and a levy, he replied “many”, and when pressed, to “Google it”.   Read more »

Why bother with it at all then, John?

John Key reckons his new capital gains tax rules won’t have much of an impact.

New measures to tax capital gains on residential property will help weed out speculators and foreign investors who trade Kiwi homes just to turn a quick buck.

But some commentators are questioning what effect the new tax rules will have on Auckland’s heated property market or how many traders will be “caught in the net”.

Prime Minister John Key announced a raft of new measures yesterday aimed to help curb spiralling house prices and track the number of foreign buyers purchasing Kiwi homes.

From October, anyone selling a residential property that is not their main home within two years of purchasing will face tax on the capital gain.

This morning John Key told Newstalk ZB he wasn’t a fan of a capital gains tax and the new tax rules were not such a tax.

“What we do in New Zealand is have an intentions-based test so if you buy an investment property, then the question is did you intend to rent it or did you intend to buy it and sell it?

“If you intended to buy it and you sell it then you were taxed at the marginal rate.

“What we are now saying is forget about if you buy it and sell it within two years what your intentions were. Your clear intentions were to buy it to make a profit so you have to pay tax on it.”

Mr Key said the new laws would make it easier for IRD to catch residents and foreigners trying to cheat the system.    Read more »

Len Brown’s world – where a 2.5% ‘cap’ actually means 9.9%

Len Brown and the Council might be hoping that with a new day the dust has settled on yesterday’s announced rates increases.

Wishful thinking, Len.

While the Green Party green lobby group Generation Zero is keen to enable Len Brown’s high rates agenda, the Ratepayers’ Alliance is standing firm against them.

Youth organisation, Generation Zero, welcomed the extra spending in the 10-year budget, specifically the focus on essential cycling, walking and public transport projects.

Spokesperson Dr Sudhvir Singh said: “This budget prioritises the essential public transport, walking and cycling projects that Aucklanders have called for, and is another step in the right direction for our city.”

“Aucklanders have called for greater transport choices and the council has responded with this budget. We now call on the government to get on board with Auckland’s agenda and to begin funding the City Rail Link in this year’s budget,” he said.   Read more »

Taxing higher incomes is persecution

Oddly the left want everyone to be well educated, get a good job and have a good life. Or so they say. But then when a person does – and their employer rewards them with a higher income – the pinko lefties quickly rally to punish them with punitively higher taxes claiming ‘social justice’ and all that sort of nonsense. You should pay more because you are evil because you earn more than someone else.

So let’s be clear – the left don’t want you to really do well. They think that everyone who earns more than the average mechanic – is evil.

Perhaps this is fundamentally the issue for Labour and the Greens. Their support base has been declining for years and at the same time New Zealanders are doing better – thanks to better education and house prices and investment and other smart things like business. Over time the left’s core support base has become wealthier. Wealthy like the people they spent decades chastising.

People who are doing better often have a radical change of disposition. As their lives improve and the trappings of life become affordable – their view of the world is amazingly transformed. No longer do they think that whacking ‘the rich’ with a big stick is a good idea because – against the left’s yardstick – they are rich!

It doesn’t actually feel good being persecuted and pillaged once you are earning a better crust, or have grown wealth in some way that has improved your life and lifestyle.    Read more »

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Are differing tax brackets – based on earnings – a basic form of human rights discrimination?

We have, as most countries do, a variable tax regime. Tax is charged on personal earnings in brackets based on the gross annual income. Earn less, pay less. Earn more – pay more.

The scale looks like this:

Earn upto $14,000 and pay 10.5c tax in the dollar

$14,001 to $48,000 and pay $17.5c tax in the dollar

$48,001 to $70,000 and pay $30 c tax in the dollar

$70,001 and over pay 33c tax in the dollar

So lets take a look at what that means:

Person A: making $25,000 per annum will pay $3395 tax per annum and take home $21,605 a year (total 15.7% of income).

Person B: on $48,000 per annum will pay $7,420 tax per annum and take home $40, 580 a year (total 18.2% of income)

Person C: on $70,000 per annum will pay $14,020 (total 20% of income)

Person D: on $100,000 per annum will pay $23,920 (total 23.9% of income).

Person E: on $170,000 per annum will pay $47,020 (total 27.6% of income)

As you can see – the people on bigger incomes are paying vastly more tax. Person E on $170,000 is paying 6.3 times the amount paid by Person B on $48,000 despite earning only 3.5 times the amount of Person B.

Person D is paying 3.2 times the tax that Person B is paying despite the income being twice the amount. Person’s D and E get thumped.

During the reign of Helen Clark the top tax rate on personal income was a whopping 39% although these days its 33%. So those top two peep’s would have been paying a lot more.   Read more »

First Auckland, now Wellington want government to make tolls legal

Charity muggers may be stopping cars and demanding money, but the idea is appealing to cities that want more money.  Always more money…

Wellington wants to join forces with Auckland in a bid change the Government’s mind on tolling exiting motorways.

The region’s political leaders say it is not practical or affordable to keep building roads to ease rush hour congestion.

Other measures – including motorway tolls, charging motorists to enter a CBD, and raising the price of central city parking – also need to be seriously considered, they say.

On Tuesday, the Regional Transport Committee, which all of greater Wellington’s mayors sit on, will vote on the idea of approaching Auckland Council to discuss a joint approach to the Government on road pricing tools.

Tolling existing roads requires a law change and Auckland Mayor Len Brown has made no secret of his support. His council has proposed a $2 motorway toll or a regional fuel tax and higher rates as solutions to Auckland’s $12 billion transport funding shortfall.

But the Government is “sceptical” about the idea, and has rebuffed Auckland’s advances to date.

The Wellington Regional Land Transport Plan, which the Regional Transport Committee will be asked to approve on Tuesday, says the transport network is being placed under high stress at peak times, particularly in and out Wellington’s CBD.

The plan estimated charging motorists to enter Wellington’s CBD could reduce car trips during the morning rush by 4 million and increase public transport trips by 3m annually.

Greater Wellington’s public transport portfolio leader Paul Swain said most of the debate about road pricing thus far had been in Auckland, and Wellington was keen to join the discussion.

He acknowledged that the two cities combined would possess strong lobbying power, but he said the intention was not to strong-arm the Government.

“The Government, in my view, will be quite cautious about the shift towards this.”

But Transport Minister Simon Bridgessaid the Government was not keen on new funding tools for transport.

He was always happy to engage with Wellington and Auckland’s councils.

Auckland Mayor Len Brown said it would be inappropriate for him to comment on the challenges facing Wellington.

It’s not unprecedented of course.  Except we’ve had tolls to pay for the item itself.  Be it a bridge, or a road extension.

Where this is going wrong is that it is a general taxation mechanism, and although it appears to be roughly targeted at “transport” related expenditure, it is the thin end of the wedge.

Once you add personal or company tax, GST, rates, ACC, fuel, and sin taxes, our lives are already taxed well in excess of 50 cents in the dollar.   There has to be someone that recognises we need to do more with less, not just come for the tax and rate payers’ pockets.  Again.  And again.

 

– Michael Forbes, Stuff

What Labour don’t get on tax

Time for a little history lesson.

Every now and then someone comes along that shows that you can actually stand up to politicians and jumped up officials and give them and everyone else a lesson in how to handle the twerps.

Back in 1991 Kerry Packer was summonsed before a parliamentary committee and he let rip.

Mr Packer stared down committee member after committee member, including men once spoken of in hushed tones as future leadership material, Michael Lee and Peter Costello.

“You’re either gonna have to believe me or call me a liar,” Mr Packer snarled when one committee member found his answer difficult to believe.

MPs appeared to shrink in size as the hearing went on and Mr Packer grew more aggressive.

Not much about the tax practices of Australian Consolidated Press was elicited except Mr Packer’s now infamous statement that “of course” he tried to pay less tax.

“I don’t know anybody that doesn’t minimise their tax,” Mr Packer growled as he stirred his delicate parliamentary china cup of tea with a teaspoon. “I’m not evading tax in any way shape or form. Of course I’m minimising my tax. If anybody in this country doesn’t minimise their tax they want their head read. As a government I can tell you you’re not spending it that well that we should be paying extra.”

Journalists had a field day. The voting public – possibly for the first time – felt Mr Packer spoke for all of them. And the politicians on the committee exited the hearing with their chests slightly less puffed out than they had been on entry.

Read more »

PAYE for business, an idea worth exploring

Todd McClay has announced he is looking at the possibility of PAYE for business.

Long awaited tax modernisation proposals were unveiled today by Revenue Minister Todd McClay.

A form of business PAYE, along with greater use of withholding taxes to deal with fringe benefits, interest and other investment income has been flagged.

The government is also looking at reversing the move, made in 1998, to allow most New Zealanders to no longer file tax returns.

[…]    Read more »

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Would you opt out of paying tax if you could?

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The IRD’s Deputy Commissioner Mike Cunnington has said, “The vast majority of New Zealanders want to pay their tax and get it right.

This made me think.  To some degree taxes are like an insurance policy.  We get free medical care when we need it, yet we pay towards the medical care of others when we are healthy.

What would happen if you were allowed to opt-out of all taxation, but in return, had to shoulder the actual cost of living your life?   Additionally, you’re not allowed into any local park without paying and all parking costs money, even on residential streets. Read more »