Home > Dollars & Sense, The Body Politic > Blood from a stone?

Blood from a stone?

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Why do I get the impression that this story just screams desperation, from this government?

Aside from the fact that many sceptics voiced doubts last year about National’s optimism to “balance the books”, and considered it nothing more than election propaganda for gullible voters, Dunne’s comments on this issue beggar belief,

“‘We just had public consultation on the use of mixed assets such as holiday homes and launches, and we’ve been doing other work looking at the tax treatment of various forms of activity.”

”That programme needs to be ongoing… what we should be doing is making sure we are collecting all the existing taxes which are due and if there anomalies and loopholes we need to be closing those to make sure the system is fair to everyone.’

It was estimated the Government was missing out on hundreds of millions of dollars of revenue a year.” – Ibid

Whut?!?!

We just had public consultation on the use of mixed assets such as holiday homes and launches

“…what we should be doing is making sure we are collecting all the existing taxes which are due and if there anomalies and loopholes…”

Isn’t this precisely what Labour was suggesting last year with it’s Capital Gains Tax?

The Green Party certainly made that connection,

“Bill English has failed to close the single largest remaining loophole in our income tax system. A comprehensive tax on capital gains (excluding the family home) is hugely progressive and would help close the growing gap between rich and poor,” said Green Party Co-leader Dr Russel Norman.

“Treasury advice to Bill English in 2009 made it clear to him that capital assets are owned disproportionately by higher income families. The advice said not taxing this income is regressive. That’s Treasury’s way of saying that a capital gains tax is incredibly fair.

“Both John Key and Bill English have consistently defended the tax loophole, however, preferring to ignore growing inequality in our society…”

…“The largest proportion of capital gains is earned by those at the upper end of the income spectrum. This income currently remains untaxed,” said Dr Norman.

“This tax loop-hole for those that can afford to own multiple properties needs to be closed.” ” – Source

So much for John Key stating last year,

Scrapping the top income tax bracket reduced the value of highly leveraged investment properties as a tax shelter, while tougher rules on depreciation and LAQCs also reduced their relative attractiveness as investments.

Labour, Prime Minister John Key declared on Monday, is “fighting a problem they had when they were in office, not a problem we have today”. ” – Source

Yeah right, Prime Minister. Unfortunately, simply saying that didn’t make the problem go away, did it?

Gareth Morgan pointed all this out to us, last November,

It’s difficult to detect any sort of principle – liberal or otherwise – in the economic policies we could reasonably expect to address the widening income gap. Gaping loopholes in our tax system permit those with wealth to earn tax-free gains – putting them further ahead than ever.

While the Government sees fit to give a handout to working families earning $100,000 per year (nearly twice the average wage), those who can’t meet bureaucratic hoops miss out on support altogether and we have abandoned targeting in toto for the politically powerful (the elderly).

Equally worrying, current tax policy incentivises investment for capital gains, causing excessive investment in property at the expense of business – something which has hindered the long-term outlook for incomes and jobs.” – Source

So for United Future leader Peter Dunne to try to excuse their inertia by saying  “that the Prime Minister could not have foreseen a dramatic slide in global economic conditions“, is disingenuous.

No. Not disingenuous. Let’s call it for what it really is: bullshit.

National’s tinkering with the tax system is not going to address the shortfall in government revenue. We will simply see more of the above headlines in future media, as the core-problems in our taxation system go unaddressed.

National simply does not have the intestinal fortitude to address taxation problems in any meaningful way. If they did, they would,

  • Implement Labour’s capital gains tax
  • Stop Trusts from being tax havens
  • Reverse the 2009 and 2010 tax cuts for those earning above $70,000
  • Implement a Financial Transactions Tax
  • Review Working for Families payments for families earning over $100,000

Unfortunately, none of the above will happen. Generally, only reformist Labour governments have the inclination to make radical changes when they become blindingly obvious as necessary.

It also takes a collective frustration from Voterland to “connect the dots” and realise that voting for National will not achieve longterm reforms.

In the meantime, Dunne will tinker; National will continue cutting services; government workers will continue to be sacked; and we’ll see more of the following, as our economy stumbles along like a diabetic with low blood sugar,

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Full Story

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Additional

NZ Herald: The case for a tax revolution

Gareth Morgan: Capital gains tax best way to tackle rot

Gareth Morgan: Reviving the values of an egalitarian society

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  1. 27 January 2012 at 2:57 pm

    Hey there Frank. Another great blog. I read every one! Just find it interesting too about the prices of food in NZ. After living here in the USA for the last almost 6 months, i have found the cost of food is SO CHEAP!! I’m not looking forward to having to part with huge sums of money back in the supermarkets in NZ. And at home my husband and I grow our own veges and meat and eggs! And our groceries are still expensive! Kiwis are really taken for a ride as far as the costs in the supermarket go.

    Anyway I’m back in NZ from the 22nd of Feb. Every fortnight thereafter I will travel to OZ to get my treatment since this govt is still determined to let us with Pompe disease die! The PTAC has resolved yet again at the end of last year to NOT fund any of these treatments for rare diseases. This also includes for babies. It has been proven world wide that if a baby gets treatment straight away they will meet the normal milestones. I guess NZ knows best though!!! *tongue in cheek*

  2. 27 January 2012 at 7:35 pm

    I could say “welcome home”, Allyson, but it may be a rather sad home-coming, what with the way this country is going right now.

    Key’s refusal to even consider the issue of Pompe Disease sufferers (when he made the provision of herceptin to breast cancer sufferers an election issue in 2008) is evidence – if we needed any – just how politically motivated the man is.

    The cost of food certainly isn’t cheap, as evidenced by the children of the poor going to school without adequate nourishment. (Thank the gods for pelople like Jazmine Heka, Bryan Bruce, et al.)

    Email me when you arrive back here, Allyson, and we can chat over what we can do to further your cause?

  1. 2 April 2012 at 4:45 pm
  2. 28 February 2013 at 4:52 pm

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