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National, The Economy, and coming Speed Wobbles

1 March 2014 4 comments

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The Nationalmobile

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For a while, the news seemed dire for the Left, and impressively positive for National;

  • A recent Fairfax Media-Ipsos poll put National on 49.4%  versus  31.8% and 10% respectively for  Labour and the Greens.
  • The latest Roy Morgan Poll had National at 48%, compared to 30% and 12% for Labour and the Greens respectively.
  • Annual average economic growth  was 2.6% to September 2013.
  • The Household Labour Force Survey for the December 2013 Quarter showed a drop in unemployment, from 6.2% to 6%.
  • Dairy prices (and thusly export reciepts) continued to rise.
  • The trade deficit continued to slowly improve.
  • And there was just enough ambiguity around recent child poverty statistics to allow National, and its drooling sycophants,  to claim that it was no longer a  growing problem (it was simply a constant problem).

However, is everything as it really seems? Is the news all rosy and are we rushing head-first toward the “promised land“, the much heralded, Neo-liberal Nirvana?

Or, are dark clouds beginning to appear on the horizon?

New Zealand’s economic recovery is predicated mostly on the Christchurch re-build, and piggy-backing on the global economic situation picking up. As Treasury reported in 2012;

The Canterbury rebuild is expected to be a significant driver of economic growth over the next five to ten years. The timing and speed of the rebuild is uncertain, in part due to ongoing aftershocks, but the New Zealand Treasury expects it to commence around mid-to-late 2012.

As predicted,  the ASB/Main Report Regional Economic Scoreboard recently revealed that Canterbury had over-taken Auckland as the country’s main center for economic growth.

Meanwhile, the same report outlines that Auckland’s “growth” is predicated on rising house prices. Economic “growth” based on property speculation is not growth – it is a bubble waiting to burst.

The other causal factor for our recovery is international. The IMF reported only last month;

Global activity strengthened during the second half of 2013, as anticipated in the October 2013 World Economic Outlook (WEO). Activity is expected to improve further in 2014–15, largely on account of recovery in the advanced economies. Global growth is now projected to be slightly higher in 2014, at around 3.7 percent, rising to 3.9 percent in 2015, a broadly unchanged outlook from the October 2013 WEO. But downward revisions to growth forecasts in some economies highlight continued fragilities, and downside risks remain...

Being  mostly an exporter of commodities (meat, dairy products, unprocessed timber, etc), New Zealand cannot but help ride the wave of an upturn in the global economy as increasing economic activity creates a demand for our products.

Any economic recovery, as such, has little to do with the incumbent government – just as the incumbent governments in 2008 and 2009 had little to do with the  GFC and resulting recession (though National’s tax cuts in 2009 and 2010 were irresponsible in the extreme, reliant as they were on heavy borrowings from overseas). We are simply “riding the economic wave”.

As the global up-turn generates growth in New Zealand’s economy, paradoxically that leaves us vulnerable to new, negative, economic factors;

1. The Reserve Bank has indicated that  it will begin to increase the OCR (Official Cash Rate) this year.

Most economists  are expecting the OCR to rise a quarter of a percentage point on March 13. As Bernard Hickey reported in Interest.co.nz;

Wheeler said in early December he expected to raise the OCR by 2.25% by early 2016, which would lift variable mortgage rates to around 8% by then. The bank forecast interest rate rises of around 1% this year and a similar amount next year.

2. An increase in the OCR will inevitably flow through to mortgage rates, increasing repayments.

As mortgaged home owners pay more in repayments, this will impact on discretionary spending; reducing consumer activity, and flow through to lower business turn-over.

Even the fear-threat of higher mortgage interest rates may already be pushing home owners to lock-in fixed mortgages. Kiwibank for example, currently has a Fixed Five year rate at 6.9%. ANZ has a five year rate at 7.2%. Expect these rates to rise after March.

If home owners are already fixing their mortgages at these higher rates, this may explain the fall in consumer confidence, as the Herald wrote on 20 February,

New Zealand consumer confidence fell from its highest level in seven years this month, while remaining elevated, amid a pickup in inflation expectations and the prospect of interest rate increases.

It may also explain, in part, this curious anomaly which recently featured in the news cycle,

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Govt deficit bigger than expected as tax trickles in

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The Herald report goes on to state,

The smaller tax take was across the board, with GST 2.3 per cent below forecast at $7.5 billion, source deductions for personal income tax 1.2 per cent below forecast at $11.71 billion, and total corporate tax 4.9 per cent below expectations at $3.56 billion.

Treasury officials said some of the lower GST take was due to earthquake related refunds, and that the shortfall in Pay As You Earn might be short-lived. The corporate tax take shortfall was smaller than in the previous month…

  • A drop in GST would be utterly predictable if consumer spending was falling.
  • Personal income tax would be falling if employers were cutting back on part-time work available. Which indeed seems to be the case, according to the latest Household Labour Force Survey (HLFS) Poll on unemployment,

Over the year, the total number of under-employed people increased by 27,200 to 122,600. As a result, the under-employment rate increased 1.0 percentage points to 5.3 percent.

Less wages equals less spent in the economy and less PAYE and GST collected by the government.

  • This would also account for the drop in corporate tax take falling by  4.9%.

The effect of the Reserve Bank’s decision to begin raising interest rates will be to dampen economic activity and consumer demand. This will be bad news for National.

3. An increase in the OCR will inevitably also mean a higher dollar, as currency speculators rush to buy the Kiwi. Whilst this may be good for importers – it is not so good for exporters. If we cannot pay our way in the world through exports, that will worsen our Balance of Trade; in turn risking our international credit rating; which in turn can  impact negatively on the cost of borrowing from off-shore (the lower our credit-rating, the higher interest we pay to borrow, as we are considered a higher lending risk).

This, too, will affect what we pay for our mortgages and capital for business investment.

4. As economic activity and consumer demand falls, expect businesses not to hire more staff and for fresh  redundancies to add to the unemployment rate. Unemployment will either stay steady later this year, or even increase.

Less people employed or a reduction on work hours for part-time employees will also result in a lower tax take.

5. As interest rates rise, in tandem with the Reserve Bank’s policy on restricting low-home deposits, expect home ownership to fall even further. This will increase demand for rentals, which, in turn will push up rents. Higher rents will also dampen consumer spending.

6. As the global economy picks up and demand for oil increases, expect petrol prices to increase. This will have a flow-through effect within our local economy; higher fuel prices will lead to higher prices for consumer goods and services. This, in turn, will force the Reserve Bank to ratchet up interest rates (the OCR) even further.

7. As businesses face ongoing pressures (described above), there will be continuing  pressure to dampen down wage increases (except for a minority of job skills, in the Christchurch area). For many businesses, the choice they offer their staff will be stark; pay rise or redundancies?

8. Expect one or more credit rating agencies (Fitch, Moodies, Standard and Poors) to put New Zealand on a negative credit watch.

9. According to a recent (21 February) Roy Morgan poll, 42%  of respondents still considered the economy their main priority of concern. 21% considered social issues as their main concern.This should serve as a stark warning to National that people will “vote with their hip wallets or purses” and if a significant number of voters believe that they are not benefitting from any supposed economic recovery, they will be grumpy voters that walk into the ballot booth.

Interestingly, the “Economy” category also included the social issue of “Poverty / The gap between the rich and the poor”.  16% believed that “Poverty / The gap between the rich and the poor”was a major factor within the economic situation – a significant sub-set of the 42%.

Add that 16% to the 21% considering social issues to be the number one priority, and we see the number of respondents in this category increasing to 37%. That is core Labour/Green/Mana territory.

10. National has predicated its reputation as a “prudent fiscal manager”  on returning the government’s books to surplus by 2014/15. As Bill English stated just late last year,

“We remain on track to surplus in 2014/15, although it will still be a challenge to actually reach surplus in that financial year.”

Should National fail in that single-minded obsession, the public will not take kindly to any excuses from Key, English, et al. Not when tax payer’s money has been sprayed around with largesse by way of corporate welfarism. Throwing millions at Rio Tinto, Warner Bros, China Southern Airlines, Canterbury Finance, etc, will be hard to justify when National has to borrow further to balance the books.

On top of which is the $61 billion dollar Elephant in the room; the government debt racked up by National since taking office in 2008. As Brian Fallow wrote in the Herald in 2011,

The concern about government debt is not so much about its level, but the pace at which it is increasing. In June 2008 net government debt was $10 billion, or 5.6 per cent of GDP, and gross debt $31 billon, or 17.2 per cent of GDP.

Since 2008, New Zealand’s sovereign debt has increased six-fold – made worse in part by two ill-conceived and ultimately unaffordable tax cuts.  Those tax cuts were, in essence, electoral bribes made by John Key to win the 2008 general election. (Labour’s paying down of massive debts it had inherited from National in the 1990s, plus posting nine consecutive surpluses, had come around to bite Cullen on his bum. Taxpayers were demanding “a slice the action” by way of tax cuts.)

That debt will eventually have to be repaid. Especially if, as some believe, another global financial shock is possible – even inevitable. With a $60 billion dollar debt hanging over our heads, we are not well-placed to weather another global economic shock. In fact, coupled with private debt, New Zealand is badly exposed in this area (as the OECD stated, in the quote below).

So the “good news” currently hitting the headlines is not so “good” after all, and many of the positive indicators have a nasty ‘sting in the tail’. As the OECD  recently reported,

The New Zealand economy is beginning to gain some momentum, with post‑earthquake reconstruction, business investment and household spending gathering pace.Risks to growth remain, however, stemming from high private debt levels, weak foreign demand, large external imbalances, volatile terms of trade, a severe drought and an exchange rate that appears overvalued. The main structural challenge will be to create the conditions that encourage resources to shift towards more sustainable sources of prosperity. Incomes per head are well below the OECD average, and productivity growth has been sluggish for a long time. Lifting living standards sustainably and equitably will require structural reforms to improve productivity performance and the quality of human capital.

As the election campaign heats up, expect the following;

  1. Greater media scrutiny on National’s track record,
  2. The public to become more disenchanted with Key’s governance as economic indicators worsen and impact on their wallets and purses,
  3. National (and its sycophantic supporters) continue to blame welfare beneficiaries; the previous Labour government; the GFC and resulting recession; and other “external factors” for their lack-lustre performance,
  4. Key and various business  figures to become more strident in their attacks on Labour and the Greens,
  5. A dirty election campaign , including a well-known extremist right-wing blogger releasing personal information on political opponants, which will backfire badly on National,
  6. National to fall in the polls; NZ First will cross the 5% threshold; and Labour/Greens/Mana to form the next government, with Peters either sitting on the cross benches, or taking on a ministerial portfolio outside Cabinet.

So it’s not the Left that should be worried.

National is on shakier ground than many realise.

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References

Fairfax Media: National on wave of optimism – poll

Roy Morgan: National (48%) increases lead over Labour/ Greens (42%) – biggest lead for National since July 2013

NZ Herald: Economic growth hits 4-year high

Statistics NZ: Household Labour Force Survey: December 2013 quarter

Fairfax Media: Dairy prices squash trade deficit

NZ Herald: NZ’s trade deficit remains despite better terms

Fairfax Media: Inequality: Is it growing or not?

NZ Treasury: Recent Economic Performance and Outlook

Fairfax media: Canterbury overtakes Auckland in economic survey

IMF: World Economic Outlook (WEO) Update

Reserve Bank:  Price stability promotes a sustainable expansion

Interest.co.nz:  Bernard Hickey looks at what the Reserve Bank’s OCR decision means for mortgage rates and house prices

NZ Herald: Consumer confidence slips as rates increase looms

NZ Herald:  Govt deficit bigger than expected as tax trickles in

Statistics NZ:  Unemployment December 2013 Quarter

Roy Morgan: Economic Issues down but still easily the most important problems facing New Zealand (42%) and facing the World (36%) according to New Zealanders

NBR:  Govt sees wider deficit in 2014 on ACC levy cut, lower SOE profits

Fairfax media:  Public debt climbs by $27m a day

NZ Herald: Govt debt – it’s the trend that’s the worry

NZ Herald: Cullen – Tax cuts but strict conditions

OECD: Economic Survey of New Zealand 2013

Previous related blogposts

TV3 Polling and some crystal-ball gazing

Other blogposts

The Daily Blog: Latest Roy Morgan Poll shows the Labour funk

The Daily Blog: Canaries In A Coal Mine: Has The Daily Blog Poll anticipated Labour’s Collapse?

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The Cost of Living

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 23 February 2014.

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Radio NZ: Politics with Matthew Hooton and Mike Williams – 17 February 2014

17 February 2014 Leave a comment

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– Politics on Nine To Noon –

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– Monday 17 February 2014 –

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– Kathryn Ryan, with Matthew Hooton & Mike Williams –

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Today on Politics on Nine To Noon,

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radio-nz-logo-politics-on-nine-to-noon

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Click to Listen: Politics with Matthew Hooton and Mike Williams (24′ 09″ )

  • Kim Dotcom/Russel Norman
  • Green Party in government
  • GCSB/surveillance
  • David Cunliffe
  • Fairfax/Ipsos Poll
  • Shane Jones/Countdown supermarkets
  • Labour’s “Best Start” Policy/Taxation
  • Passports/Syria/Al Qaida
  • Green Party Home Solar Policy

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When the Rich Whinge about paying tax

17 February 2014 3 comments

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I can't afford this and pay my tax

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It seems that after seven tax cuts since 1986, the rich still aren’t satisfied;

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taxation rich poor

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The matriarch of the Horton family – the 41st richest family in New Zealand according to the 2012 NBR Rich List and worth an estimated $220 million – Dame Rosie Horton, is complaining that “increasing the rate on the wealthy to provide services for lower income New Zealanders would just discourage hard work” and claims that “the country is already overtaxed and demanding an even greater take from the wealthy would only put people off working hard“.

New Zealand?! “Over-taxed”?!

After two tax cuts (2009 and 2010) which saw the wealthiest and top income earners benefit the most, Horton is still insisting that New Zealand is “over-taxed”?

Well, let’s put that to the test and compare New Zealand to Australia, via the KMPG on-line tax rates indicator;

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KPMG - individual tax rates

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Verdict: New Zealand’s highest individual tax rate (33%) is lower than Australia’s (45%) and lower than the Oceania average (37.75%).

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KPMG - corporate tax rates

Verdict: New Zealand’s corporate tax rate (28%) is lower than Australia’s (30%) – though marginally higher than the Oceania average (27%).

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KPMG - indirect tax rates

Verdict: New Zealand’s indirect tax rates, GST, is higher (15%)  than the Australian rate (10%) or the Oceania average (12.92%).

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The only tax rate higher than Australia or the Oceania average is GST. That tax is recoverable by companies (through their GST Return), and does not impact on rich families (who can also avoid it with some skillful accounting) unlike poorer or middle class families.

So let’s compare New Zealand globally. Where do we stand on taxation rankings? In 2006 the US-based Tax Foundation positioned New Zealand at number 22 out of 30,  in terms of high-to-low taxation ranking;

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Tax Foundation: Top Marginal Combined Individual Income Tax Rates in the OECD
2000 and 2006

Country

Top Combined Marginal Individual Income Tax Rate in 2000a

Rank

Top Combined Marginal Individual Income Tax Rate in 2006a

Rank

Percentage Reduction in Marginal Rate
(2000-2006)

Denmark

59.70%

3

59.74%

1

0.06%

Sweden

55.38%

4

56.60%

2

2.20%

France

53.25%

6

55.85%

3

4.88%

Belgium

63.90%

1

53.50%

4

-16.27%

Netherlands

60.00%

2

52.00%

5

-13.33%

Finland

48.67%

8

50.90%

6

4.58%

Austria

45.00%

17

50.00%

7

11.11%

Japan

50.00%

7

50.00%

7

0.00%

Australia

48.50%

9

48.50%

9

0.00%

Canada

46.41%

13

46.41%

10

0.00%

Germany

53.81%

5

45.37%

11

-15.67%

Spain

48.00%

10

45.00%

12

-6.25%

Italy

46.40%

14

44.10%

13

-4.96%

Switzerland

43.23%

21

42.06%

14

-2.71%

Portugal

35.00%

28

42.00%

15

20.00%

Ireland

44.00%

20

42.00%

16

-4.55%

Poland

40.00%

23

40.00%

17

0.00%

Greece

45.00%

18

40.00%

18

-11.11%

United Kingdom

40.00%

24

40.00%

19

0.00%

Norway

47.50%

11

40.00%

20

-15.79%

United States

46.09%

15

39.76%

21

-13.74%

New Zealand

39.00%

26

39.00%

22

0.00%

Luxembourg

47.15%

12

38.95%

23

-17.39%

Korea

44.00%

19

38.50%

24

-12.50%

Iceland

45.37%

16

36.72%

25

-19.07%

Hungary

40.00%

25

36.00%

26

-10.00%

Turkey

35.60%

27

35.60%

27

0.00%

Czech Republic

32.00%

30

32.00%

28

0.00%

Mexico

40.00%

22

29.00%

29

-27.50%

Slovak Republic

35.00%

29

19.00%

30

-45.71%

Average

45.93%

  

42.95%

  

-6.46%

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Note that the Ranking chart above is dated 2006 – three years before National’s tax cut in 2009, and a further year before the 2010 tax cut.  Our marginal tax rate is now at 33%, putting us even further down the Chart, just above the Czech Republic. That would put New Zealand at number 28 out of 30.

The following chart is a comparison of corporate tax rates;

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United States 39.10%
Japan 37.00%
France 34.40%
Belgium 34.00%
Weighted Average (by GDP) 32.50%
Portugal 31.50%
Germany 30.20%
Spain 30.00%
Mexico 30.00%
Australia 30.00%
Luxembourg 29.20%
New Zealand 28.00%
Norway 28.00%
Italy 27.50%
Canada 26.10%
Greece 26.00%
Simple Average 25.50%
Denmark 25.00%
Austria 25.00%
Netherlands 25.00%
Israel 25.00%
Finland 24.50%
Korea 24.20%
United Kingdom 23.00%
Slovak Republic 23.00%
Sweden 22.00%
Switzerland 21.10%
Estonia 21.00%
Chile 20.00%
Turkey 20.00%
Iceland 20.00%
Czech Republic 19.00%
Hungary 19.00%
Poland 19.00%
Slovenia 17.00%
Ireland 12.50%

Source: OECD Tax Database
PART II. Taxation of Corporate and Capital Income. Table II.1. Corporate income tax rate: Combined Central and Subcentral (column 4):
http://www.oecd.org/tax/taxpolicyanalysis/oecdtaxdatabase.htm

(Via The Tax Foundation – http://taxfoundation.org/article/oecd-corporate-income-tax-rates-1981-2013)

Whilst New Zealand ranks above the Simple Average, at number 11 (equal with Norway) we are still considerably below the Weighted Average (by GDP) and well below our major trading partners, Australia and the United States (figures not shown for China).

Another ranking is the Marginal Effective Tax Rate on Capital Investment, OECD Countries, 2005-2013. On this scale, New Zealand ranks 13th out of 34 nations. At a rate of 21.6%, we are well under the weighted average of 28.5%, though marginally above the unweighted figure of 19.6%. Australia, Japan, and the US rank well above us in higher marginal effective tax rates on capital investment.

So is New Zealand “over-taxed”?

Or are we hearing the remonstrations of a woman with considerable wealth, enjoying a life of luxury and privilege that 99% of New Zealanders could only imagine.

That’s 99% of us.

Horton belongs to the remaining 1%.

Which, in that context explains why she is bleating about having to pay anything resembling her fair share of taxation.

This blogger acknowledges that Horton may well contribute to charities. If so, good for her.

But contributing to charities is no substitution for taxation which ensures that State resources are fairly shared out, according to need, priorities, and maximising benefit for the country as a whole.

However Horton decides to prioritise her philantropy is her choice. But left to the random vaguaries of personal  philantropy, some will always miss out. Goodwill is important, but is no substitute for ensuring the widest, and optimally organised  distribution of resources to health, education, roading, public transport, the justice system, environmental conservation, etc, etc, etc, etc – all the things which New Zealanders enjoy and take for granted every day of their lives.

Why is it that with all their considerable wealth, the rich still feel the need to complain? With a dollar value of $220 million, Horton and her family will never have to worry about paying the mortgage of rent on time; whether their power bill will be higher yet again this winter; if they can afford to pay their children’s uniforms and “voluntary” school fees; and how much they’ll be able to afford to spend on groceries.

The infra-structure of this country did not materialise out of thin air; built up over-night by pixies. It was built by people paying taxes, and the State (the people’s collective will)  building everything from scratch.

When Horton switches on her light-switch tonight, I hope she spares a thought for the tax-dollars that went to pay for the dams; the access roads; the transmission lines; and the workers’ wages who built this incredible asset.

Rather than complain about taxation, Horton should count herself lucky, and give thanks to whatever deity she worships, that she was born in New Zealand.

It could easily have been Somalia.

They have little or no taxation.

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References

Radio NZ:  Philanthropist dismisses ‘rich tax’

NBR: The Rich List at a Glance (Wealth order)

NBR: HORTON family

Tax Foundation: Top Marginal Combined Individual Income Tax Rates in the OECD 2000 and 2006

Tax Foundation: Marginal Effective Tax Rate on Capital Investment, OECD Countries, 2005-2013

News.Com: Tax collecting a deadly job in Somalia, five taxmen killed this year

Previous related blogpost

Greed is good? (28 August 2011)

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election 2014

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 10 February 2014.

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Two Tax Strikes against Dunne?

20 March 2013 5 comments

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cut taxes for the workers

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First, there was the Carpark Tax.

That didn’t go down well…

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Government ditches controversial car park tax plan

Acknowledgement: Government ditches controversial car park tax plan

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Strike one.

Then there was the “Talk Tax” on cellphone, ipads, smartphones, laptops, and  all manner of other gadgets. The business sector didn’t like that idea, either…

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Cellphone, laptop tax plan scrapped

Acknowledgement: TVNZ – Cellphone, laptop tax plan scrapped

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Strike two.

Next up, perhaps one of the meanest taxes ever…

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'Paper boy tax' on small earnings stuns Labour - stamped questionmark

Acknowledgement: NZ Herald – Budget 2012 ‘Paper boy tax’ on small earnings stuns Labour

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Made all the meaner because children cannot vote and therefore this is taxation without representation.

By contrast, the tax cuts of 2009 and 2010 gave the biggest cuts to the wealthiest in this country,

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tax-cuts-april-2009

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Tax rates October 2010

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The 2010 tax cuts alone gave Dear Leader an extra $291 extra per  week, on his old salary of $390,000 p.a. (see: $4b in tax cuts coming) – on the backs of school children doing paper-rounds and other part-time work, for pocket money, it could be said.

Key’s  salary has since increased to 411,510 – plus perks, allowances, superannuation, etc (see: Salaries payable under section 16 of Civil List Act 1979).

For Key, it’s apparently a “non-issue,

“A lot of people didn’t know they were entitled to them so they didn’t bother claiming. The amounts were fairly small and overall we have been trying to clean up the tax code.”

See:  Key rejects criticism of ‘paperboy tax’

I guess when you have $50 million stashed in bank accounts all over the place it’s fairly hard to identify with a kid earning $40 a week?

By what definition of fairness can we justify someone earning $390,000 a year getting an extra $291 a week – whilst paper boys and girls – who are paid a pittance anyway – are taxed for the few dollars they work for? Are we really that desperate as a nation? And then we wonder why our young people are buggering off to Australia and elsewhere?

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The Final Goodbye

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If there’s one single example of where our society has gone terribly wrong since 1984 – this, to me, is it.

It’s fairly apparent to everyone except the most sycophantic National supporter that the ’09 and ’10 taxcuts left a gaping hole in the government’s revenue. (see: Outlook slashes tax-take by $8b) Dunne’s pathetic attempts at raising additional taxes is simply a consequence of tax-cuts that were unaffordable three years ago – and remain unaffordable to this day.

On the issue of the “Paperboy/girl Tax”, I look forward to the business sector campaigning hard to scrap that, as they did with the “Carpark” and “Talk” taxes.

After all, the members of the Employers and Manufacturers Association have kids of their own.

Isn’t campaigning on behalf of your own children as important as a carpark?

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Additional

Key defends tax cuts in light of zero Budget (2 April 2012)

Key rejects criticism of ‘paperboy tax’ (25 May 2012)

Car park tax opposition cuts across cultural, class divide (19 March 2013)

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The more things change…

27 August 2012 4 comments

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From 1999, the final year of  the Shipley-led National government…

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Source: Otago Daily Times

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To 2012 – some thirteen years later – and now led by a smiling, waving shark from  the commercial sector that kindly gave us the Global Financial Crisis and fifteen million unemployed, worldwide,

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Full story

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Some things that we can always rely on, when National is elected into power; poverty will worsen; unemployment remains high;  taxes will be cut for the rich, and welfare beneficiaries – the victims of National’s policies – will cop the blame.

Eventually,  the realities of National’s mis-management filters through to the television-distracted middle classes and a mixture of guilt and fear prompts them to switch their votes from the Tories to Labour/Greens/NZ First.

Thus it was in the 1990s – and thus it will be in 2014 (if not earlier).

In the meantime, while it takes umpteen bad news-stories to awaken the TV-addled brains of  baby-boomers, we continue to waste lives and the locked-in potential of people trapped in poverty, unemployment, and a stagnant economy. Child poverty remains New Zealand’s dirty little secret, to the rest of the world.

For National and their rabid ACT supporters, the fault lies elsewhere,

See: Poor better off than before: Kerr

See: Where is welfare policy heading : Muriel Newman

The Right is very ‘big’ on personal responsibility. Except when it comes to failed Right Wing policies. Then it’s someone elses’ fault.

Meanwhile, the real bludgers in our society continue to live their lives, enjoying the fruits of a developed nation, but not paying their fair share of taxes,

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Full story

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One of the constant refrains of the neo-liberal establishment and sycophants for the rich & powerful is that New Zealand society cannot afford things like decent housing and school meals for our children.

Of course not.

When the rich are not paying their fair share, they are denying society of the means to address poverty-related issues.  At the same time, they enjoy living in a society built up with the taxes paid by others.

That’s bludging.

See previous blogpost:  Greed is good?

In the meantime, our society income/wealth gap widens and we move further and further away from any notion of egalitariansism we once had.

If  that’s the sort of society New Zealanders want, then let’s be 100% up-front and honest about it. Let’s prepare ourselves for outbreaks of disease; increased crime; drugs; beggars in the streets; and eventual outbreaks of mass violence.

See: England riots: was poverty a factor?

I doubt, though, that Middle New Zealand could stomach an overtly class/wealth-stratified society – especially if poverty becomes so entrenched that it becomes more visible and inescapable. We prefer our poor to be out-of-sight and out-of-mind, so we can focus on who is going to win “The Block” or “The Voice” or “The Whateverthefucktelevisionisdishinguptoustotakeourmindsofreality“.

As long as Middle New Zealand is prepared to accept such a bleak future, then the rest of us can plan and prepare accordingly.

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Or, we can turn our backs on that vision, and instead look elsewhere for inspiration.

The Scandinavians and French may be a good start.

Or are we, as a nation, so gullible and thick that we keep going around in circles, decade after decade?

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Additional

Baby boomers clogging the job market

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= fs =

“We must depoliticize children’s issues…”

9 March 2012 3 comments

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An OECD comparitive table on international tax rates (OECD average income tax, %,  single person at 100% of average earnings, no child). Australian, Swedish, and New Zealand comparisons highlighted in red,

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OECD average income tax (%) single person at 100% of average earnings , no child sweden australia new zealand

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As the table clearly shows,

  • New Zealand’s tax rate (single person at 100% of average earnings, no child) is lower than Australia,
  • New Zealand’s tax rate (single person at 100% of average earnings, no child) is marginally lower than Sweden,
  • The OECD average is dragged down by countries such as Mexico, Korea, and Greece,
  • During the Clark-led Labour Government (2000-08), New Zealand’s tax rate was consistantly lower than Australia.

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Comparing taxation with social outcomes for our children and families, we find the following. The table shows, with grim clarity, that we are lagging behind. Australian, Swedish, and New Zealand comparisons highlighted in red.,

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OECD child wellbeing sweden australia new zealand

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Meanwhile, from “Inside Child Poverty New Zealand’s” Facebook page…

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” 63 people voted in this week’s Friday Poll on National’s Welfare reforms. 55 don’t like them, 5 do like them and 3 don’t know.

Me? I think yet again here are policies which do not think through what impact the economic policy will have on the current and future well being of the child.

All the long term research tells us that if we do not get the first 6 years of a child’s life right in terms of meaning health, social and emotional needs – we risk spending huge amounts of money in crisis management is the child grows into an adult with health problems and anti-social attitudes and quite possibly emotional scarring from having to live with strangers for the better part of each day from year 1.

Opting for short term populist solutions instead of long terms planning and ring fencing our children from the storms of politics is not statesmanship, it’s salesmanship .

The legacy of the 1991 mother of all budgets was a dramatic increase in the all the diseases of poverty that affect poor children most. What part of that do the current architects of welfare reform not understand?

We must depoliticize children’s issues, come to a common cross party agreement about the appropriate level of community responsibility for ALL our children, work out the most cost effect method of meeting those needs and then ring fence it so no future governments can mess with it. This is the Swedish system. It is why they are No2 in the OECD for child well being and we are No 28 with only Turkey and Mexico below us.”

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Bryan Bruce is 100% correct. The OECD stats paint a grim picture of Sweden achieving much superior outcomes for their children than we do. (The link to the relevant report is given below, under “Resources” – it’s worth having a look.)

This is one table, showing data on “Comparative policy-focused child well-being in 30 OECD countries”. New Zealand and Swedish comparitive rankings are underlined in red,

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Comparative policy-focused child well-being in 30 OECD countries Australia New Zealand Sweden

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And a similar table, this time compiled from UNICEF data. Whilst New Zealand and Australia are not represented on this graph, it is interesting to note that the Scandinavian social-democracies rate consistantly better for children than the market-led, more capitalist-oriented nations of America and Britrain (both of which have considerable problems with poverty and other social problems),

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Only the de-politicisation of child poverty can achieve practical, serious, and long-lasting solutions to this growing problem. National and Labour must work together if this is to be achieved.

Both parties have achieved cross-Party concensus on issues such as superannuation and our Nuclear Free policy. We need to be asking the question; why can’t the same be done for child poverty?

If Sweden and the other Scandinavian social-democracies can achieve a measure of success in this area – we need to be asking ourselves; why can’t we?

This issue is not beyond our means, abilities, and wealth to address. We have all that.

What’s missing is one thing to resolve this problem; the will to do it.

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Additional

Food parcel families made ‘poor choices’, says John Key

No track kept of ‘lost’ kids

New Cabinet must get busy working for children

Fear of dangerous rift from wealth gap

Children absent from new welfare policy

Resources

OECD Report: Comparative Child Well-being across the OECD

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