MUST READ: Why is Labour walking into a trap?

By   /   December 3, 2016  /   13 Comments

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In New Zealand, however, we are taxed to death and then when we need help we get denied our entitlements by a brutal system that seems dedicated to stopping people gaining access to help when they or other members in their family have an accident or are unemployed, sick, or are born or become disabled.

andrew-little-labour-leader

The government is holding out the “tease” of possible income tax cuts as part of their election strategy for 2017. They are well aware that many people quite rightly resent the level of taxes they pay and would welcome some tax relief.

They also know that they need to use the cover of a tax cut “for everyone” when what they are actually planning is a massive tax cut for their rich mates and peanuts for the rest of us. The peanuts that most of us may get in the form of an income tax cut will also simply be gobbled up in increased costs for rents, power, indirect taxes and government charges.

The fact that the National Party tax cuts will be a fraud for most people does not mean that the smart political option is to reject them out of hand.

Working people in New Zealand pay too much in tax and the wealthy pay too little. That is simply a fact of political economy that nearly everyone knows to be true.

Workers know they lose at least 20% of their wage income before they get to see it. They then pay 15% in GST on nearly everything they buy. On top of that come fees for education including illegal “donations” being extorted by more and more schools. Government departments charge for things that used to be able to be obtained as of right.

And that doesn’t count the taxes on petrol, car registration, and the so-called sin taxes on cigarettes and alcohol because the middle class disapproves of our “bad” habits.

Taxation probably takes over half of a wage workers income. That probably wouldn’t be too bad if we actually got value for money. For example, countries that have genuinely cost-free access to child care, education, and generous welfare systems usually accept the need for high taxation to pay for it.

In New Zealand, however, we are taxed to death and then when we need help we get denied our entitlements by a brutal system that seems dedicated to stopping people gaining access to help when they or other members in their family have an accident or are unemployed, sick, or are born or become disabled.

The state boasts about reducing people on welfare as a percentage of the working age population that is radically more than would be expected by reductions in official unemployment measures. These politicians then express shock that more and more people are homeless and have to access food banks just to be able to feed themselves.

A party claiming to represent working people should expose the fraud and counterpose a “progressive family tax package” that will promise to reduce taxes on most working people and radically increase taxes on the wealthiest in our society.

I suspect Labour is reluctant to do that because the measures that would achieve that end are simply too “radical”. By “radical” I don’t mean measures that would only be supported by the “lunatic left”. The policies that are necessary would be simple and extremely popular. They would involve a reduction of taxation on low and middle wage incomes and an increase in tax rates on high incomes as well as the imposition of taxes on all other forms of income and wealth accumulation. This would include wealth taxes, death duties and capital gains taxes.

The wealthy treat taxation as a voluntary activity. Avoiding tax is rewarded not punished. Even when banks and big corporations are caught cheating they are allowed to pay a discounted penalty rather than a very punitive one. Every High Net Worth Income Individual should have a personal tax assessor assigned to them to help them calculate their tax liability. This is actually done in the UK and has resulted is a massive boost of payments to the government. I would add that the assessment can be accepted by the wealthy individual or challenged in court. If they lose in court the tax imposed should be increased by another 50%.

All foreign corporations should have assessors assigned and a reasonable tax imposed. If it is challenged in court and they lose a penalty should be imposed on top of the original assessment.

Tax dodges like the interest rate deduction used by foreign vulture funds who load their companies with debt should be eliminated.

One way simple way to prevent tax dodging by corporates would be for the government to be allocated a one-third non-voting shareholding in all companies. With 33% of all benefits, including dividends and capital gains going to the state it would be guaranteed that taxes would be paid fairly.

We could also propose replacing GST with a financial transaction tax which would also be popular.

Every Labour Party report explains at length that wealth has concentrated in New Zealand over recent decades. That is only possible because the wealthy do not pay their fair share. It is also a consequence of a radical weakening of the worker’s movement and their institutions like the unions.

A progressive Labour government would combine fairer tax measures with increases in minimum wages, and measures to allow unions to grow radically from the current pathetic nine percent of the private sector workforce. Wealth redistribution downward would then be possible if we had more tools to fight with.

A shift in tax from labour to wealth, combined with moves to strengthen the power of workers in their daily struggles would be a popular programme for a genuine workers party.

It would be simple for Labour to say to John Key’s promised tax cuts that a future Labour-led government would guarantee every working family up to a certain income threshold would be better off with their tax and family support measures than what was being promised by National.

But to do that there would need to be a determination to tax the accumulated wealth and high incomes that are escaping the attention of the tax man at the moment.

Fear of advancing such a programme reflects not that it would be unpopular, but a fear of the social struggle that would be unleashed by the rich and powerful to subvert and defeat such a party and government.

However, defending the status-quo, with its high taxation of workers income, is a losing strategy.

 

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About the author

Mike Treen

National Director of Unite Union

13 Comments

  1. Castro says:

    The status quo puts No Zealand on the path to serious social unrest and potentially civil war… Labour is not a left-wing or workers party… quite obviously, and most compellingly exemplified in its signing away No Zealand in a Free Slave Agreement to the world’s largest dictatorship, China.

  2. Shona says:

    I agree with most of what you say here Mike. BUT Labour have the weak ineffectual neo liberal Grant Robertson as their Finance shadow minister. No way will that spineless pontificator do ANYTHING like what you propose. It would require actually having the ability to connect with and understand what used to be Labour’s voter base. He doesn’t have that. In fact no one who calls the shots in Labour has any vision or cojones. They are Nat Lite.

    • lloyd jordan says:

      woo hoo finally someone else calling out robertson.. im not alone at last..now can someone else please expose queen annie king as the leader of the neos pink party

  3. Words says:

    “Fear of advancing such a programme reflects not that it would be unpopular, but a fear of the social struggle that would be unleashed by the rich and powerful to subvert and defeat such a party and government.

    However, defending the status-quo, with its high taxation of workers income, is a losing strategy.”

    You know it Mike Treen, Labour is damned if they do and damned if they don’t.

    • save NZ says:

      The powerful also tried to stop MMP but failed. Taxes at present are not fair. There are many hidden taxes in NZ and it is not greed that makes many Kiwis baulk at the word ‘more taxes’ but the unfairness of the tax system when rich listers on 50 million pay less than the top tax rate legally and the doctor who breaks over with the student debt and 7 years of study before being able to get a job is told how ‘rich they are’ based on PAYE income. That is why the tax bribes work for National to an extent and why there is anger when Labour talk about raising taxes.

      The poor can’t pay taxes, the super rich don’t have to pay taxes, overseas based people don’t pay taxes, so the main burden of taxes are left to the middle classes who also tend to have to add on 10% extra tax for student loans.

      I would like a transaction and robin hood tax that will catch all the people who moving money around whether, property or shares and lower PAYE taxes and maybe GST. The reason I hate the idea of capital gains is that the rich can avoid it, those buying and not selling property avoid it, so actually it is taking away from the locals. If everyone had to pay just to transact any transaction then it makes it fair for all.

      The UK is also taxed to death and they are also increasing in poverty for many based on their ‘free market based’ ideas which in NZ politicians also love. UK have teachers, and police who can no longer afford to buy a house in the city they work in because so many empty foreign owned or recently resident migrants houses are bought and the rents and house prices are too high for their wages.

  4. John W says:

    Abolishing GST would be a start forcing a progressive tax scale.

  5. Sheepdog says:

    Great article Mike!

    So why won’t they do even a fraction of what you suggest? Because the constituency they claim to support is not the constituency they actually support.

    In other words, if Labour was a party for labour, they would do it, except they aren’t. They’re a party of centrists; well-paid professional political anesthesiologists, chloroforming workers and keeping them sedated for nefarious purposes.

    Railing against this isn’t going to fix it. But organising local political resistance in every electorate held by a sitting Labour member might.

    The Labour Party has been running TINA on workers for so long it’s an ingrained response. But we have absolutely nothing to lose at this point. It’s time we taught the Labour Party that they are actually accountable to the workers for their time in office.

    This is the lesson of Corbyn and Momentum; we have to mount a mass mobilisation against our “own” party in order to get it to be what it is actually advertised to be.

    So be it. Let’s get started.

  6. dave says:

    If you are right Mike, Labour have already lost the election by not seeing it, and not saying so. If you can see it then surely they should have.

  7. Mike in Auckland says:

    LABOUR and Little now need to stay firmly ON FOCUS, fuck the MSM and polls, stay damned firm, on equality, fair chances for all, controlled immigration, a living wage, at least an significantly increased minimum wage, consideration of a UBI, fair treatment of sick and disabled (not forced to exit benefits for insecure, precarious work), FAIRNESS, ALL OVER, a one and all society, where we build a NEW nation, where you BELONG, and are PART of a greater scheme of things.

    NO more elitism, speculation with property (just had the manager knock on my door, harassing me), no more discrimination, no more stigmatisation for being poor, on a benefit, sick or disabled, no more rich pricks privileged treatment, close the tax gaps, and loopholes, work with progressive governments across the world, be independent and bold, in standing for a fair, humane, dignified and rewarding, participatory society, that is what we fucking need, not this shit that Key and Nats have sold to too many.

    People take note, read, hear, listen and think, it is time for a change, a game changer, bring NZ back into the driver’s seat, to run its own affairs for the people as a whole, not just the selected few, who have screwed us up so much.

    The times they are a changing, smell the coffee, it smells good.

  8. mosa says:

    Shit Mike i wish you writing Labours tax policy and had the chance to implement it !

    If the Labour party dont get back to basics and common sense and really stand for working people and those suffering under this financial system based on modern day slavery and enriching the already wealthy then its time to change the party and start again.

    If National secure a fourth term, unprecedented in our modern history then Labour will be a total irrelevant force and provide no hope for the people that need a strong alternative there is still time for adopting what you are advocating.

    As Norm Kirk campaigned in 1972 after the last fourth term National government said

    ” Labour its time “

    • Strypey says:

      Anyone still referring to Labour as “National light” is just not paying attention. Yes, there is still a rump of neo-liberal MPs who have been holding safe Labour seats since the 1980s (one less now Goff has gone), but there has been a major rebellion inside the party since the departure of Clark.
      * Mike, who wrote this article, now runs Unite. The man who used to run Unite is now a core Labour staffer. Is it so far-fetched to imagine Mike’s suggestions might get a hearing inside Labour?
      * People writing off Grant Robertson as a neo-liberal are obviously regurgitating hearsay about the man. He is nothing of the sort.
      * Andrew Little came out of the union movement, and I have heard him speak passionately (if privately) about how badly Labour messed up in the 1980s. Despite his (possibly out-of-context) quotes about Labour still being a “free trade party”, he is our answer to Corbyn, possibly even more so than Cunliffe was.
      * a friend of mine attended a meeting of her local Labour branch recently, just out of curiosity, and the discussion was very similar to the sort that goes on here on TDB. The neo-liberal rump and the corporate media work together to project a vastly distorted picture of the real organisation that is Labour 2016. They do this on purpose, to keep the working class left alienated from Labour, and help them in their attempts to keep pulling Labour to the right.
      * Labour are making slow and careful moves into harmonization with the Greens, something that is as essential to overtaking National (just as the accomodation with their predecessor the Alliance was for Clark), and something never would have happened if ecocidal neo-liberals like Shane Jones were still calling the shots.

      Look, I’m still an anarchist. For me, the long game is bringing about a radical, participatory democracy, one that is as different from the Victorian debating society we have inherited as a form of government as representative democracy is from the theocratic feudalism that came before it. I don’t believe that political parties can really fix the things that need fixing, but having lived through three National governments, and two Labour ones, I cannot deny that who controls the state matters. It matters to many people’s everyday survival, and it matters to whether the conditions for pushing towards a more radical democracy are fertile or sterile.

      We now have the raw material for a broad coalition that would, at worst, not make thing worse as fast as National will, and at best, make them significantly better. The regime’s secret weapon has just quit on them. There has never been a better time for a political revolution to move Aotearoa from a one-party dictatorship (propped up by 2 seat warmers from dead parties and a third whose party is already preparing to jump ship) back to a multi-party democracy. Instead of wallowing in fatalism and cynicism, let’s embrace this opportunity. By all means criticize Labour when they deserve it, but don’t just write them off, at least not until you’ve checked out their policy platform for yourselves.

  9. Gosman says:

    Yes please. Push for this and a CGT for the next election. See how many votes you win.

  10. Philip Ferguson says:

    Mike T means well, but his perspective of appealing to Labour or trying to advise them really is hopeless. They have been what they are for a long, long time and are not about to be anything else.

    We need an alternative to Labour, not the cringeworthy perspective of trying to convince them to be something other than what they are.

    https://rdln.wordpress.com/2016/07/28/redline-on-the-labour-party/