GUEST BLOG: Bryan Bruce – A Clayton’s Tax Review

By   /   February 22, 2019  /   11 Comments

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Sometime in the 1980’s a television ad appeared on our screens for a non-alcoholic drink called Claytons which had the catch line “The drink your having when you’re not having a drink”.

It wasn’t long before Kiws began referring to a decision that didn’t change anything as a “Clayton’s decision”

I think the MIchael Cullen Tax Review is one of those. The Tax Review you’re having when you’re not having a Tax Review.

Here’s why.


Sometime in the 1980’s a television ad appeared on our screens for a non-alcoholic drink called Claytons which had the catch line “The drink your having when you’re not having a drink”.

It wasn’t long before Kiws began referring to a decision that didn’t change anything as a “Clayton’s decision”

I think the MIchael Cullen Tax Review is one of those. The Tax Review you’re having when you’re not having a Tax Review.

Here’s why.

A key challenge for the review group was “to assess the structure, fairness, and balance of the tax system” yet while it was specifically asked to look at a capital gains tax (CGT), company tax and environmental taxes it was told not to touch income tax, GST rates or tax on inheritance ( whihc is how most wealth is passed on)

So right from the start it was set up as a Clayton’s review which would ignore taxation methods that could significantly close the gap between the rich and the poor in our country.

So the proposal for a financial transaction tax was given short shift and
Corporate Welfare will continue with companies paying less tax than individuals

As for the two areas the group WERE told to look at….

Yes they have recommended a Capital Gains tax on a wide range of currently untaxed assets such as the sale of land, shares, business assets, intangible assets such as intellectual property but not on the family home, and personal assets However, a holiday home would be taxed on sale.

The capital gain on shares in companies would be taxed but in some circumstances capital losses would also be able to be offset against other income. The capital gain on the sale of a business would be taxed, including the goodwill.

Exemptions from capital gains would be granted for some “life events” such as relationship breakup, death. A family farm passed on to a family member would be covered by a rollover and there would be no tax on the capital gain.However if the family member then sold to a third party the capital gain would be taxed.

As for environmental taxes they have suggest ed changes to the emissions trading scheme to be more like a carbon tax. Dirty taxes on solid waste to reduce volumes to landfills. Taxes on water pollution and water extraction. Tax deductions to encourage conservation. They are recommending a tax on fertiliser use and congestion charges to tackle traffic issues.

How many, if any, of these recommendations will find their way into the various political manifestos come election time is anyone’s guess .

Certainly for those hoping that the Ardern/Ropbertson government would make reducing Inequality in our country a priority ,the FUTURE OF TAX REVIEW is and the way it was,set up is a very great disappointment.

Bryan Bruce is one of NZs most respected documentary makers and public intellectuals who has tirelessly exposed NZs neoliberal economic settings as the main cause for social issues.

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11 Comments

  1. Mattygee says:

    It was a 1970s ad, late

    • CLEANGREEN says:

      Yes bryan we picked this issue as our press release of today also as we agree that their must be a tax on businesses causing “environmental damage, as we see many companies are wrongly choosing road freight over rail which is five to eight times less in causing climate emissions.

      So companies using only ‘high carbon footprint’ mode of transport to markets and Ports is a bad move and should be highly taxed to reduce their impacts on our future.

      We found this issue of ‘water’ and ‘who owns our water’ as this was one of more evidence of yet more erosion of our rights to our natural resources; – whom maori hold a deep appreciation of water and its intrinsic values to their heritage and health.

      We wrote an article today about this loss of our water by global bottling companies now invading our country and now taking much of our best water sources now and damaging our health and properties as they truck freight the product through our poorer areas to our export ports now. These foreign bottling companies are now seen as ‘environmental thugs’ wrecking our communities lives and health.

      ‘A new water tax is needed for foreign water bottling companies currently paying no water tax while they are causing harm to our public health and environment.‘

      Press release – Citizens Environmental Advocacy Centre Incorporated. 22nd February 2019.

      The environmental impacts of business activities of water bottling in NZ are currently not being considered by “The Tax Working Party” group, as to the environmental impacts these foreign overseas companies are causing to our residential communities health and wellbeing now; – consider the cost and harm they are causing us now by only using truck freight transport;

      We are supporting placing a new water tax on those foreign overseas companies taking our best water around our country today as they are choosing to exclusively use only road truck freight which has a large carbon footprint and impact on residential health from noise, vibration and air pollution.

      Facts;
      • The transporting of that water by trucks to production plants and for export is harming our roads as more trucks are gridlocking the roads causing accidents and road damage.

      • But the elephant in the room is the harm the extra truck transport going through our cities and causing noise, vibration and air pollution is now adversely affecting the health and wellbeing of many residential areas around the country and councils claim now have no funds to mitigate the adverse effects of these trucks carrying water for export through their residential zones to export.

      • The “Tax Working Party” should be a proposing an ‘environmental harm’ cost as part of a tax on the “user pays” principal, to pay for mitigation on those transport effects to our citizens.

      Since these water export companies are now choosing to use only the roads to move millions of litres of water and causing damage both to our residential environment, and impacting large costs to us paying for road repairs on the roads they are using we must place a tax on the cost of transport of that ‘so called free water’ then it is only fair these foreign companies are required to pay tax to mitigate for their damages they are causing in their business.

      We think this is a fairer system to give local councils and NZTA the funding to repair the roads and repair the water infrastructure also.

      All NZ citizens should be not paying tax for a for a ‘natural recourse’ if they are not using it for financial gain, so only commercial water users should pay a tax and NZ business should only pay a limited tax far less then foreign companies as they are not citizens.

  2. Andrew says:

    No tax system will close the gap between the rich and the poor.

    If you increase taxes on the wealthy successful people they simply go elsewhere.

    If those tax increases are doled out to the poor they won’t use it to uplift themselves. Just the opposite – it will entrench poor decision making.

  3. Al says:

    I am not disappointed. CGT is a move in the right direction – especially if the revenue gained from the implementation of this tax is used for targeted income tax cuts (along with changes in the thresholds). I agree that the ongoing corporate welfare you describe is not great – especially as we have been waiting for the trickle down since 1984. I actually don’t believe that it would have been politically viable to suggest both CGT and a financial transactions tax at the same time, but FTT will have its day.

  4. Steve King says:

    I am very disappointed that a financial transactions tax was never on the table. I have not read anywhere why this was not considered as an option. https://www.youtube.com/watch?v=qYtNwmXKIvM

  5. Black Lemming says:

    Standing in the way of a fairer tax system may be the end of Winston Peters and NZ first .

    Tv 3 poll this week , 75 % of National voters don’t want a CGT because they largely are the benefactors of that property income which is tax free .No surprises here .

    On RNZ this morning Guyon Espliner heard Amy Adams contend a CGT attacked the kiwi way of life .He then asked her how many houses she owned , which she avoided , but he countered with , ” I believe its 8 ” She countered saying now only 6 , as she had sold 2 last year .

    Which was an undisputed capital gain she had paid no tax on . He asked, relative to workers who pay income tax ,was this a fair go ?
    Check mate .

    One of the best political assassinations I have heard in a long time and a major media backfire .

    Gold Star Guyon .

  6. David Stone says:

    A CGT is simply a tax on inflation. There is no real gain if replacement of the taxed asset with an equivalent, perhaps in another tow or site; perhaps away from sea level rise, is similarly at an inflated price. If the countries’ finance was managed properly house and property prices would increase only modestly and there would be no opportunity for windfall speculative gains in price. For speculators the GCT will simply become part of the calculation. For a business employing people and needing a larger premises because the business is growing, or needing to relocate for a wide range of possible reasons it will be crippling. All that Cullen and co are capable of doing is to tinker around with the chaotic effects of the neoliberal mismanagement they have orchestrated, causing even more damage to the real economy that employs people, and thence to society.
    The working group having been set to work with the constraints outlined by Bryan was left with nothing to look at but a CGT. So it was indeed a Clayton’s Tax review, and a publicity stunt. But is it really going to help the economy to place this roadblock in the way of any small business ability to expand? Few enough survive anyway. This will play right into the hands of multinationals and existing monopolies. No one seems capable of thinking it through.
    D J S
    D J S

  7. Marc says:

    I agree with what is said above in this post. Own goal for the government, but perhaps they did not really want to achieve much anyway. It has Grant Robertson written all over it, I think.

    Much smart talking, little substance.

  8. David Stone says:

    This describes the problem that a NZ CGT is supposed to fix.
    https://www.globalresearch.ca/quantitative-easing-qe-forever-the-feds-dramatic-about-face/5669320
    D J S

  9. CLEANGREEN says:

    Quote from Martyn;
    The ‘Kiwi way of life’ is a low imagination horizon anti intellectualism based on exploitation”

    Yes Martyn, well said.

    No tax system will ever balance between rich and poor.

    I came back from 10yrs away working in Canada from 1988 to 1998, and suffered a large shock as most of my mates were either without jobs anymore or had a broken marriage.

    It seemed that while away ‘rogernomics’ had gutted the country and closed most of the local regional HB/Gisborne businesses down.

    Then when ‘John Fucking Key’ the slimeball came along he just totally dredged the place, to close down and steal anything he could finally sell.

    I don’t have much respect anymore for politicians now, because they say what you want to hear.

    When in Government they just don’t do much at all.

    It is very disheartening really.

    I just hope Jacinda doesn’t let us all down as they all have before.

  10. adam says:

    I said before the last election that the labour party was solidly right wing – when you look at them in purely economic terms.

    Now we have a tax review which confirm all the worst fears of another austere, thus effectively right wing government in control in this country.

    The economics of these people dictats how they think and operate. This is business as usual – more liberalism to destroy working people and the middle class.

    But there is a difference, you better be nice to these masters this time round, as they believe in kindness. OK it may be a blunt type of deserving and undeserving kindness – but you have been warned.


 
Authorised by Martyn Bradbury, The Editor, TheDailyBlog,