GUEST BLOG: Bryan Bruce – A Taxing Issue.

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I see Simon Bridges is dangling the “less tax as a vote for me” carrot this election and that Grant Robertson has immediately wanted to know which services Bridges would scrap in order to run a government on less income.
(Could it be election year I wonder?)

Yet this is the same Grant Robertson who rejected the recommendation of the Tax Working Group for a Capital Gains Tax that would tax profits made on such things as the sale of residential property, businesses, shares, all land and buildings except the family home, and intangibles such as intellectual property and goodwill.

At the time , the group’s chairman, Sir Michael Cullen said he calculated such a comprehensive capital gains tax would raise roughly $8 billion over its first five years. (Just think of all the public good you could with that money.)

Moreover Robertson has not signalled ,as far as I am aware, he is in favour of any measures to tax wealth .

Other parties will no doubt be offering their tax related remedies for what ails us – from a complete reform of the monetary system to seniors being required to pay a tax for the privilege of living in their mortgage free home.

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Me?

I’d take GST off food because it’s a tax because it proportionally hits the poor more than the rich.

I’d like to see a comprehensive capital gains take on the sale of assets plus a financial transaction tax on all bank and finance transactions.

I’d be happy to see some increase in Public Debt ( currently we have one of the lowest levels in the OECD) in order to reduce our massive Private Debt because families are now having to pay privately for things we ALL, collectively, once helped provide.

Why do I take this view ?

Because as US Supreme Court Justice Oliver Wendell Holmes once famously stated:

“Tax is the price we pay for a civilised society”.

If we want a fair society then we have to be fair.

Of course, once tax money is collected it can be terribly mismanaged and misappropriated.

But I’ll leave that particular topic for a future post because being angry about the inefficient , non-transparent , and the self-serving use of public funds, is not a good way to start the day.

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.

17 COMMENTS

  1. Bryan,

    It’s simplistic to state Grant Robertson “rejected” the Capital Gains Tax. All of Labour were devastated at the position NZF put them in over the CGT.

    Choice 1 = press on with the well overdue and fairer aspect of taxation and as a result, see the Government collapse and a snap election called….or choice 2 = admit you’re being forced to consume a turd sandwich and shitcan the CGT due to a power play from the party that put them in Government and in doing so, avoid a crisis and stay in Government.

    It makes many of us sick to the back teeth that people around us are enjoying significant investment profits as tax free income all the while we are being forced to surrender a significant portion of our well needed family income to the taxman. Binning this was a price Labour had to pay for having NZF as a coalition partner. I’m confident this would be near the top of Ardern’s biggest regrets of her first term.

    • FFS it was not a capital gains tax that was recommended by the business friendly tax working group, because the rate of tax on assets was determined by the taxable income – which is easily avoided by the richest companies in the world!!!

      We turn a blind eye to public tax transparency in NZ, but the OZ companies are required to be public and are disturbing reading on how they do not have to pay any taxes! It also then shows how the companies are linked to ‘high worth’ individuals around the world.

      https://www.abc.net.au/news/2018-12-13/one-third-of-australian-companies-paid-no-tax-ato/10614916

      Same thing with American companies – even worse!

      “new analysis finding that 60 profitable Fortune 500 companies paid no taxes on a total of $79 billion of profits earned in 2018.”

      https://www.cbsnews.com/news/2018-taxes-some-of-americas-biggest-companies-paid-little-to-no-federal-income-tax-last-year/

      In NZ we are SO PATHETIC our government does not even require transparency to the public just like we did not require an OZ style banking Australian Royal Commission to investigate the routs. (Note banking profits is one of NZ’s biggest exports)… nothing to see here but a lovely banking directorship to NZ MP’s is a small price to pay!

      Might help if the left can work out that middle class NZ are not tax cheats but the identity brigade individuals giving away NZ assets to big business statistically are!

  2. Both of your taxes are in practice hard to implement.

    Taking GST off food makes for additional complexity and leaves unanswered how to treat the catering industry. It would be typical of a Labour government to take GST off food then add a tax on anything with a lot of sugar in it – you know, like apples and oranges. 😉

    The current government caved over GST for the same reason – it is byzantine in it’s complexity and relies on valuations of assets: which is a recipe for the government finishing up in court for half the transactions.

    Here’s a thought: How’s about less government? Less pointy headed civil servants poking their noses into the daily activities of average people.

  3. Yet more economic nonsense. Taxation does NOT fund government spending. Taxation is used to condition the economy, such as:

    1. Taking heat out of a highly inflationary situation
    2. Redistribution, by taxing the rich
    3. Helping certain industrial/ commercial enterprises

    A country using its own currency can never run out of money. Labour’s boast about putting $3billion away for a rainy day just exposes either their economic ignorance or deliberate lying to our people – because in reality it means that they have impoverished the economy by $3billion. As the rainy day arrives, or just before, the government can issue whatever funds it requires – just think how easy it seems for countries to afford wars, or to bail out the financial sector. Labour has wasted its time in office, when it could have been spending far more to help (money is never the complete answer) solve the very serious social issue we have. For heaven’s sakes, catch up with the sense of MMT.

    • You are referring to printing money which is how you end up like Venezuela or Zimbabwe.
      For example, if we print $80 billion to pay off our debt, this means foreign entities now have $80 billion to come in, flood the market, and drive inflation through the roof.
      Claims that we can print as much money as we need is naive and nonsensical.
      Please do some research on the matter .

      • The printing of money is not usually done for the purpose of paying overseas debt, but for stimulating the economy and boosting production. Zimbabwe and Venezuela were were exceptional cases: Zimbabwe, as a result of predatory lending, found itself with overseas debts which it couldn’t repay; Venezuela had its gold reserves and export receipts frozen as a result of US bullying.

  4. It is not taxation that is crippling the economy and lives of most non-rentier/landlord people but the incredibly high rents that many have to pay – and for 3rd World hovels if what I have seen of my young daughter’s various abodes in Wellington (the capital city for Christ’s sake!) is anything to go by. No real efforts by governments of all colours to control this (house prices are AT LEAST twice as expensive as they “should” be in relation to incomes). No rent caps, fair rent schemes, no punitive taxation of income from investment properties etc. Pie in the sky, but the whole thing is both a scandal and utterly depressing.

    • @ Liminal, The rents seem high because people’s incomes are so low.

      Historically under various governments over decades within NZ property prices average a doubling every 7 years and rents are in line with property prices. In fact one of the issues in NZ is that the rental prices are too low in relation to many property prices so it is not what people think is going on at all. People don’t know because they are just used to mindless echoing, not based on long term statistics or historical norms.

      Aka People in the 1970’s were paying $30,000 for a house in a premium location…. now surprisingly 50 years later same house is worth over 3 million dollars. The difference is that in the past they had wages that were also increasing in line with the cost of living, and cheap loans for housing via the state. Now everything is privatised and all that is gone.

      The problems is not the price of rents or property which is probably not that far off average norms in terms of raises (maybe a bit higher maybe through immigration demands) but the true destruction is the wages income which is essentially declining for most people in NZ, while property is increasing at normal trends…

      The left’s insistence of housing crisis while not being interested in the wages crisis is a case in point and why they continue to jettison support from workers across all income streams to the right.

      Likewise more cries for more welfare for beneficiaries when the working poor are actually worse off than beneficiaries in many cases… I know someone with kids on the DPB who gets around $1000 p/w… I also know some one who is on the 2020 minimum wage for 40 hours of $756 less taxes which might be made up of income tax, Kiwisaver, ACC, student loans… then take off petrol taxes, council rates.. so hearing how hard done by are beneficiaries does not resonate with many anymore as many know those on benefits getting more income than the working poor.

      In addition the laughable $20 p/h that most of the new migrants are on is only $800 less taxes so it should not take a genius to work out that doing a cash job while claiming for kids once getting permanent residency is a better income than working for about 50% of NZ jobs that are now under $20 p/h…

      I am not making a judgement about beneficiaries or migrants I’m just saying it is a trap, because in neoliberal dysfunctional NZ, increasingly you are better off on a benefit or with a cash job on a benefit, especially if you are not a benefits genius and have the time to work out all the other credits you may be entitled to with lengthy paper work and an excellent grasp of accounting that sadly many people under our decreasing numeracy, do not have.

      Meanwhile the white collar jobs are increasingly being restructured and redundancy has become a yearly event at many firms. There is no job security, creating a trend of there being more security in someones home than their job – directly tied to how workers are treated and job security with constant redundancies and more workers on the subcontractor model.

      Instead of advocating treating workers better, raising wages and putting in massive compulsory redundancy to increase worker security, the left instead try to make people’s lives less secure by trying to prise people out of their only asset left, their house.

      Don’t worry, lefties, Rymans will get it, business wins as soon as the unprepared tax wise Kiwis are admitted to a rest home!!

      The right are laughing all the way to the ballot box when disgruntled workers both blue and white collar, switch allegiance to the right, tired of the lefts obsession with beneficiaries, trade deals, more immigration at laughable rates/immigration for people who have zero incomes or thinly veiled Ponzi scam labour businesses like fast food/liquor stores, and more taxes and tinkering with tax brackets which all seem to lead to one thing, more poverty and less social mobility even if you work hard and have a job.

      It is also an incoherent left message. Do the left hate the landlords and want to reduce them or do they want to attract them to try and get more houses in circulation to stem the rental shortage? Who knows!!

      Likewise the recent advertisiment to try and attract NZ youth to go into the ‘trades.

      This was done by laughing at the ‘white collar’ degree for the 30 yo that could not leave home because her job paid so little (or maybe she did not have a job) while the son rushed into the building degree.

      Sadly the advertisement did not bother to work out that construction workers are now being imported into NZ and employed on $20 p/h – so you study for 3 years, and then look forward to $800 less taxes…. wow how enticing!

      Then you wonder why domestic students are reducing tertiary study in NZ, they can’t get locals into the trades and suicide rates in particular for young men, are at record highs!

  5. Here’s an idea for Grant. If the polls start looking bad think about that $8billion surplus. If you are not in power you dont get to use any of it wisely. Make sure you win by offering a tax refund. Give every man woman and child a $1000 GST refund. Cost $4.5 billion. Its economic stimulation and its progressive, as $1000 is worth more to the beneficiary and working poor than to your average property speculator. That said the property speculator may just vote Labour to ensure receipt of $1000.

  6. I would carry on with the wage increases and then introduce a measure ( maybe a tax break) to help some businesses offset this cost. I would invests heavily in getting people of welfare not punitive measures they don’t work we saw this under national they created more inequalities and other undesirable stats out of people. I was on a benefit but I also worked on and off keeping my foot in the door and I got help to get an education. I utilised the TIA and didn’t pull the benefit get rid of this but she used it herself. These types of measures are really good if we truly want to help single parents. Also not all single parents are women.

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