New Zealand goes to the polls tomorrow – Saturday November 8.
According to the latest polls, it seems that NZ will give National about 48% of the party vote, not enough to form a government in its own right, but by the time it invites its friends Act and United over to play, it will have enough seats in the House to take the Treasury benches. Things could yet change: the Maori party could win enough seats to give it the balance of power, and Labour and the Greens between them could form a sufficiently large block to be the basis of a government, together with some of the minor parties, but that’s looking increasingly unlikely.
So why is NZ voting this way?
I really don’t know. Here’s how I see it.
The Labour government in its various incarnations over the last nine years has made some very impressive moves, making changes and implementing policies that are so well liked that the National party will not be able to change them, or at least, will only be able to tinker around the edges. Labour has:
- re-introduced a retirement savings scheme (the Labour government of 1975 set up a retirement savings scheme, but the incoming National government of 1978 repealed it and introduced a universal pay-as-you-go state funded pension based on the average wage, available to everyone aged 60 and over);
- set up an investment fund using the substantial budget surpluses of the last few years to partially fund the superannuation liabilities created by the state-funded super scheme;
- developed a substantial welfare-for-families scheme, which has appreciably reduced poverty levels; and
- introduced several social equity measures of the sort that are being seen world wide, such as a somewhat threadbare but nevertheless viable form of marriage for same sex couples, and any other couples who care to use it, and banning smoking in pubs and restaurants.
Some of these measures are, to my thinking, mixed blessings. The family-welfare package doesn’t deliver much support at all to the lowest income families, those on benefits, and it is a highly targeted and consequently expensive-to-deliver program. It would be much more cost effective to simply give a universal benefit to all children (more precisely, to their caregivers). Of course, this would mean giving as much money to millionaires’ children as to beneficiaries’ children, but so be it, and if that’s really a huge issue, then the benefit could simply be taxed at the marginal tax rate of the higher income earner in the family. As for same-sex marriages, or “civil unions,” the form of marriage doesn’t go far enough: either the same form of marriage should be available to all couples, or the state should not be involved in marriage at all.
Labour have also reduced unemployment, reduced government debt, increased GDP growth, increased real wage growth, restored capability to the public sector, and in general, been a jolly good government. There have been some failings: in common with developed countries world wide, there are disasters and mishaps in the health system; the tertiary education sector has been allowed to decline and decline and decline, with New Zealand now seen as a happy hunting ground for overseas universities looking for staff; despite rhetoric about being green, carbon emissions have increased substantially and the country is full of polluted streams because dairy farmers are allowed to release effluent at will. However, overall the positive far outweighs the negative.
But it’s about personalities, not policies.
Helen Clark and Labour are not particularly seen as old and tired – there are plenty of new faces coming through the ranks – but they are seen as being out-of-touch and convinced of their own inherent right to rule, a common enough characteristic of third term governments. They have been plagued by allegations of nanny-statism, spending too much time telling people how to live. These claims however, only seem to make traction in the more rabid areas of the blogosphere. What is really hurting Labour is their political expediency. To my mind, there are three items that count against them here.
(1) In the 2005 election, they used parliamentary funds to pay for a pledge card. The move was extraordinarily cynical. The card was clearly election expenditure, but they claimed it was just informing people about their policies, which is a legitimate use of parliamentary money. But anyone with any nous would just reply, “Bullsh*t.” Moreover, because they regarded it as parliamentary expenditure, they didn’t count the cost towards their election campaign limit. They spent up to the limit on other campaign material. In effect, by using parliamentary funds for the pledge card, they not only helped themselves to taxpayers’ funds, but they also spent far more than the allowable amount on their campaign. Notoriously, one of their defenders claimed it was “courageous corruption” but that was not well received in a country that prides itself on being unusually corruption free.
(2) In 2007, Labour rushed through legislation controlling election advertising, but the legislation was so poorly drafted, due to political pressures, that even the Electoral Commission admits that it cannot administer the law with any certainty. The legislation itself seems to have been designed with the purpose of hobbling the National party, but it has created constraints for all political parties. I have no problem with trying to create limits on the extent to which money can be used as a source of political power, but this legislation seems to be deeply flawed.
(3) Labour has become very closely associated with the perfidious Winston Peters. Peters took his NZ First party into a loose coalition agreement with Labour, and in return won ministerial positions for Peters. In his capacity as Minister for Racing, Peters was able to acquire substantial concessions for the racing and bloodstock industries. Some people who are deeply involved in racing and bloodstock have made substantial donations to NZ First. You draw the conclusion. Peters has also for many years railed against big business in politics, but this year, he was found to have accepted donations from big business, and hidden those donations by not declaring them. His latest gaffe has been to deny that he has been using a donated helicopter for campaigning (donated by those racing interests) despite photographic evidence to the contrary. He tried to wriggle out by claiming that he had travelled in a helicopter, but of course he had not campaigned from it, because he wouldn’t try to shout from a helicopter. [link] Puerile stuff, and yet somehow, emblematic of the stench which surrounds him. He also, regularly, every election year, pulls out a race card, against Asian immigrants. He’s bad news all round, and yet Labour continues to work with him, and has not ruled out working with him in the future. Labour has become contaminated by his stench.
What this all means is that there are plenty of people who despite liking Labour’s policies, feel that they can no longer vote for them. They don’t trust Labour any more.
But the alternative is no better. The National party has the usual policies that you would expect from a right wing party – less government, less tax, better management and so on. Some of its policies are bizarre: it has promised to invest 40% of the pension investment fund in New Zealand, which would soak up the entire capitalisation of the NZ stock market, leaving the party of less government owning a high proportion of the NZ business sector, and it wants to privatise the Accident Compensation Corporation, NZ’s no-fault accident compensation scheme, which according to PriceWaterhouseCoopers, “adds considerable value to New Zealand society and economy and performs very well in comparison to alternative schemes in operation internationally.” [HT: Hard News]
All that National is really offering is a different leader, new comer John Key. Key has an interesting background – reared in a state house, educated at public schools and universities, then making millions in senior positions with Merrill Lynch, before coming back to NZ to become a politician. He has no personality. He is like a great blancmange, taking on whatever flavour is slathered over him. He proclaims his Jewish descent to Jewish audiences, his Christian upbringing to Christian audiences, and his agnosticism on national TV. Early on, he claimed not to recall what his position had been on the 1981 Springbok tour, an event which rocked New Zealand. Campuses were alive with protest for and against the tour, and Key was in his first year at university in a rugby playing town. It’s hard to believe that he couldn’t recall his position on the tour. It looks very much as though he simply doesn’t want to take a position, doesn’t want to lose votes, doesn’t want to show who he really is.
More than that, he seems not to understand just what life might be like for the people on the other side of the tracks, despite that much vaunted upbringing in a state house with a widowed mother. When speaking to school kids in Waitara, a small Taranaki town with a large proportion of underprivileged young Maori households, he chose as his topic National’s promise to get fast broadband into 75% of homes. The kids weren’t impressed.
“How can you compare the environment to broadband?” Jenses Kemp (17) said. “Not everyone has computers … how can he justify that billion dollars? Some kids here don’t even have money for clothes.”
Shane Partington (17) agreed. “That billion dollars could go towards so much. What about our education and health system?” [link]
Key forgets that his own underfunded childhood nevertheless had incredible privilege – a middle class mother who not only valued education, but knew how to go about getting it for her children, and a white skin.
I was more confident when Bill English was leader of the National party. For all his moral conservatism, he was at least a compassionate conservative, prepared to try to understand what life might be like for other people, sure that he didn’t want to see children going without on his watch, intensely pragmatic about ensuring that all New Zealanders had at least some opportunity to succeed. After being demoted as leader, he put in a fine turn as Opposition Spokesman on Education, to the extent that even left leaning economist Brian Easton endorsed him. [link]
Key doesn’t convince me, at all. But then he would have to be extraordinary to do so, given that I almost always vote left. More to the point, I know at least two usually Tory-voting women who are very unsure about voting for him, to the extent that they are searching for a vote other than National. One thinks that she might, like me, vote for the Maori party instead.
Labour has, however, made a huge mistake in the campaign they have run against Key. They have sought, without success, for some evidence that he had dirty hands in business, that he was involved in the crooked deals of the 80s and 90s, that he is the incarnation of teh ebil bizniz. He is not, and Labour look silly for pursuing him so intently instead of focusing on policy. I suspect that Key doesn’t have the courage to be teh ebil – blancmanges are not noted for their iron will. But it’s almost as though Labour have decided that business is necessarily evil and therefore John Key is necessarily evil. Many business people, big and small, must feel offended by Labour’s pursuit of Key.
Can’t vote Labour, can’t vote National, wouldn’t vote for Winston Peters and NZ First ever, at all. So who to vote for?
The Greens are an option for many left leaning voters. The right has been at pains to characterise them as watermelons – green on the outside but red on the inside. Given this identity campaign, the right will have little to complain about if the overall left-vote, Labour and Green, turns out to be bigger than the overall right vote, and the Labour party gets to lead the government again. But they look like Luddites to me. I would be more confident about voting for them if they acknowledged that we can’t actually all live in some rural idyll, not without a massive decrease in the population first.
On the other side of the ideological divide, there’s the Act party, unreconstructed market ideologues from the 80s and 90s, who are proposing the usual sell-offs and meltdowns and damn the poor. They are about as unpalatable as Winston Peters and NZ First, ‘though to give them credit, they are at least honest in their aims.
So what I have done? Along with one of my Tory-voting friends, I’ve voted Maori. Go figure.
*****
There should be some preliminary results through by about 8pm AEST, and we might have a clear sense of how the government will shape up by Sunday morning. I will try to pop by on Sunday to give you an up-date on what’s happening, and why.
To my soulmates in the Australian and American Right, I offer words of comfort and inspiration in this dark time – New Zealand will be your Taiwan, from which the recapture of your respective mainlands will only be a matter of time!
“So why is NZ voting this way?”
Too much sheep sex. Or is it not enough?
LOL OMG SHEEP JOKES!!11
I suspect more than anything Labour are likely to fall victim to the curse of incumbency – after a certain period as long as the opposition is bland and appears competent there just isn’t a lot a government can do, unless they’ve miraculously managed a decade without fuckups.
Good post. Bad sheep comment.
…
What on earth is a pledge card? I’m not familiar with the term, and a quick Googling reveals little. Is it an actual card, that’s handed out, or is it a research document, like a budgeted set of commitments?
It was a credit card sized piece of cardboard with Labour’s election promises on it. There’s a not-so-good image of the 2005 card here. There’s various spoof images around, but I prefer not to link to them.
I hope the Greens put the kybosh on blanket baby allowances. At least over the Zero Population Growth level of two surely. More people are not the solution imho. More people are the problem.
I think it was a leaflet committing to do particular things, but I think the point was that it was paid for with government funds, or something like that.
Cheers, Deborah. They sound like a pretty useful thing to produce (tho’ not with Government money, naturally).
Whoever wins is in for a bit of a nasty downturn in the NZ property market. A lot of the miners from NZ I work with have a number of houses they have brought in NZ, if the mining boom here slows down much more then they will be back to a more purely domestic housing sales regime.
The NZers we have here are invlauable part of the industry, but the money flowing back home is quite large.
Any budget predictions by any of the NZ parties are likely to be wishful thinking if they fail to factor in a mining downturn here in Oz. The Kalgoorlie region has seen a number of projects shelved or placed on care and maintenance already.
I’ve a spooky sense of “race”always lurking just below the surface in recent NZ politics. I’m not saying the whites are out to do a Selma on their indigenes; I sense rather a lack of comfort from many whites toward their at times formidible, at times vulnerable minority and that there is a related blue collar aspect that sometimes sees the centre turned back to the right.
And of course, far more powerful than anything to do with sheep is the fact that Australia voted Labor, and heaven forbid they should do anything remotely in sync with the foul possum breeders across the Tasman.
As the Duchess of Windsor said, you can’t be too rich, too thin or have too many sheep jokes.
So Spiros – I understand that you are a level headed person; in that you drool out of both sides of your mouth. And well balanced too – with a chip on each shoulder. But is it true that your hometown cancelled Christmas because they couldn’t find three wise men and a virgin?
Still laughing?
As Sarah Palin would say,
“You betcha!”
I’ve got a feeling the pledge card thing was first used by Tony Blair in 97.
I hope that’s right. Howard, of course, came to power in 96 basically saying “all the Labor policies people like I am now a convert to” and disclaiming his and his parties’ previous far off to the right stances – something very much alive after the Hewson FightBack throw everyone off welfare after 9 months, GST, completely deregulate IR package. What do we have now? The ruination of Medicare and public health, vast overfunding for private education, a horrible IR system most of which is still in place, etc, etc. “Tinkering around the edges” after a few terms can mean turning policy into its opposite. I still think that it’s an enormous pity Beazley didn’t win in 2001 (or 98!) – that was about the last time you could reasonably have expected the damage to have been turned around quickly.
Of course, maybe it’s harder to do this sort of thing with an MMP chamber?
I am sorry Deborah, but most of what you’ve said is rubbish in my view. The fundy right in NZ hate Labour and have made it their business to get rid of Labour since the legalisation of prostitution and, in particular, the civil union bill. Then came the relatively minor changes involved in the repeal of section 59. This was whipped up with some considerable skill by hard right christians to generate a classic right wing culture war ambush. They real objective of any culture war – getting working class people to vote against their own best interests over “values” succeeded and gave traction to the whole tiresome nanny state narrative.
It is disappointing to me that an educated woman such as yourself has decided to vote for a party that is fundamentally built on the proposition of reverse apartheid, but it is your choice to waste your vote i guess.
Deborah I am not sure why it is better to give welfare payments to the well off as well as those that really need it. Does this not simply put more of a strain on the system as a whole and mean that there is less overall for those who do genuinely need it.
In your list of Labour Govt achievements you forgot to mention the most important (morally) of all IMO: The decision not to follow the US into the invasion of Iraq. A National Govt would have been all in there hammer and tongs (possibly by way of apology for the Nuclear Free legislation). Legislation NZers are very proud of, but will be undermined in any way possible should the Nats gain power.
While I can understand the mood for change after 9 years, the Kiwi’s may end up biting of their noses to spite their faces.
I hold out hope that Clark will retain power with the help of the Greens. The leader of which is from Brisbane I believe.
I am not sure why it is better to give welfare payments to the well off as well as those that really need it.
The point is more that the costs of targeting are sufficiently large that it is actually cheaper, because it is so much easier, to give the same amount to everyone, and then claw some back through the tax system.
NZ does this already with universal superannuation. If universality is okay for old people, why isn’t it okay to do it for children?
I’ve got a feeling the pledge card thing was first used by Tony Blair in 97.
Yes, that’s right. The NZ Labour party copied the idea.
Sure is. Russel Norman.
http://www.greens.org.nz/people/candidates/russelnorman
I was at uni with him @ UQ. Back in the day, he was in Resistance, and I defeated him for the spot of Union Treasurer if I recall correctly!
Oh and to Spiros and other who still think their well worn sheep jokes are so funny, I would just say that at least the Kiwis have had the balls to defend their principles not once but twice in regards to US ‘requests’.
Pity Govt’s here didn’t have half as much courage.
Now now Mark let modesty prevail, otherwise we’ll be looking at kiwi and thinking where party leadership and destiny might have met their mark.
Heh!
The point is more that the costs of targeting are sufficiently large that it is actually cheaper, because it is so much easier, to give the same amount to everyone, and then claw some back through the tax system.
NZ does this already with universal superannuation. If universality is okay for old people, why isn’t it okay to do it for children?
Oh yes the old chestnut about how it is cheaper to just give benefits to everyone.
If this is the case why means test anything? On universal super, I feel pretty much the same way.
What really grates is it is the well to do that are always denouncing the vast sums spent on the ‘undeserving poor’. I am sure they are more than happy to put their hands out for their ‘handout’.
Tom Semmens, lest we forget how bad the Nats really are. Have Kiwi’s forgotten the way the Nats and EB carried on last election? If they do give the Nats power again I guarantee they will regret it.
Kim, I remember that soooo well. Howard was so soothing. Nothing will really change. I’m just nicer than that nasty Mr. Keating. I’m just like you. It still makes me angry – which is probably obvious.
With respect to targetting vs. universal benefits, I don’t think you can make universal generalizations.
Sometimes it makes more sense to target; sometimes it’s cheaper and easier to give things to everyone and claw back in tax.
The only problem with that Robert is how much actually gets clawed back in Tax. If it’s anything like here with all the tax loopholes then some would end up paying back and others (probably those who need it least of course) would not.
I just can’t see the social justice is giving welfare money to those who clearly don’t need it on the offchance they may pay it back in their tax.
There are very few dodges in the NZ tax system, especially for wage and salary earners. It’s instructive to compare the physical size (printed pages) of the Australian tax law with the physical size of the NZ tax law; NZ’s is very much smaller. It’s not for nothing that Kevin Rudd has been muttering about a thorough review of tax law here.
Business owners in NZ can usually structure their activities through a trust, but it takes a fair amount of effort to do so. So yes, a wealthy business person could avoid ‘repaying’ any benefit, but only to the extent that she or he is already minimising tax obligations.
The Poll Bludger will be liveblogging the results:
http://blogs.crikey.com.au/pollbludger/2008/11/08/new-zealand-election-live/
There are very few dodges in the NZ tax system, especially for wage and salary earners.
…
Business owners in NZ can usually structure their activities through a trust, but it takes a fair amount of effort to do so. So yes, a wealthy business person could avoid ‘repaying’ any benefit, but only to the extent that she or he is already minimising tax obligations.
Exactly my point and why I think the whole thing is just a scam. Can you imagine why any business owner would not be minimising their tax obligations? Any ‘effort’ would be expended by their accountants, and I’m sure the cost involved is worth it. That is why they all do it.
Even more reason for benefits to be means tested so those that need it get it.
The gravy train for the wealthy just never stops does it.
Well a few days after Americans threw out a right winger and a year after Australia tossed out one and in the middle of a serious financial crisis created by the right, the Kiwis have thrown out the worthwhile, stable Helen Clark.
I know things haven’t been perfect there recently, but such a repudiation?
I don’t think Clark has been rejected for economic reasons.
Even more reason for benefits to be means tested so those that need it get it.
Well yes, except that means testing is usually based on taxable income. So any business person with a decent accountant can get their taxable income below the relevant thresholds. Means testing benefits just creates an economic incentive to create a lower taxable income.
I agree entirely with the social justice arguments around means testing benefits. It’s just not clear that it is the most cost effective approach. Sometimes, it really is cheaper to just give everyone the same amount, even if it means giving money to people who are already rich.
Deborah, if you are referring to my comment about the current financial crisis when you talk of Clark not being rejected for economic reasons; what I meant was that it seemed the more surprising that the NZ people, after nine years of healing under Clark from the effects of previous neoliberalist politics, would choose to reject that just as a giant neolib- triggered crisis threatens more of it.
Particularly when the US and Australians have just moved so emphatically away from neoliberalism, btw.
Well yes, except that means testing is usually based on taxable income. So any business person with a decent accountant can get their taxable income below the relevant thresholds. Means testing benefits just creates an economic incentive to create a lower taxable income.
Very few successful business people would be able to reduce their income sufficent enough to make them eligible for benefits. Look at the cut off points for those things that are means tested. Maybe some micro businesses, but most would not.
There are plenty of incentives, foremost being greed for business to minimise their taxable income. Means testing of benefits does not create this phenomena. I guarantee that if all means testing of benefits were to cease tomorrow, businesses would still minimise tax, and continue to use tax havens – it is the nature of the beast.
There will always be arguements against means testing, but I just do not think they bear close scrutiny. They may be plausible to some, and thus allow for what it IMO blantant greed by the already wealthy.
Welfare is a safety net, not a free cash grab.
Kat, it’s a straight trade-off, and one that’s made all the time in government policy. Do we choose the cheaper option which has the drawback of giving money to people who don’t need it, or do we choose the fairer option which costs more?
I have worked in tax, and tax policy, and believe me, there are plenty of ways to get taxable income below various thresholds.
Deborah, we’d love to hear some of these ways.
The only way I have encountered to reduce income is to increase inputs. (In plain language:- Raise the costs)
You mean, you want me to advise you how to go about rorting the tax system? Not today, thank you! If I was to do such a thing, which I wouldn’t, I would charge you a hefty fee for doing so, then channel it through various structures so that I could claim the Family Tax Benefit. At least, I know how to do this under NZ tax rules; I wouldn’t be so sure about the detail of doing it in Australia. However I’m sure the good people at PWC or Deloitte or whoever could help you out.
Deborah, Please help me past the inconsistency.
Is minimising tax a rort, or is it legitimate?
An old conundrum – when does tax avoidance become tax evasion? (NB: I may have the meaning of ‘rort’ a little askew. My understanding is that a rort may or may not be legal, but it’s definitely pushing the law, to the point where the activity may be fraudulent.)
I have a couple of views on that. There’s the standard views from tax cases:
Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.
[link]
So if you can arrange your affairs so that you pay less tax and / or get more benefits, and it’s all legal, then that’s fine.
I tend to go a step further, and say that as citizens, we have a duty to pay as little tax as is legally required, because it’s one of the few ways that we can restrain the power of government. I don’t always put that into practice for myself; sometimes the effort required to make a deduction claim is just not worth what I would get for it. It’s yet another of those trade-offs between principle and cost.
I think minimising tax is legitimate, but evading it is not. But the line between avoidance and evasion is notoriously difficult to draw.
Deborah, Thank you for the dictionary definition of “tax minimising”.
If you are going to charge any sort of fee for taxation advice, your first task is to convince the client you have expertise. Your comment above indicates you have more understanding of taxation than most on this site (not a very high bar to leap) Were you working in “tax, and tax policy” as a typiste, or was your comment tailored for the comprehension of the readership here?
I have never encountered any way to legitimately reduce tax AND keep the money saved. There is much chanting of “tax savings” from many I encounter, but little to no explanation of how this would be achieved. “Smart accountants” is the usual face-saving reply.
The exception being investment allowances, which haven’t been around for..er.. 20 years. And they won’t be much derided on this site as they were principally for water conservation, tree & soil conservation, and money poured into “artistic” stuff.
Those with memories will recall the “Bottom of the Harbour” schemes, which were legal (though extremely immoral/unethical – thus not touched by most). Tax avoiders who used such schemes were caught & penalised only because the government made a law, then backdated it, then prosecuting persons for having yesterday done what was legal at the time.
“Tax avoiders who used such schemes were caught & penalised only because the government made a law, then backdated it”
With the charge led by Treasurer John Howard.
It was the only useful thing he did in economic policy in his career.
Why was it “useful”?
Because it plugged a huge hole in the government’s revenue base, without which more scrupulous taxpayers would have ended up paying a lot more tax.
Is it proper for a government to enact retrospective legislation, then prosecute people who acted in a manner which was legal at the time?
or, if a government loses a revenue stream, is it proper for them to impose a greater burden upon other taxpayers, or is it proper for that government to just reduce spending?
Roughly, to minimise tax you can either change the nature of the income so that it is exempt from tax (for example, in NZ, getting capital gains rather than revenue), or you can defer the recognition of income, thereby getting a timing advantage, or you can channel it through a different entity, thereby getting either a permanent advantage through a lower tax rate, or a timing advantage by holding the income in a lower tax entity for a few years.
For example, back in NZ, if you earn your income through a company, the income is taxed at 30% in the company, but when it is paid to you (by way of dividend), it will get taxed at your marginal rate (say, 39%). Imagine you earn $1million. You put it through your company, where it is taxed at 30% ($300,000). You leave it there for say, five years, and then pay it to yourself by way of dividend, where it gets taxed at 39% ($390,000) with a credit for the tax already paid ($300,000). That means that you have deferred $90,000 of tax for five years. The time value of money means that you have saved about $25,000 (assuming a discount rate of 5%, and also assuming that I have dredged the formula up correctly from the dim dark recesses of my commerce degree).
Of course, you have to have enough money to live on in the meantime, but we’re assuming these are rich folks, right?
From the point of view of collecting benefits, deferring income can be very useful. If you can create a low taxable income in one year, then even if its higher in the next year, in the first year, you can collect the benefits. Sometimes you see taxpayers with an income pattern of low income one year, high the next, then low again the following year. That can suggest that they are deferring income in order to be eligible to collect benefits every second year (eligibility for benefits is usually determined solely on the basis of current year taxable income). And collecting a benefit every second year is better than never collecting it at all.
All perfectly legal, and if the government has set the rules up in that fashion, then why shouldn’t taxpayers use the rules in order to pay the minimum tax (or collect the maximum benefits) possible?
hey, came to this post a bit late but just wanted to say i liked it
like the way you’re upfront about your biases and not afraid to make an explicitly left critique.
Kat, it’s a straight trade-off, and one that’s made all the time in government policy. Do we choose the cheaper option which has the drawback of giving money to people who don’t need it, or do we choose the fairer option which costs more?
I don’t think it has been demonstrated to be the cheaper option.
The ‘clawback’ in tax sounds good in theory but in reality is unlikey to happen except to PAYE tax earners.
How much can it possibly cost to include a question about income. Other things are means tested, no practical reason why this should not be.
Except to assuage reverse class envy.
Kat, it’s not just “how much did you earn”. It’s how many children did you have? Do you have a partner? How much did they earn? Have we got the threshhold right? What if your income (or children) change during the year? Do you have to pay it back? Is a 98% effectively marginal tax rate too high? How can we verify that you are telling the truth? If we give you this benefit, how does it change your entitlement to other benefits? Is our computer system big enough to record all this? If we need a new database, will it talk to our other databses? How long will it take to employ the people to do this analysis? Have we thought of everything? How do we educate people to understand their entitlements? What was the question again?
The crux of this discussion appears to be that if you are ‘big’ enough there are many mechanisms to avoid tax. Highly paid accountants are more than happy to advise you of what these are.
Costs incurred are really an investment, as you get the benefits of minimising tax as well as being able to claim the cost of such advice as a tax deduction.
As Deborah said ‘There are very few dodges in the NZ tax system, especially for wage and salary earners’. And in Australia as well. All the ‘dodges’ are for the already wealthy as a ‘reward’ for business investment. As if mere profit is not enough these days.
And I thought it was only Communism that was corrupt! (No not really).
“Tax avoiders who used such schemes were caught & penalised only because the government made a law, then backdated it” – SATP
“With the charge led by Treasurer John Howard.
It was the only useful thing he did in economic policy in his career.” – Spiros
Yet under Howards PM’ship a tax avoider was allowed to pay only half the amount owed to the tax office, and probably wasn’t even fined. As a bonus he was given a seat on the board of the Reserve Bank.
Remember Costello’s good friend Gerard Henderson.
Yeah real ‘useful’ policy. In the US such people ‘tax avoiders’ are named snd shamed, as per the recent 4 Corners programme, ‘Tax me if you can’ which lifted the lid on the nefarious activities of the Lowy’s and Lichtenstein (?) bank.
Surely they save enough on the ‘tax minimising’ mechanisms afforded them by the ATO? Apparently their is no one so greedy as a rich man.
Wouldn’t even have heard about it if it hadn’t been for the US position on such activities.
PAYE earners have no option but to pay, and little/no scope for minimisation.
Yet some would argue we should hand these people even more money in the form of middle/upper class welfare which is basically what non-means tested handouts really are.
Little wonder the gap between the haves and the have nots continues to grow.
Kat, instead of “the rich avoid tax”, how about being more specific. Stereotyping is easy. Please demonstrate how one may avoid lots of tax. (for your example, I suggest an example of how a rich, bloated, greedy publican would pay less tax)
Malcolm the fact remains other benefits are means tested. If there is value in means testing some there musts be value in means testing all.
I am not prepared to accept at face value the statement that ‘it costs less’ when logically it must cost more.