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90 seconds at 9am: Dampening expectations; Super-regulator; Wal-Mart deflation
Watch on our video home page here.
David Chaston details the key news in 90 seconds at 9am in association with BNZ, including news with news that Bill English has been dampening expectations about the amount of reform there will be in the upcoming budget.
He is now strongly hinting that the government is unlikely to align the personal / trust / and corporate tax rates.
In fact, finding a revenue-neutral set of reforms without making meaningful reductions in government spending is proving too hard, it seems.
There are also reports the Government is intensively polling around these issues, trying to ensure it doesn't get its supporter base too grumpy.
And, the Government plans to create a 'Super regulator' for capital markets that combines the Securities Commission , the Companies Office and the disciplinary section of the NZX. All aimed at rebuilding confidence in stock markets and other securities.
Related Topics
In the US, there are reports overnight that manufacturers there are starting to hire, with both call-backs of laid-off workers, and new hires on the increase, as prospects improve.
However, there was also a report that new jobless claims for unemployment benefits are still rising.
And Wal-Mart, the world's largest retailer, reported its 4th quarter earnings, and that showed a 1.6% decline in sales of its US stores. It put the decline down to less store traffic, and interestingly to deflation in the price of groceries and electronics "“ items that make up 40% of its trade.
But it is an enterprise that benefits from deflation "“ its profits jumped to record levels.
Overnight markets were quiet, with exchange rates pretty much unchanged. However, the Euro continues to take a hammering, and it is now at its lowest level against the NZD in more than a year. The UK Pound is also starting to come under pressure.
Finally, out today are the six month Crown accounts, which will give an early indication of the size of Bill English's immediate problems.
Bernard Hickey is reporting from Wellington today and will be back on Monday.
16 Comments
''There are also reports the
''There are also reports the Government is intensively polling around these issues, trying to ensure it doesn't get its supporter base too grumpy.''
Great. A really good recipe for radical government.
On an unrelated note - the US Fed apparently watches the American Core Logic House index very closely. As can be seen in this pice from Calculated Risk that would be a double dip in US housing which is forming then (see his graph):
http://www.calculatedriskblog.com/2010/02/first-american-corelogic-house...
Agreed Andy - how about
Agreed Andy - how about some leadership from the politicans instead of this Obama style rubbish. I don't think much of alot of what Lange and Douglas did but at least they knew how to do an "all in play"
I'm glad they have abandoned
I'm glad they have abandoned the idea of aligning the trust and personal rates with the company tax rate. Now they need to abandon having the trust rate as low as the personal rate. I suggest the following:
Trust Rate: 35%
Top Personal Rate: 33%
Company Rate: 30%
That would be much cheaper to implement than full alignment. The difference between the trust rate the the personal rate would help to unwind the trust industry, ensuring assets were allocated on economic efficiency rather than tax efficiency.
@Vibenna - the finance job
@Vibenna - the finance job is yours!
If they want stop sheltering of income in Trusts raise the rate for Trusts.
A great day today..... Expand
A great day today.....
Expand the policy Vibenna......
@Vibenna. You are penalising true
@Vibenna. You are penalising true users of trusts, not all trusts are setup to dodge tax. At the minimum the rates must lined up in order to stop tax loophole. Company tax does not have to be lower than personal but as long as its competitive. Either way to fund massive tax reforms the gov will need to cut spending, but they are not going to do that. So we'll probably ending up with minor reforms and more sticky plasters on other areas of the tax system.
Drop top personal rate to
Drop top personal rate to 33%, don't change trust rate, i.e rate should be tax neutral as trusts have a valid purpose when discharging a duty of care for person and property.
Making them tax neutral will stop the abuse.
I agree with John trusts
I agree with John trusts do have a valid purpose and they fact you have to pay fees to accountants etc not to metion the hassle for no real gain will stop abuse.
"In fact, finding a revenue-neutral
"In fact, finding a revenue-neutral set of reforms without making meaningful reductions in government spending is proving too hard, it seems."
"And, the Government plans to create a "˜Super regulator' for capital markets "
In fact, lets expand government spending. Why not just get the existing regulators to actually do something?
Spoilsports....
Spoilsports....
Having the personal rate and
Having the personal rate and trust rate neutral will stop new trusts being formed unnecessarily. But to unwind existing trusts, an impetus is needed - a definite disadvantage for trusts.
Yes it does penalize genuine users of trusts. But how many of those are there? And what's wrong with paying a slight premium for the privileges granted by sheltering assets in a trust?
But vibenna. I won't be
But vibenna. I won't be able to give a personal guarantee and have 'my' assets protected from creditors in the case of default if I don't have a trust.
So only 35%, then.
maybe the polling of their
maybe the polling of their supporter base has told them if they were looking to fund the cuts via property ringfencing they will be gonners at the next election ? And thats why we are seeing a dampening of expectations ?
"Too hard" just doesnt cut it - 30/30/30 is doable if they have some backbone
@Andy H and Sean: Funny
@Andy H and Sean: Funny but for myself we elect a Govn to do what we want them to (mostly) do and not what they want....ie they present their mandate at election time and follow that mandate if elected...
regards
Trusts have a purpose...the tax
Trusts have a purpose...the tax difference/advantage should be neutralised though I think....
regards
wassup with 10 at 10
wassup with 10 at 10 ????????