Here's my summary of the key news overnight with news of problems for Japan.
But first, small business optimism rose in the US in October as more owners said they planned to invest in their companies and were having a harder time filling job openings, according to a survey released on Tuesday.
The same cannot be said for consumer confidence in Japan; it sank to another low in the latest survey.
Japan might have its problems but its current account is not one of them; it surged in September as its currency weakened - and this is despite it now running trade deficits.
Here's something to ponder. The giant Alibaba ecommerce site did almost NZ$12 bln in sales on Tuesday, which was 'Singles Day' in China. That is, it raked up sales of almost $140,000 - per second, for 24 hours. That is some sales channel. But making the sales was the easy part; delivering the goods is proving much more difficult.
In Australia, they have dropped accounting from its list of skilled occupations in demand for 2015. The controversial decision to drop accounting has stunned the major accounting bodies who claim there is a shortage of accountants. This may give emigrating kiwi accountants an advantage across the ditch.
In New York, UST 10yr bond yields rose and are now at 2.36%.
The oil price slipped slightly today and is now at US$77/barrel with the Brent price at only US$81/barrel which is a four year low.
The gold price gained slightly and is now at US$1,161/oz.
The NZ dollar has more than held its own overnight and is now at 78.0 USc, at 90.0 AUc, and the TWI at 77.3. In fact the yen is now over 90 to the NZ dollar and that is its highest level in almost 20 years.
If you want to catch up with all the changes yesterday we have an update here.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
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14 Comments
Our politicians have no shame - best they tighten up the tax laws in favour of those they are meant to represent.
After examining F&P's financing, Chalkie reckons it might have something to do with related-party loans from Haier Singapore of $756m.
Of that, $302m carries interest and the rest is interest-free, maturing in 2018. However, it appears that accounting conventions think nothing is free, so the value of the loan is discounted. This creates a gap between discounted value and face value, which apparently gives rise to an amortisation charge. For the 2013 period F&P's amortisation charge was $32m, which makes quite an impact on the bottom line.
CHALKIE is not surprised to find an overseas-owned company reporting accounting losses - in his observation red ink tends to arrive with foreign ownership the way a shining cuckoo arrives in spring.
The issue here is the hypocrisy of multinational corporates doing their best to limit their contribution to government coffers, while holding their hands out for whatever they can get from taxpayers.
Sigh. My suggestion for a 12% income tax for all and a 12% corporation tax with no deduction for interest paid seems appropriate here. Its the same argument for having GST on all Goods and Services (which should include interest too as it is, guess what, a Service). Sadly our highly paid and highly intelligent civil servants don't seem to like simplicity; guess it would be an unwise career move to advocate simple systems.
a) The Govn needs a level of income, cutting income tax in half is not possible given the outgoings have to be paid for.
b) It isnt the same a dropping GST as GST is a regressive tax and the above isnt.
Otherwise I dont follow your logic, apart from I assume "I want to pay less tax" I mean there is no or little evidence that cutting taxes boosts an economy and certianly in desirable ways.
The advantages of cutting/eliminating GST are a few,
a) It is a regresive tax and hence removing it helps the poor more, they spend all of their money into the economy, hence helping keep it going.
b) Buying overseas and under $400NZ means no GST is paid. Hence part of the advantages Internet purchases are removed (NZ retail often still over-charges though).
c) You actually remove an entire tax and hence its collecting overhead, with your 12% no efficiency is gained.
A possible disadvantage is the cash based black economy ie those who pay no income tax now also wont pay GST. However sooner or later they get caught and delt with.
On top of that if it was me I'd also be stopping various loopholes like NZ but foreign owned companies can dodge most tax, but NZ owned ones cannot. Ditto the likes of Google, I'd tax at point of collection and not at point of delivery.
To compensate for loss of GST a CGT and a land tax would have to be introduced and income tax go up.
regards
Yes, my post is a bit too concise. Basically I find the drama about overseas companies getting out of paying NZ tax a bit silly. The general tone is that of under tens saying:
"It's not fair!", and:
"There should be a rule about that".
My point is that we have a system that is easy for them to take advantage of, so change the system. Companies are our customers - they provide us with jobs, income and taxes, so it pays to be nice to them and offer them a deal that works for them and for us. Better to have them pay 12% here than the current 0% they actually get away with.
? I agree change the system and not allow it, simple in theory of course.
and you think they'd willingly pay 12% when they can continue to pay 0%?
Also with such a severe/significant drop how is public spending then funded? you seem quiet on that one.
Lets be clear here its not about the level of taxation but to ensure that a) enough tax is collected and b) from everyone so the overall burden is 1) low and 2) not dis-advantaging NZ homegrown companies.
So really if there is a need here to do business lets be nice to NZ companies and not foreign ones who export their profits and often dont pay any tax.
regards
It's about NZ investors finding NZ business worth investing in.
It's about profits, share value and dividends remaining in NZ; not going overseas.
It's about a corporate share of those profits paying for the infrastructure they use - when the local companies are shoulding that burden AND having to pay more for financing etc.
Jobs? that's sales of labour, frequently for minimal return, and it means the best often end up selling their labour for the profits of their foreign masters. So that's labor done with.
roger, you said "income" and "taxes" but that's the point! they DON'T provide taxes and income (certain not in any strategic advantage that a NZ firm couldn't supply.)
AND NZ firms have an interest in grow skills and research and supporting business IN New Zealand. Foreign companies don't...pretty much why Glaxo went overseas - just couldn't get support in NZ, they found it better to go where their market is, and they took all those skilled jobs with them. Likewise with other foreign companies like recent dairy joint ventures building the brains and high end products in China. Why would they do it in NZ?
Why pay 33% to run corporates here when shelters are available. Why pay 12%? Stick with trusted and true methods of 0%, and laugh at all the locals who can't afford to compete (especially with RBNZ waiting with the cold steel....
George Friedman with a thought provoking piece, well for some of you anyway.
"Marxism never succeeded in escaping the primordial reality of the human condition. I don't mean this as not escaping self-interest or corruption. What it failed to do was escape the reality of community as the foundation of human existence, more important than the individual, and certainly more important than class."
The Parallel for readers and contributors on this site is the accumalation of wealth that is unearned, largely property rents and capital gains. You are not generating wealth but taking it from others and thus generating inequality, an action detrimental to community and actually detrimental to yourselfs. You are trying to be the richest man on a street that is getting poorer, poorer because you are breaking down the community. The more you accumulate the more energy you will have to expend fighting to keep it.
"The young men and women at the wall now emphatically support austerity in Europe, not accepting responsibility for the rest of Europe's fecklessness. Why should they?"
This in a way will be a generational war but it will be a circuitous route to it. The young are not going to accept the debts that have been racked up in their name.
I talk occasionally about personality types here and one fact I have posted before is that most stand up commedians are ENTP personalities. They are in the thinking club, rational thinkers capable of deeper understanding than most. Brand isn't some shallow emotional twit, he is a smart man that gets the big picture. I would say he is currently a little scattergun but I am sure he will refine is thinking and develop better clarity both in his own thinking and his leadership style.
a) "The young men and women at the wall now emphatically support austerity in Europe"
b) "not accepting responsibility for the rest of Europe's fecklessness. Why should they?""
I would think these are 2 seperate arguments? even assuming a) is correct which frankly I doubt.
b) Yes I can see they see nothing but pain for them now and in the future while the BBs enjoy their retirement expecting the youth to pay the debt, their OAPs and pension/investment returns.
I can see that one unwinding, though the early BBs with their weight of numbers as voters might well delay that judgement day.
regards
Australia to limit foreign purchases of agricultural land
The area of agricultural land owned fully or in part by foreign-owned businesses is 49.6 million hectares or nearly twice the total land area of New Zealand of 26 million ha
New rules will see the FIRB threshold for the purchase of agribusinesses lowered from $248 million to $53 million
Any entities owned by a foreign government will have a $1 threshold.
Currently someone from overseas can buy a $230 million property today, come back to the market without anyone asking any question and buy another $230 million property the next day, then come back the next day and buy another $230 million property, and it’s never queried
In future it is going to be $15 million and if you buy a $1 place the next day it goes back to the FIRB
The area of agricultural land owned fully or in part by foreign-owned businesses grew 10 per cent to 49.6 million hectares from December 2010 to June 2013, according to the latest Australian Bureau of Statistics figures.
http://www.news.com.au/national/nsw-act/tough-new-rules-as-foreigners-g…
Introduction of these new rules will shift attention to NZ
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