Terry Baucher says that families struggling to meet bills suffer from a lack of income, not over-taxation. Boosting incomes would be far more effective than an ill-defined tax break

Terry Baucher says that families struggling to meet bills suffer from a lack of income, not over-taxation. Boosting incomes would be far more effective than an ill-defined tax break

This is the eighth of ten articles in the Public Service Association's "Ten perspectives on tax" series.*


By Terry Baucher*

During the year ended 30th June 2016, the Government collected nearly $70 billion in tax revenue, or about $14,900 from every person in the country.1 That sounds like a fair sum of money, but how does New Zealand’s tax burden compare internationally?

Very well it appears, based on the 2017 edition of the OECD’s annual Taxing Wages report.2 According to the OECD, a childless single New Zealand worker earning the average wage had the second lowest “tax wedge” in the OECD’s 35 member countries. One-earner families with two children had the lowest tax wedge in the OECD.

Behind the headlines

The low tax wedge is a combination of relatively low income tax rates, no social security taxes and transfers for social assistance, such as Working for Families (WFF) tax credits.

What the bald statistics hide is the effect of the “abatement” provisions for those receiving social assistance when they earn extra income. Under the abatement provisions, the amount of WFF assistance is “abated” by 22.5 per cent for every extra dollar of income over $36,350. This means that as income rises, the amount of assistance falls. This can have some dramatic effects. According to one Inland Revenue report in 2015, there were 4,000 families with an effective marginal tax rate of 100%.

In other words, every additional dollar earned was effectively lost through the combination of benefit abatement and tax. It’s conceivable that more families will face this welfare trap as the abatement rate is set to rise to 25 per cent in the near future, together with a corresponding reduction in the threshold to $35,000.

The OECD survey looks at income tax, but what about GST? This made up $18.2 billion, or 26.1 per cent, of the total tax collected in the 2016 year. GST’s percentage of the overall tax take places New Zealand second overall in the OECD .3

On average, GST or value added taxes represent about 20 per cent of tax revenues in other OECD countries. New Zealand’s higher GST take is because it has no exemptions or variable rates, making it the most comprehensive GST in the world.

This is the result of the “broad base, low rate” approach to tax policy that governments of both hues have followed since the mid-late 1980s. A broad base with no exemptions allows lower tax rates, and the GST system – which is regarded as a model of this kind – best exemplifies this policy.

Countries seeking to introduce Goods and Services Taxes are encouraged to follow the New Zealand approach.

However, one problem with GST is that it is seen as a regressive tax for low income persons as they pay a greater proportion of their income in GST than higher income earners. This has prompted calls to zero-rate fresh food, for example, as a means of redressing this issue.

Such proposals address the symptoms, not the cause. Families struggling to meet the bills suffer from a lack of income, not over-taxation. Boosting incomes for low and middle income families would be far more effective than an ill-defined tax break.

The broad base low rate approach can also be seen with corporate income. Companies paid just over $11 billion in corporate income tax for the 2016 year. At 4.4 per cent of GDP, this is in the top five of the OECD.

However, the base is perhaps not as broad as it appears. The four Australian owned banks paid $1.65 billion between them in 2016, Air New Zealand $200 million and the New Zealand Superannuation Fund $538 million on profits of $559 million; an effective tax of 96 per cent!

The New Zealand Superannuation Fund is consistently one of the largest taxpayers in the country, having paid more than $4.6 billion in tax since its inception in 2003. More than $3 billion of this tax has been paid since the government stopped contributions in 2009. The New Zealand Superannuation Fund was established to help meet future superannuation costs, but it pays so much tax that it’s already covering almost five per cent of the current cost of New Zealand superannuation.

Its colossal tax bills are very largely down to the vagaries of the financial arrangements and foreign investment fund (FIF) regimes, which operate as de facto capital gains taxes.

Social spending relative to the rest of the world

New Zealand’s social spending on health, education and social security and payments including superannuation was $52.8 billion during the June 2016 year. At an estimated 21 per cent of GDP, it is in line with the OECD average.

$12.2 billion (4.9 per cent of GDP) of the total social spending represented New Zealand superannuation, with health costing $15.6 billion (6.2 per cent of GDP).

Treasury expects superannuation and health costs to rise to 7.2 and 8.3 per cent of GDP respectively by 2045. Although these future costs would be reasonable by comparison with other OECD countries, they still represent a 40 per cent increase from present levels.

Consequently, future governments will face mounting pressure to either raise taxes or cut services. Politically, cutting services or means-testing access to services and benefits has proved difficult – witness the abandonment of the New Zealand Superannuation Surcharge in the mid-1990s, and how the current National government retained popular social programmes such as WFF and interest-free student loans.

On the other hand, both Labour and National have successfully implemented increases in GST, and the Labour government was elected in 1999 with a specific promise to raise the top rate of income tax.

Lessons from overseas

New Zealand’s “broad base, low rate” approach to tax policy is seen as best practice. Nevertheless, are there lessons from overseas tax systems for New Zealand?

Yes, in the form of a comprehensive capital gains tax (CGT). This would apply without the need to determine a person’s intent. Its introduction should broaden the tax base to meet future health and superannuation demands and help address growing wealth inequality.

In a 2012 paper, Treasury saw “merit in a general capital gains tax…as possible revenue-raising reforms.”4 Inland Revenue, in the same 2012 paper, was less persuaded; arguing that evaluating a CGT “would be a very substantial exercise”. For the moment the politicians are siding with Inland Revenue.

What’s remarkable about this debate is that the experiences of other countries’ CGTs are discounted, with the difficulties for a New Zealand CGT viewed in isolation.

CGT has its complications, but those already exist in New Zealand’s tax system in the financial arrangements and FIF regimes; probably the two most complicated parts of the current tax system.

The FIF regime is arguably the most loathed part of the tax regime. In 2006, when the latest incarnation of the FIF regime was introduced, Parliament’s Finance and Expenditure Select Committee received over 3,400 submissions.5 Only two supported the changes.

New Zealand is practically alone in the OECD in not having a CGT. The United States has treated capital gains as income since it introduced a Federal income tax in 1913. The UK has had a separate CGT since 1965, Canada introduced its CGT in 1972 and Australia has taxed capital gains since 1985. There are decades of practical experience about the implementation and operation of a CGT available from other jurisdictions.

The absence of a CGT undermines the broad base low rate tax policy. If politicians and policy makers want to ensure New Zealand continues to have one of the lower tax burdens in the OECD, then this gap must be addressed. Otherwise future generations will face an unpalatable combination of higher taxes and reduced services.


[1] Financial statements for the year ended 30th June 2016 https://goo.gl/ixI91s

[4] Inland Revenue & Treasury Joint Report: Taxation of Savings and Investment Income, September 2012 https://goo.gl/Qp9gOy

[5] Volume 2 of the Officials’ Report to the Finance and Expenditure Committee on Submissions regarding the Taxation (Annual Rates, Savings Investment, and Miscellaneous Provisions) Bill https://goo.gl/wXasfq


*Terry Baucher is the director of his Auckland based tax consultancy firm Baucher Consulting which he founded in August 2004. This is the eighth article in the PSA's "Progressive thinking series, Ten perspectives on tax."

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65 Comments

There isn't much room for everyone's income to grow before everyone ends up on the top tax rate. How many OECD countries have as large a portion of their tax base in their second highest tax bracket as we do?

If this carries on we will effectively have a flat rate for everyone! Much like ACT wanted!

and I just wonder where the superfund would be if it did not have to pay tax, how much would that 3 billion be worth now.

The sole point of the article appears to be to promote introduction of CGT. We all know that Terry thinks it would be a good idea from his previous articles - OK , fair enough. - but why bother with the watery title and the preamble ?
Is there really a problem CGT would solve (other than the vaguely defined "pressures" on the government finances - is this not something that is always present ?) .The whole thing smacks of the usual "let us tax the rich some more because it is fair".

If high marginal tax rates resulting from WFF are the problem ( and I do agree it is a problem .. ) than abolishing WFF ( and adjusting tax rates / brackets to ensure revenue neutrality ) is the obvious logical solution - not introduction of CGT.

Saying "most OECD countries have a form of CGT therefore NZ should to " is simply cherry picking to suit
the argument. Many of the same countries ( including the US ) also allow income tax mortgage interest deductions - would it not be a terrible idea to introduce that here ? ( I suspect that I might even be in agreement on this with many of the people I usually clash with here ).

"Is there really a problem CGT would solve (other than the vaguely defined "pressures" on the government finances - is this not something that is always present ?) .The whole thing smacks of the usual "let us tax the rich some more because it is fair".

CGT is not a "lets us tax the rich some more" scheme. It's about tax fairness. Tax capital gains on property just like all others. If you think it's "unfair" then how about we can impose a FIF-like tax for housing? Let's see how much you enjoy paying tax on the VALUE of the house(s) you own (every year, mind you) regardless of whether you have actually realized those gains. Sound fair to you?

CGT is only unfair to those who are currently riding the property investment, tax free gravy train.

Nonsensical plain and simple. A govt tax take at almost 30% of GDP is completely unsustainable. As for the comparison with other OECD countries, that's laughable. Most OECD govts are technically insolvent based on future liabilities, so you might as well draw a comparison by saying that you're only smoking weed while all your neighbours are on P. Disneyland economics.

The single largest contribution any government could and should make to it's struggling citizens would be to make housing affordable and return prices to something like the long term price multiple of 3 to 3.5 times the average income. I.e. do their job properly and energetically stop the artificially constrained land supply, cartel like behaviour in the wider building industry and pumped up demand from overseas immigrants and investors.
If they did that people would be far better of and there would be far less need for government hand outs. All these government hand outs are just a cost of keeping the ponzie scheme going.

I agree with the sentiment .. not sure how much any government can realistically do in this space without causing greater damage ... 3-3.5 average income to house price multiples are unfortunately a thing of the past - one cannot have that and low interest rates at the same time . Reducing immigration and/or introducing capital controls would impose huge costs and crush the pension system in the fairly near future.
This leaves removing constraints on land supply ,reducing regulatory obstacles on the builders and breaking up the cartels where they exist- something the government is only trying to do halfheartedly.

Artificially high house prices - long term it must be fixed, surely. Just because we have gotten into a stupid situation, you cant continue to run the place like a circus forever just because it may cause some pain to get back on track.

Tax is good for us. Because all them rich fellas on more than $50,000 a year need to think about us poor fellas too. They can dodge taxes with fancy accountants, so this new type of tax sounds good to me. All the rich fellas should be ashamed. everybody needs money.

Is this just not legal theft?
What obligation do I have to you, to have to pay for your life choices?

Funny how you only ever see poor people advocating for high taxation.

>Funny how you only ever see poor people advocating for high taxation.

A blatantly untrue statement.

Not my fault that greedy managers won't pay decent money for job that doesn't affect my style. We need a rule that ppl can work when they want not when manager wants.

Ha.
It's so hard to know when people are serious on this site.

That is certainly true at times but this wasn't one of those times!

The Silver spoon and the platter must be rather heavy.

Yea, true.
Forgive me.
I forgot about the daily protests by high wage earners about their tax rates being too low.

Gareth Morgan wants to pay more tax.

Gareth Morgan only wants to pay more tax if everyone wants to pay more tax.
Little bit different.

Really??

"Gareth Morgan wants to pay more tax" What? At any time Gareth can rock up to the IRD and make a voluntary payment......so if he wants to pay more taxes, why has he not done so?

I assume likely because even if he rocked up with his entire fortune - he realises it wouldn't make the difference needed to get the country back on the right track. But just a guess.

I'm happy to pay a bit more, and assuredly do not want a tax cut. But I'd also be happy to see a rebalancing of some of the burden off income and onto land, where it used to be.

I would also suggest having a read of some things such as http://inequality.org/born-on-third-base/

There are plenty of concerned folk out there who actually do want to contribute to a better life for more in society. There's also some interesting research out there suggesting more of a sense of civic ownership and participation among the rich in some of the higher tax countries, e.g. in Scandanavia.

You can pay 100% of your income and it will still never be enough. I agree with your sentiments about a better society, but more tax and bigger govt has NEVER produced a better society. Western Socialism, which we are now a part of, has produced the following results over the last 40-50 years:
1) Govt came along and introduced pensions, and basically told kids not to worry about their parents in old age as govt would take care of them. This was the first break in the family unit and the establishment of the "me" culture as opposed to the "community/village" culture which preceded this period.
2) Govt then came up with various welfare supports such as DPB, etc, which have undeniably eroded the family unit and the very foundation that a decent society should be built on.
Today, we have a truly "it's all about me" culture who are in for whatever they can get out of society without any inclination to give back. NZ clubs are a classic example of this. There used to be armies of volunteers and working bee participants, but they are a dying breed. Now the mantra is "apply for a grant" and the alcohol/pokie money will pay for it.
The next stage of socialism is that as the govt struggles to pay for all of these grand welfare promises, we will get taxes on wealth, property, capital gains, etc, and this will simply send the economy south, with fewer contributors and more and more takers. Then, the authorities will ask people to "dob in a neighbour" for any tax avoidance or misdemeanours and the final breakdown in community spirit and trust will begin...i.e. everyone for themselves and the collapse of community. I think they have called this "divide and rule" through the ages. Some things never change. I have witnessed this first hand in Eastern European states and it was horrible. However, as more and more people demand that govt take over our lives then this is exactly what we'll get.

Neither was my argument that paying 100% tax and having the government do everything is the way forward. That's slip-sliding dangerously into the slippery slope fallacy territory. I've also argued many times on this site that universal pension does not make sense - giving social welfare to rich old folks makes zero sense and does indeed as you note seem to result in an entitlement mentality in our older wealthy folks. (And indeed you see the "all about me" in the double-standard of demanding the pension while not wanting to contribute to affordable housing anymore.)

Funnily enough, many of the good old days social traits you refer to (teamwork, volunteerism etc.) aligned with a time in NZ where the state was much bigger than now. Whereas from what you're saying, these things have declined significantly since the 1980s - when National and Labour switched places temporarily and Labour liberalised the economy. Did we create an "all about me" society through this move in society?

It's easy to point to the excesses of communism, but it's sort of rather skipping over the success stories of Western Europe and Scandinavia.

Having worked in poverty alleviation for a number of years, I've also less time for the stereotypical views we often hold of welfare exploitation etc. Sure, there's a segment who do that - just as there is a segment throughout society who exploit wherever they can...we call some of these finance company directors, for example - but there are many more for whom we really do need to be working to break the cycle. E.g. you can take a kid out of a broken environment and raise them in one of Auckland's nice suburbs with a stable family and that will break the cycle, but it's also completely unpalatable - point being there's nothing innate in the impoverished.

Hear hear Ludwig. Accommodation supplements, WFF, middle class welfare, phony liberalism, the state knows best, mega corporations writing our laws. Sick society!

"It's barbarism. I see it coming masqueraded under lawless alliances and predetermined enslavements. It may not be about Hitler's furnaces, but about the methodical and quasi-scientific subjugation of Man. His absolute humiliation. His disgrace"

Odysseas Elytis, Greek poet, in a press conference on the occasion of receiving the Nobel Prize (1979)

Bet you are one of them greedy rich fellas.

Nope, I'm one of those fellas who has used my marketable skills to enrich myself.

Greedy would be if you are poor and saying that we should tax richer people more in order to provide yourself with more handouts..

Greedy would be if you're rich and insisting you're entitled to a pension you don't need, too.

Really?
Even if that person had supported the system with taxes their entire life?
Worthy entitlement is not greediness.

The pension is social welfare. That's supposed to be about need.

Beyond that, it's just entitlement. Especially when Boomers are going to be a net drain on society.

You don't understand us poor fellas.

No one is that thick...

Well Nyman,you are not the only one who has done ok on their own merits. I was self-employed most of my working life and retired fully at 57,but unlike you,I want to live in a fair society. I actually want to pay tax to fund for things thatI don't use like the education system and lots of other things,without which we wouldn't have any sort of society. Nor do I believe,as you seem to,that all those who are poor just want bigger handouts.
All the research I have seen suggest that a fairer society is both happier and safer.

Rule One - Anything is doable with someone else's money.

Rule Two - Everything is easy for he who doesn't have to do it.

Why not have a choose your own tax rate system where varying levels of state services come with different rates. Let people opt out of ACC in favour of private healthcare etc...

How about those advocating for a weakening of public health care head off to USA where they can be denied overpriced private healthcare because of contract technicalities as much as they like. Leave NZ healthcare alone.

Even leaving it alone is fine. Problem is that too many people want to keep pumping more money into it.

I'm really like this suggestion, opt out of ACC, public health system, public education, police (well the buggers never turn up when you want them but are good when your 5km over the speed limit)........In fact I would suggeest there would be such a mass exodus out the tax door that many thousands of public servants will end up looking like fish when the tide sucks out during a tsunami......

@Ralph

To quote Thatcher :

'the problem with socialism is that you eventually run out of other people's money'

To quote Thatcher, again.

Labour4Life would prefer that the poor be poorer, as long as the rich are less rich.

Ah, the politics of envy.

Its what the left call equality meaning everyone is equally poor!

NO! Just increase the benefit by $50 per week.

For who?
Simply increasing social welfare will never make society, or the poor, richer.

if I can get $50 more a week i will be richer.

Until the rich people can no longer afford to invest in the economy.
Then your poor person job becomes very jeopardised.

Said no Scandinavian, ever, well in the last several decades anyway. Old saws do not any truth make.

Yes, GST does impact more on low income households. But that is what transfers are for - to neutralise that regressive effect. So it's misleading to just state that GST disproportionately penalises poor people but leave out the bit about transfers from wealthy to poorer people which balance the equation.

I completely disagree with Terry Baucher's narrative......the market has to work hard as it is to create income and increases in income can only come from increases in productive enterprise. Terry would you have a job as an accountant if there was no taxation? Of course you wouldn't......it is in your best interests that there is a taxation system and not the poor or lower income people that you are proposing need an increase in income rather than a decrease in taxes to be better off. Poor and low income people are there because this system places most of them there! Out of the billions of dollars taken in taxes annually, exactly what proportion is generated from the productive and what is generated from the unproductive i.e. those clinging to the coat tail?? NZ has an issue in that the elephant in the room has given birth annually.
http://www.taxpayers.org.nz/lifetime_tax

It is plain old wrong for people to have to work so many years of their lives just to pay for the system that you are endorsing and might I add endorsing while obtaining personal benefit...and no doubt I will get into trouble once again with David Chaston for writing this....but it needs to be said.

Look at the $15.6 billion going into healthcare, it equates to nearly $3,500 per person......this is crazy. I can buy surgery only medical insurance for far cheaper than this and still have a huge surplus available for day to day healthcare........In fact my entire family of 5 adults could be covered for all their requirements both surgical and otherwise for under $3,500.......this is what is wrong with the system.....those receiving from the system have every incentive to grow it and it is the poor and low income people in particular who bare the brunt of it.....the whole economy gets distorted with taxation.......and that distortion benefits those who are generally in the unproductive enterprises........

If you want a broad-based tax........why not introduce an APT tax.....no opt-outs available......Who wouldn't like an APT tax? IRD staff, Accountants, the financial markets........yet the efficiency in collection woud be second to none......smooths out all market place distortions, the poor and lower income earners would have far more in their back pockets.........It is was envisaged in the US that a quarter percent was all that had to be charged on each and ever transaction and the government would have had all the money it needed to run the country and wipe out debts...........no other taxes, duties, levies, GST, income taxation etc.....no endless unproductive hours of taxation compliance for SME.

Watch everyone switch to cash or run tabs via systems such as barter card so that you only transact the difference in dollars once close to the end of a fiscal year.

For example A buys paper ($100) off B who uses the legal services of C ($200) who uses the printing services of A ($100), they all participate in an organised mutual payments scheme. At the end of the year only B transacts $100 to C.

I agree those issues could arise....but I'm sure that they could be mitigated somehow.

Change the look of the currency periodically and that will bring the cash back in......in fact it could be done overnight........I'd be doing everything I can to discourage the holding and hoarding of cash....

The running of tabs could well be an issue......there is nothing to stop this problem from happening at the moment either though.......A good deterrant for business would be a significantly hefty fine perhaps - if you can ever catch them.......

No system is perfect and there is always going to be those who evade taxes.....but surely this must be weighed up against the compliance, enforcement and inefficiency costs that we have now.

Some of the comments here really are not fair. I agree there should be efforts to redistribute wealth and bring about equality. However, it does not appear fair to say everyone who is on the higher tax rate are not paying their fair share and are bad people. There is a lot of generalization which is never good if we want to have a healthy debate. I know a few of these people, they work long hours, have very high levels of stress, cannot drop stuff and go to the pub like average Joe on Friday afternoon, travel so miss family milestone etc. They have spent many years getting a good qualification, building skills and getting to levels where those sacrifices have paid off and they get paid for it now sometimes 20 years after they started off on this journey to improve their lives. It is important to acknowledge those efforts and encourage that spirit in others too instead of ending up as a bitter society that trashes everyone who aspires to do well because others cannot be bothered to make the effort. Where is the incentive in the current tax system for people to aspire to do better or save and invest in growing skills? We need to move away from an envy based attitude to an aspiration based attitude, that is the only way NZ will be a good place for everyone.

I read something about the top 20% of tax payers paying 60% of all tax. That is manifestly unjust in my opinion!

The top 20% of tax payers benefit from the economy created by the rest of the tax payers. Of course you are saying that they do not want to share the benefits they are receiving. If you truly believe that and in fairness then what we should do is make everyone pay for their own costs. Naturally those in the lowest income categories cannot afford to pay all of the costs as they aren't paid enough. So what we need to do is increase their pay to the point where they can afford the costs.

The result of this is that all business employment costs increase substantially, as such profits drop and those top earnings make a lot less money and they pay way less tax. Yay! You should be jumping for joy as everyone receiving fair pay and only paying their fair share of tax.

Where does automation fit into this picture? Can't we instead of having to Hire the same number of workers for higher wages simply reduce the number of workers we need supplementing them with Human assisted AI and expert systems or robotic process automation?

That's a tough one as no one has the full picture. It's hard to see what's going on when we're in the middle of this.

What I'm seeing in automation at the moment is that the workers on low and middle incomes are going to be hit with job losses. Sure there are a few technical jobs that appear and some workers are still needed to support the automation. For now there will be increased job losses. In the future as the automation scales up there will be more technical workers needed.

If the workers are substituted with more effective automation then what are these "spare" workers supposed to do? Most of those that lose their jobs are going to be the least effective at training for a creative design job. I think we will end up with a period of workers that will end up on the scrapheap in relation to productive work, we need to repurpose these people to contribute to society somehow.

Note that some of those on the scrapheap are currently in the primary and secondary school systems. The education is still not good enough to prepare them for the rapid changes that are coming.

Given the above we may need to rethink income tax and other taxes for fair distribution of wealth. There's a lot of information missing that will seem obvious in the next 10 years.

Bill Gates suggested taxing robots. I don't know that this would be the correct solution, and may not be effective.

My robot gets paid $1 per year, honest!

"Well you see sir, he's not actually very good at his job."

There will be little option, unless of course, the ownership of the robots is changed.

dictator - scenario one, so you increase their pay but then across the board just about everything becomes more expensive so people will not actually be any better off......Two, then you find that some businesses cannot compete so remove themselves off-shore for their survival......so now you have less jobs and likely more people unemployed.

If a SME business is paying astronomical taxes then most know they are better off to be paying their employees a higher wage or a bonus......better to have your employees get a bite of the cherry than paying it away to the IRD.....grantedly not every employer understands this point.

People in the productive sectors have the international markets which keeps a check on prices as well....so it is not always as simple as you say.......

Correct. The point was to drive through that we still need to help people and taxes are a method of redistributing the benefits of the growth of the country. If not by tax going full neoliberal would be an option, but as you've pointed out one that would be doomed to fail.

I don't know where this guy gets his GST figures from. According to an article on this site the other day GST raked in around 32% of the tax take, not 26%. (From the Ministry of Finance year 16/17 budget figures)???!!!
It is one of the highest in the world. And the fact that GST is taxed on things like other taxes, like rates (just a property tax in another name), fresh food (and so doing nothing to curb the extremely high rate of obesity in NZ), and even insurance...the GST in NZ hits at everything lower income people pay for with regard to the most basic living expenses. In this respect, it is not just an income problem, it is totally a tax problem for people with less income. GST rakes in so much money ,to propose a capital gains tax on top would put NZ in the highest taxed countries in the world.
If the USA had GST at 15% they could completely do away with capital gains tax. But they don't. It is around 8%. Every country needs to get its tax from somewhere, but you don't just compare one type of tax, you have to look at the whole tax system.
I sure would not use this author as my accountant. He has no logical clue and has not done any real research of the comparison facts or used the most basic correct figures. If you are using him as a consultant my suggestion would be to ditch him immediately. No one needs a communist as an accountant. Incredible.

Gee, would I be right in saying that as soon as the Super Fund goes pear-shaped - and the Aussie banks start making losses - we're stuffed.

It'll be another TINA moment, I suspect - CCT will hit overnight. Nowhere to hide.