The spending cuts required to cover the cost of recent tax reductions will leave New Zealand poorer and less productive, Labour’s finance spokesperson says.
Barbara Edmonds made this argument in a speech to the party’s conference in Christchurch on Saturday, which set the scene for a fresh set of policies after last year’s election loss.
She said Finance Minister Nicola Willis had chosen tax breaks for landlords over hiring nurses and that her fiscal policy amounted to “austerity”.
“And forging on with unaffordable tax cuts just to keep her job, that is selfish economic vandalism,” she told party supporters.
Getting the operating balance back into surplus was a “moot point” if Kiwis were not getting the healthcare they needed and other economic investments weren’t being made.
“It’s like making extra repayments on your mortgage when your kids are sick and hungry, and your house is falling apart all around you”.
In a tweet, Willis said Labour’s reckless spending had fuelled a cost of living crisis without improving any outcomes.
“Barbara Edmonds says that letting Kiwi workers keep more of their hard-earned money is wrong, and that racking-up more taxes and extra debt is the way to go.”
“That’s what I call economic vandalism,” she wrote.
Edmonds said she would be a “pragmatic steward of the public purse” but being pragmatic might mean more—not less—spending on nurses, school buildings, ferries, and hospitals.
Unmentioned in her speech was the prospect of tax increases which may come with these choices to limit debt increases.
The NZ Herald has reported the party membership will vote to continue developing a capital gains or wealth tax policy, while stopping any work on other proposals.
Tax on the floor
In an interview prior to the conference, Edmonds wouldn’t comment on any specific tax proposal that would be debated by members over the weekend.
“Tax will always be [debated] on the floor for Labour, in the respect that we want to see how we can make things more progressive, equitable, and plug some gaps, so to speak — but it’s one small part of [the policy platform],” she said.
The second term MP has held the finance portfolio for less than 10 months and has been reluctant to support any particular tax policy. This is despite having a successful career as a tax lawyer, and even serving a short stint in Cabinet as Minister for Revenue.
She told Interest.co.nz her role was to be a “steward” or advisor, who could help the wider party identify the pros and cons of different policies, and not be the final decision-maker.
Edmonds has spent much of her spare time travelling around New Zealand and meeting with business leaders, who have mostly seemed impressed by her.
For this reason, it is easy to speculate that she might prefer to broaden existing capital gains taxes, rather than set up an unconventional wealth tax.
Remember, that she was given the revenue portfolio while in Government after David Parker resigned the job after then-Prime Minister Chris Hipkins vetoed his wealth tax proposal.
However, Edmonds herself won’t be drawn on taking a public position and the party plans to keep both options on the table until much closer to the election.
Fiscal challenges to meet
While she didn’t talk about tax in her speech, the finance spokesperson said there was “no doubt” New Zealand was facing a serious fiscal challenge.
“By 2060, 10% of our GDP will be spent on health care, and 7% on Superannuation. That is a hefty burden on our economy and we need to start making choices now that prepare us for that challenge,” she warned.
The Treasury has warned in multiple speeches that current tax revenue will not be enough to support these rising costs, and some sort of reform will be needed in the next decade.
“The path we are on of austerity and cuts does not make us a richer country. We need to be ready to invest in our people. That is what will make our country grow and become more productive,” Edmonds said.
She said she would focus on supporting businesses to innovate and adopt new technologies which could boost the productive capacity of the economy, but was sceptical of deregulation as a way to grow the economy.
163 Comments
Lol bit rich coming from Lsbour when they were the ones who have financially crippled NZ with their financial incompetence.
Just shows how out of their depth when they believe that being able to claim a legitimate business expense is a tax break??
Seriously, if the Lefty Lxxxxxx ever get back in then NZ is done!
Why do businesses not pay capital gains on sale but rental investments do or should? My last investment netted me 600k without having to pay salaries, retain service providers, build up plant and equipment, or consume much of anything in the local economy. I got 600k in gains not because of my own effort, but because the economy kept growing around it. Meanwhile a one-man band plumber valuing their business on 6x earnings on 100k profit would have pumped 100x more than I in to the economy to net the same benefit. That business has already paid more tax in a few years than most landlords will pay in a life time of house sales.
There is no other business like being a landlord. It is the only business out there that does not actually generate economic activity, and indeed is wholly reliant on the economic activity happening around it to determine its value. Fixing a car generates economic activity. Selling toys does. BUILDING houses and developing land does. None of those things can be sat on with the expectation that they will even maintain their value - let alone grow in value. To even survive they need to be productive. Renting is the only business that sits there without spending a cent beyond the absolute minimum in rates, insurance etc. and whose capital value is wholly determined by how productive everything else around it is. Yet landlords demand the same taxation treatment as business who actually generate economic activity. It is laughable and insulting to compare the two and expect the same treatment, but here we are.
The three main factors of economic production are capital, labour, and land/natural resources. We have conveniently decided that when it comes to housing that land is just lumped in as capital now so we can all pretend we are contributing to the economy like we're mechanics, and demand the same taxation.
I'm going to keep investing because I'd be stupid not to. But I also am under no illusions as to how comically lop-sided the equation is in my favour. If this country actually wakes up to the realities, I'm not going to have a sook like I'm some hard-done by job creator being unfairly punished - I'll put my money elsewhere and hopefully the incentives line up so that building wealth for my kids lines up with building wealth for the country.
The longer we keep placing landlords as economically analogous to every other business the worse off we will become, economically, productively and socially.
Yes , you have to ignore the expected primary return for a rental property is capital gain, and many are happy to run them at a loss, ( probably encouraged to by their accountant), or at least pay the minimum repayment back to maximize tax credit on interest claimed.
It's no great secret , entirely legal, I don't know why people are pretending otherwise.
Agreed - though I'm not sure about it being no great secret based on discussions I've had with other investor-landlords. They are either pleading ignorance or they really are that ignorant.
But as Upton Sinclair is quoted, “It is difficult to get a man to understand something, when his salary depends on his not understanding it."
That may be true, but how daft do you have to be to inherit the books in such a state, and decide the best thing to do is to cut your income?
Would be like someone racking up huge personal debt from a gambling addiction, and deciding to go from full time to part time work to pay it off.
You can't credit Cullen for the weather I agree, but you can absolutely credit him with what he did with it.
With Cullen we got Kiwisaver, the Cullen Fund, and a government tax take that held us in good stead post-GFC. National and NZF opposed all three during those good times.
All subsequent governments have him to thank, and I would hate to see how much worse NZ would be today if wasn't there to capitalise on that golden economic weather.
The average salary and wage earner on $60k certainly got screwed over. And there were a whole lot of unintended consequences - income and tax structuring by those able to, and an increase in negative gearing property investment.
WFF was primarily a vote bribe and only added to the low wage iniquities, and created a division between those with children and those without.
All good if you don’t like Labour, but let’s stick to the facts. The economy was buzzing under Labour until the RBNZ applied the brakes. And here we are under National with a terrible economy and the only hope being the RBNZ taking their foot off the brake. Neither party has anywhere near the influence on the economy that the independent reserve bank does.
Funny, I was just looking at the data for 2016 / 2017. I forgot that RBNZ stopped dropping interest rates in 2016, and house prices fell in real terms in 2017. That was enough to persuade the swing voters to give the red lot a go in October 2017 - helped no doubt by their charismatic new leader. Once Labour got in, RBNZ started dropping rates again and the economy got back to credit-fueled growth! I am not suggesting collusion here - just agreeing with your point.
That cheap debt pumping was the RBNZ.
The lack of fiscal discipline lies at the feet of the people. We may have been better off having a financial depression at the time.
Obviously better leadership (government, RBNZ, and business "leaders") was required during an unprecedented event such as the pandemic created supply shock. We should've all chilled out rather than profiteering etc.
The party didn't end and it would appear it's simply the "hair of the dog" approach now.
That cheap debt pumping was the RBNZ.
We spent up large on things that were not COVID and had nothing to do with COVID. And then the Finance Minister reappointed the RBNZ Governor and there was no independent inquiry into their decisions around FLP or the LVRs. So I can only assume he approved and agreed and thus he should be answerable, as that is within his wheelhouse.
So it's a nice go at moving into 'RBNZ is independing, gee what a shame we couldn't have done anything about it' territory there, but ultimately not convincing.
Bring on Argentina! "After running the Argentine state for a year, his contempt for it remains “infinite”, he told The Economist in an interview on November 25th.
...Argentines are impressed by falling inflation. It has long been their scourge, fuelled by wild government overspending financed by printing money. When Mr Milei took office inflation was running at 13% month on month. It spiked to 25% after he devalued the artificially and unsustainably strong peso. It is now under 3% per month (see chart 1).
The reduction rests upon Mr Milei’s brutal cost-cutting. He campaigned brandishing a chainsaw, then delivered a primary surplus in his first month—and every month since (see chart 2). The surplus, crucially, eliminates the pressure for the central bank to finance spending by making “temporary” transfers to the government, which are in fact rarely paid back, a form of money-printing."
"While Milei’s popularity ratings have remained high, public support now appears to be waning. A survey published on Monday found a drop of almost 15% in September, the steepest fall during his nine-month administration. Recent polls have found that worries about inflation have been overtaken by fears of job loss and poverty.
“For a county that has historically prided itself on being a middle-class nation, this poverty rate is terribly painful,” Sabatini said."
https://www.theguardian.com/world/2024/sep/27/poverty-rate-argentina-mi…
“Tax will always be on the floor for Labour, in the respect that we want to see how we can make things more progressive, equitable, and plug some gaps, so to speak"
Of course. Because Labour needs institutionalised dependency on the State to generate their future voters.
No clue as to how to create the surplus pie in the first place.
"The problem with socialists is that they eventually run out of other peoples money" Maggie Thatcher
Tax and spend. That’s all they know, that’s all they can do. So the priority would be spending on healthcare. A good priority unquestionably. But the other question is how would they know how to do it. Lest we forget. Their last government, in the midst of a crippling pandemic, when under resourced, ill equipped and undermanned frontline staff were battling just to try and cope, they instead spent cluelessly, $millions on consultants and other paraphernalia, all towards restructuring the MoH headquarters, the ivory tower, in Wellington. On that shocker alone, not to be trusted anywhere near the public purse.
Moot argument, as money is debt and debt a promise on future resources. By that standard, they are no different than each other as irrespective of views, govt can create money and resources are finite. Perhaps if we stepped back from historical biases learned form our parents, and took a resource driven view, we could start allocating resources to what is needed for the majority of the population. But alas, we continue with a popularity contest portrayed by swayed media sources which parrot narratives instead of getting the masses to think critically and widen their scope of view on key issues.
Tax has a parasitic impact on the host. In balance it is tolerated. In excess avoidance is rife, or people go broke or shut up shop and go elsewhere. Lab were sucking the host dry to fund their socialist fantasy's.
Still they chickened out on a land tax or a capital gain tax. How many rentals did Helen have again...
We were already facing cuts under Robertson (likely more than the 4% he'd already requested including gutting the Climate Change Response Fund) without the tax cuts.
So keen to understand how this 'National tax cuts unaffordable' angle comes from given that the operating state of the government was unaffordable even without the tax cuts.
What would help would be the discipline to concentrate on priorities such as health rather than vainglorious projects like cycle harbour bridges which in the circumstances should never have been considered in the first place. Mr Ryan the Auditor General reported in December 202s about $15 billion of uncontrolled and unaccountable spending about which, Finance Minister was obliged to apologise. Now the present government appears to have embarked on the same sort of miscalculations with the Wellington Victoria tunnel. Surely it cannot be too difficult to assess and prioritise essential government services for affordability, before even thinking about the gold plated stuff..
Maybe read some of Bent Flyvbjerg's work on why mega-projects (and this is a mega-project by NZ standards) so often fail to meet time, specification and cost targets.
Reading someone who has actually dug down in to the real data why giant projects are so often epic failures is educational and discouraging: it's kind of miraculous anything gets built at all and the biggest problem seems to be that the projects get politicized and when politicians get involved...
This interview about the city rail link on Q+A a couple of months ago was quite good as well.
It is not that we cannot 'afford' it...it is simply we have allowed our capacity to provide the service to deteriorate to such a point that our inability can no longer be covered up with 'statistics'....we have been triaging treatment/surgery for years only it has now reached the point where the whole system may implode.
Really?
Research says otherwise ... The Dramatic Increase in Total Knee Replacement Utilization Rates in the United States Cannot Be Fully Explained by Growth in Population Size and the Obesity Epidemic (That's just one study btw. There are many others concluding much the same thing. One of my favorites actually says that 'consumers' now trust the outcome so much more than 20+ years ago that they're far happier to take the risks.)
Link: https://www.nzherald.co.nz/nz/new-zealands-knee-replacement-burden-link…
quote: "It is difficult to say obesity causes osteoarthritis, but there is definitely a strong link and these findings do not surprise me, they just reinforce the international research." [David Gwynne-Jones, an orthopaedic surgeon at Dunedin Hospital]
What the good doctor is saying is that correlation is not causation.
The journalist is spinning the fact that as we age - and there is a growing number in this age group in NZ - knee and hip replacements become common - into another issue. (The journo has no qualifications whatsoever to make this leap. Further, the journo doesn't publish the link to the actual study on which this 'article' is based. Nor do they actually say whether Gwynne-Jones actually participated in the study on which the article is based.)
But this, being the right wing NZ Herald, achieves what they wanted ... i.e. "It is all the recipient's fault for being too fat." i.e. transfer the 'fault' to an easily identified and specific group.
In my social circle - all the people that have had knee replacements have been very sporty. Many sports, e.g. running, rugby, skiing, squash, badminton, netball, etc. are extremely tough on the knees due to hard surfaces, rapid changes in direction, hard collisions, and hours of repetitive minor damage that mounts up.
Methinks you've been conned. But don't feel too bad. The NZ Herald is awash with terrible journalism like this.
"The disease is an inflammatory response to fat around the joints" - that's a new one on me, but the good doctor is the expert, not me. Strange though how many non-obese people and those who have engaged heavily in sporting activities over their lifetime are needing joint replacement.
I pretty much fit that bill and may need a knee replacement possibly in the next 5 years. Little knee pain now but i do have one of the arthritis's that has damaged one knee. Can never remember which arthritis. Hospital physio said you pretty much have to have permanent pain before being considered. Friend in the UK about 72 is inline for a knee replacement and he has pain when trying to sleep at night. His Dr indicated this is a trigger point for knee replacement.
It is a near-guaranteed eventuality for every human on the planet in some part of the body, and articular cartilage has low blood flow so I'd imagine it very hard to 1./ Create something that will prevent the breakdown of cartilage over the mid to later decades of life and 2./ Administering it in a safe, effective manner for maximum effect. with knees I'd consider it very hard to prevent the wearing of cartilage if your menisci have thinned, or or pushed outward and you have bone on bone between your tibia and femur.
Can you imagine a country without any police, roads, electricity and rule of law? Would people want to live there? Tax is not just 'tolerated'. Unless you pay for the required services with inflation it is essential for modern society.
Why are people on this site so blind to basic facts around governments and society?
Do you not think that WW2 was rather an unusual set of circumstances. Perhaps contemplate the history after Dunkirk, the Battle of the Atlantic when Britain stood, and fought alone, in Europe. Then have a gander at the extreme working conditions imposed on the population by Lord Beaverbrook & Trade Union leader Bevin, the rationing and on and on. After that it might dawn on you perhaps that things were a bit out of the norm? Britain survived the war by the intervention in Europe by then USA. Whatever extra tax was collected was a pittance to the debt that Britain owed the USA by 1945 , which incidentally stacked on top of similar unpaid debt from WW1.
"Do you not think that WW2 was rather an unusual set of circumstances."
From an macro-economic point of view? No. Not that unusual.
There have been many economies needing a drastic restructure to pull them out of the mire over the last 200 years. All are well documented.
People that do not study these situations seem to believe only wars provide the 'license' to make the drastic changes necessary. In actual fact, the war allows the required actions to go further so the restructure occurs faster. Strip out the 'going further and faster' aspects of these structural changes however and such changes are not uncommon at all.
Good news National are now ensuring our public service improves.
It comes after Te Whatu Ora offered just 844 of 1619 graduate nurses jobs on Wednesday, which is only 50 percent of the cohort.
https://www.rnz.co.nz/news/national/535049/half-of-nursing-graduates-mi…
Entirely predictable (unless you're a panicking public servant / Govt minister)
The ~250000 new migrants Labour bought in 2023 included a lot of overseas nurses incentivized to apply
https://www.immigration.govt.nz/about-us/media-centre/news-notification…
https://oet.com/post/new-zealand-immigration-residency-healthcare-worke…
With predictable results for both immigrants & NZ domestic nurses
https://newsroom.co.nz/2024/07/24/unexpected-success-in-hiring-nurses-d…
https://www.rnz.co.nz/news/indonz/518006/hundreds-of-experienced-intern…
https://www.1news.co.nz/2024/10/16/why-international-nurses-are-struggl…
Oh wow, that is some mental gymnastics to try to spin National cutting the Health service and forcing NZ trained nurses overseas as being somehow Labour's fault kiwikidz.
Are you actually paid to defend the Coalition or are you so incapable of questioning your team's decision that you default to any argument to defend them regardless?
Paywalled, but the headline numbers are still visible...https://businessdesk.co.nz/article/policy/the-public-services-growth-sp…
They don't see society. They only see themselves and those like them. Anyone outside their sphere doesn't count.
And they're likely white, privileged, and entitled. They'll throw those terms at everyone else other than the person in the mirror.
I'm actually coming round to idea that we cut all taxes and disestablish the government. Back to savagery and anarchism. I suspect the bike gangs would be the big beneficiaries, strong, organized around the wellbeing of their own primarily, and willing to use force to achieve their aims. All the rich old fogies would be their first targets.
Maybe we should do a trial for a year or so. They tried it once with parking. The council announced it was receiving so many complaints about parking officers doing their jobs it was ceasing enforcement and people could decide if they wanted to obey the rules or not. It lasted less than 48 hrs.
"Tax has a parasitic impact on the host."
This is fundamentally not true. (Never has been either.)
The 'business lobby' that makes such statements overlook the demonstrable fact that businesses will not ever spend money on anything that does not have a payback period (and after that generates substantial private profits) inside a short period of time. What constitutes a 'short short period of time' varies depending on the type of business, and how much is being invested ... and how much competition they'll face when the project is complete - obviously, the less, the better.
Governments, however, will spend on large (and small) projects that have far longer payback periods. In NZ, our hydro-electric dams and the associated electricity infrastructure is an excellent example of this. (This collective investment also drove absolutely ginormous productivity gains. But that's a subject for another day.)
Of course, such large investments benefit all of the country. Privately owned businesses included.
Thus, one might rightly claim businesses are in fact the parasites as they privatise large amounts of the profits from these collective investments.
Government has to be "socialist" to negate capitalism's iniquities and provide social services that the market can't, or won't.
One could also suggest that capitalism is parasitic, and by virtue modern civilisation, is parasitic on its host.
Both wings of government are guilty of creating imbalances.
Mainstream NZ so happy with coalition there’s no need for alternative input? Measured against the inflation prompting them, those tax cuts were insulting. Fine to address Labours administrative excesses but too many core service are being downgraded. Despite RBNZs positive spin, can’t see too much hope for the domestic economy in short to medium term.
This is disingenuous: six years in power, half of which was with an absolute majority, and where our productivity fell ever-further behind OECD averages, and now they want to talk about improving productivity?
The moment I knew we were in trouble was in 2022 when the then minister in charge of MBIE was asked "what are you doing to improve productivity?" Her response was: "we've raised the minimum wage".
And not once, but twice.
... and just who do you think does the admin tasks when there are no admin staff to do the job?
Who books patients? Who follows up? Who submits reports into (now understaffed) IT system?
There may be bloat, but this 'not front line staff' line is absolute rubbish.
The NZ health system already relies heavily on people working extra hours for nothing, now you want the same output (1.2-1.5 FTE for 1.0 FTE pay), and now they need to pick up 0.1-0.2 FTE of admin work to support themselves?
NZ health is underfunded AND the working environment is disgraceful. A large portion of the readers here are going to find out the hard way as they age.
Personally, I couldn't care less - my partner provides private health care (as well as public), but due to the public working environment she will likely end up full time private. More money for her, less service for the public.
Friend who is a consultant said exactly this. Their public workload dropped dramatically when the coalition took power and appointed Lester Levy and czar (former chair of Auckland Transport). It turns out it was because there was no-one booking appointments. So they were twiddling their thumbs, still getting paid but no patients to see as 'back office' staff had been cut.
All because f****it's who believe the coalition mantra that you can make cuts to services and not impact services believe their shit.
The coalition's objective is the same as the Tory objective was in the UK. The Tories wanted to destroy the NHS and make health more like the US where people can make huge profits but ordinary people suffer, they have almost succeeded. This is the coalition's aim. A strong public health service is bad for the coalition's donors, there is very little profit in it.
Then it was mighty kind of the previous government to work so hard to cripple the health system as well, given it's apparently a plot that the coalition have a single-handed monopoly on.
But importing foregin talking points is more important than being frank about your favourite team's performance and holding them to account, so we're just going to pretend that we didn't have a failing health system when the Coalition got in, and how little they did to actively fix it themselves.
What hilarious irony! From the team who created mega inflation, drove up the cost of housing, doled out money on wasteful spending and crippled the health system!
Hipkins and the other drunken sailor were true economic vandals!
Edmonds speech makes for a great Saturday afternoon laugh, so much dramala! So unburdened by what has been!
2% interest rates. State house building boom. New tax on mortgage interest encouraging new building and demolition. Healthy homes rules taking existing stock out. Labour shortage. Material shortage. Planning changes (MDRS) surging demand for existing houses on normal sections. More state house demolition. More existing house demolition. Tiny townhouse building boom. More new school building. More new hospital building. More material shortages. More tiny townhouse building. No gib board. More state house building. Cost of living payments. Record immigration. Shortage of normal houses. Record rent increases. Lots of expensive tiny townhouses. Record real house price increases. More tiny townhouse building. More tiny brand new townhouses at higher rents. More overall rent increases. Repeat. Repeat! Repeat!!
All preventable if there had been half a brain in the Beehive. Hipkins and the former vandal in chief couldn't muster half of one between them! Hence why they have managed to screw the economy so royally.
State house building boom - Labour. New tax on mortgage interest - Labour. Extra healthy homes standards - Labour. New over the top school/hospital projects - Labour. Record immigration - Labour. Cost of living payments - Labour. All Labour led inflation. Private sector house building boom was a result of Labour's actions.
Labour = Super bad at governing = Great at creating inflation.
I think it was Bob Jones who used to say something to the effect (not these exact words but) that it's always a giant real estate party whenever Labour are in town. Spend spend spend, tax tax tax, inflate inflate inflate.
If those are all RBNZ failures then surely the Finance Minister of the day insisted on an independent inquiry of sorts at some point, given the huge scale of the issues you swear have nothing to do with the Labour Party?
Whatever the case, I'm sure he wouldn't have reappointed the Governor of the time to reward him for such a questionable performance!
$1000+GST per month, per apprentice. To any business owner who had an apprentice. Not incentive for the apprentice to qualify. If you had 3 apprentices during the peak covid times like many did. That’s $3000 play money per month when business was booming already. Inflationary? You bet ya.
The $53B in Quantitative Easing directly impacted the OCR and retail banks lending rates. The artificially low rates were meant to stimulate business and growth. In reality it led to massive borrowing for housing and a concomitant increase in house prices. Bernard Hickey (left leaning economist) challenged Orr/Robertson in a press interview about this. The response ‘at least they have jobs.’ Record new car sales…jet skis….financed by cheap debt.
Note-this is separate to wage subsidies, vaccine costs etc.
"From the team who created mega inflation" ... So you include our independent Reserve Bank on that team? There is ample evidence that their un-accountable behavior drove an outsized proportion of that bout of inflation.
Methinks you need to bone up how things actually work rather than regurge b.s.
(And one notes that the RBNZ still remains unaccountable thanks to the ignorance from people 'Getting it right.' !!!!)
Regular reminder that taxes do not fund Govt spending. Govt spends shiny new tax credits into the economy, which we can use to pay our taxes. If we're lucky, Govt give us more tax credits than we need and we can build up our savings.
Same with banks of course, they issue loan repayment credits, which can be used to settle bank debts.
These tax credit and loan repayment credits are of course denominated in the same currency - the NZ dollar. We have nearly $700bn of tax and loan repayment credits saved up or in circulation now. Thank you banks! Thank you Govt!
If the left focus completely and totally on the "tax swap" aspects ... They may just pull it off. But I doubt they can. They'll get pulled into minutiae and the trivial and the 'trickle down' bullsh*t as they always do. (My guillotine manufacturing business IPO continues to remain viable.)
Any tax swap, rebalancing needs to be communicated in such a way that those who think they're going to be losing something, believe they're going to gain.
I'll add my stones and rotten tomato throwing IPO to your guillotine manufacturing. Can we get some cake in there too. :)
I still disagree with a land tax , we already have rates which is really a property tax (house and land), the real issue is, it will further push land into the hands of the rich who can afford the tax from the hands of the less well off. Not the intended outcome.
Also this whole 'it will make the land productive' argument, what about that large spine down the South Island, will a tax make that productive, no. will it end up in the hands of the rich for 1 week a year getaways, probably. Not all land is productive and a tax is not going to make it so.
Very. And that's a human/humanity issue.
Economic thinking of resource allocation based on monetary values cannot address this or offer solutions.
It requires either a voluntary or forced change. The forced change will come from the breaking down of the institutionalized systems. The loss of credibility and trust in these systems is already happening.
Some have had it rightfully assessed. As per the following commentary. “There must be a voluntary drive for production to keep our country prosperous. Unless our work continues industriously and we all do our best in every way, we are undermining our present and future prosperity. And “Unless goods are produced without interruption, you can have all the money beyond the dreams of avarice and yet the country will still be poor.” Spoken by PM Fraser May 1946. Believe the man knew the business on hand, how a mercantile nation needs to function, ,and at the time thankfully, he wasn’t the only one
The recipient is simple, we need:
a) comprehensive capital gains tax
b) inheritance/estate tax
c) gift tax
These then cover almost all capital transfers as income and there is no need to consider a wealth tax.
These taxes would level the playing field and ensure that “free” capital gains are also taxed along with productive capital gains.
These taxes would allow income taxes and potentially gst (regressive) to be lowered with a potential tax free threshold added, at say $10,000.
Why the heck can’t NZ get its ducks in a row and get these implemented (it’s almost a return to the 1970s/1980s before neoliberal hell was unleashed.) Until this is done NZ will continue to be a housing ponzi scheme and head towards banana republic status.
Im happy to stand as finance minister to get this done. Any takers.
You should be living in China!
Level the playing field?
How about those that are envious of those that achieve, and want other peoples money make an effort for s change.
Communism has no place in the Western world.
Good to see you are living overseas and best for NZ interests that you remain with that poor attitude.
If those taxes ever came in there would be a flight of wealth leave Nz and there would only be the poor remaining!
Why shouldn’t I be able to gift money or an asset to a relative? Would you charge tax on a lotto win? Government picking over my dead bones would be a Labour-Greens playbook. Appeals to the envious and jealous. Disclaimer-we arrived to nz as poor immigrants. Any nominal wealth we have was accrued thtough work and diligence.
The U.K. is an absolute cot case!
What gives anyone the right to take money off someone who has worked hard compared to those that have not?
They have already been paying big taxes and you think they should not have any reward?
You are deluded if you think the wealthier people are going to allow wealth taxes to be taken from them!
Envy is not good.
You are deluded if you think the wealthier people are going to allow wealth taxes to be taken from them!
You speak as if the wealthy are a group that feels entitled and can have nothin 'taken away' from them o they'll kick up a stink and force a u turn on anything that 'threatens' their level of wealth. Money and wealth doesn't make anyone more important than another, nor the interest o the few more important than the interest of the many. many seem to succumb to these views as they gain wealth. On your deathbed, wealth will mean nothing, you cannot take it with you, and your children do not need to inherit millions to enable one to feel as if they've achieved in life.
If you're so concerned about working for your money then how does the government do any work to earn someone's family property when someone dies? Why is it only ever considered unearned in the hands of someone's family and not a ticket-clipping government?
Why would we ever accept the government having a presumptive right to our property and my family having to buy things from the state that I've already purchased out of after-tax earnings, just to keep the things they have now?
I think Labour is making the same mistake as Democrats - not reading the room - they are going to lose the majority of hard working people in NZ - I am unsure why they are so out of touch - ** for those of you who think CGT will get you your revenge on property and landlords ** make sure have your reasons right - I would say property prices will go up - no one will want to be a landlord and rent will go up - and for all your trouble having a co -allition with Willie Jackson - rawhiri and Chloe = good luck oh yea and chippie just look like a vengeful person to me now.
If no one wants to be a landlord, how do rents go up?
I'm not sure where you get the revenge idea from. Sounds more like the landlords and property investors are failing to read the whole house.
Note: I don't think a CGT will solve the underlying issues. That horse has already bolted. As a former tax professional I only look at it as a means to have a fairer and balanced tax law, one that the average layman can follow, and reduce the complexities. The sooner we can get past the tax BS, the sooner we can address real issues. We might be 20 years too late.
I agree. The time for a CGT was back when the ITA 2004 or 2007 was being drafted. We dont want to make our state revenue reliant on a tax that requires persistent asset inflation. The Brightline is the next best thing.
The biggest fish to fry with tax is how we treat Kiwisaver. I'm shocked that a Labour party won't address their own retirement saving scheme if they're really interested in 'fairness' but the Labour Party has very much been a 'drag the top down' as opposed to 'build the bottom up' party for several years now, thankfully without the guts to follow through on it even when they had an absolute majority.
How do we treat effective tax rates?
Where many are paying 25% - 35% and locked into 30 years of debt servitude, and a few are paying 10% or less, because of flawed tax law, and flawed economic beliefs. They get to shout the loudest that they already pay too much.
Don't even start on the lower income earners and beneficiaries. That misses the point. They're a very small minority in the greater scheme of things. The fact they require tax transfers is because of the imbalances further up the pyramid.
Under Labour, Government debt blew out from 5 billion in 2019 to 100 billion. The ongoing interest costs from this borrowing is horrendous.
Add in the greens and Maori party next time and you will have the perfect team to bankrupt the country.
They will get a turn at some point.
Personally, I believe that tax is a way to help fund an equitable society and part of the contract of citizenship.
The problem is that the Public Service and the parties have lost my confidence (and that of a lot of others, I suspect) by: ineptitude, a lack of accountability, vanity projects and decisions based on doctrine and ideology not data - all of which are just wasting money we don't have.
Nobody expects the public service to be particularly efficient, but over recent years they've become visibly less effective as well and that's hard to take.
Im no economist but it seems to me the key problem is we don't have enough people earning enough to pay tax, especially after rebates such as working for families etc. When you have 20% of the people paying 80% of the tax you cant just keep bleeding them. I'm all for fair share and even some form of CGT (and I would be paying!!) but unless we can grow the 20% who pay the bulk we will run into real problems.
The only other option is to live at a lower standard of living - in relative terms we already live a far better life than most did 50 years ago. This will require means testing NZ Super, boosting Kiwisaver to reduce NZ Super payments(to be allocated elsewhere), tolling new infrastructure, closing down some roads, gravel instead of sealed roads etc etc. - hard unpopular choices.
If we can get our head around this and continue to invest capital long term (NZ Super fund, Kiwisaver, Sharsies etc) the long term is brighter but it will involve not living 100% for today and investing for the future. The results will take a few decades to emerge but there is not an instant fix as far as I can see.
You're right. You're no economist. So let me help with your maths. You said ...
"the key problem is we don't have enough people earning enough to pay tax"
The key problem is in fact ... We are not taxing many of the people who are earning plenty because our tax system does not tax them.
If we change our tax system to recognize all types of incomes - not just salary, wages and business profits - and raise tax on those un-taxed sources at similar tax rates to what salary and wage earners pay - we'll have plenty to fund the much needed infrastructure to drive up productivity.
I'd also add that once tax is being raised from the sources of income that are currently not taxed we should see a reduction of tax on salaries and wages which would mean many benefits consuming tax revenues can be reduced. Quite a win-win?
I'd be a mug to agree to upping taxes to fund infrastructure given the stink Labour caused about adjusting tax brackets more than once in 13 years and their chronic inability to actually plan or build infrastructure.
100% more likely based on actual evidence to date you would just end up with higher taxes and nothing to show for it.
While I see your point on efficiency of govt, I agree with CONF as the alternative is continued growth in inequality, and the erosion of the middle income earners of NZ which will only lead to further breakdown in social cohesion, greater levels of crime and more young and productive people losing faith in any vision of a positive future in NZ and leaving.
“By 2060, 10% of our GDP will be spent on health care, and 7% on Superannuation. That is a hefty burden on our economy and we need to start making choices now that prepare us for that challenge”
Without productivity improvement it's difficult to see how service can be maintained given the changing demography of our society.
Really, she thinks hard working kiwi's shouldn't keep more of their money?
Oh dear, and here I was thinking Labour had some hope with Edmonds as being someone who might be more balanced with her views around workers keeping more of their money, business and deregulation.
How wrong was I ?
Clearly, Edmonds has let the cat out of the bag and shown us all what she really thinks!!!!
Emonds has earned big praise for actually not saying anything at all, but now she has I hope people are rethinking their comments.
This is the same, tired and played out Labour party speil on tax, pretending like the amount we collect is the problem and not their massively overdemonstrated inability to spend it or manage the projects that they use it to finance.
We could have 100% tax and the last lot still would have had to revert to diversion, name-calling and class war rhetoric to draw attention away from they fact they blew through it on things like huge centralisation projects that undermined the viability of the services they were trying to provide for. It was government by for Wellington, by Wellington, paid for everyone else.
She is predictably more of the same, but wants the same Kiwis to keep digging deeper, all so those that pay nothing or less than nothing can pay even less. So much for self-reflection.
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