Tuesday, January 19, 2010

“. . . a fairer tax system”? [update]

BILL ENGLISH HAS BEGUN his working year by talking up his plans for something he calls "a fairer tax system.”  If that bromide is to mean anything at all, then there is only one possible means by which Bill English could deliver such a thing: By not spending so goddamn much.

That, however, is not on the agenda.

Pity, because there’s plenty of easily quashed boondoggles that any responsible Finance Minister would be eyeing up with a sharpened axe:

  • Cindy Kiro's Office for the Children's Commissioner
  • Peter Dunne's Families Commission
  • Paula Rebstock's Commerce Commission
  • David Lange's Ministry for Women's Affairs
  • Jim Anderton's Ministry of Economic Development
  • The Ministry of Youth Development
  • Asia New Zealand Foundation
  • The Ministry of Pacific Island Affairs
  • The Ministry for Maori Affairs
  • The Race Relations Conciliator
  • Alcohol Advisory Council of New Zealand
  • Action on Smoking Hysteria
  • Electricity Commission
  • Energy Efficiency & Conservation Authority
  • The National Advisory Council on the Employment of Women
  • The Department of Labour
  • Welfare for Working Families

That's just a few of the bureaucratic sacred cows that any responsible government should have in their sights when they’re talking about “fairer” taxes. If Bill really did want to relieve the burden of big government from New Zealand taxpayers, then those troughs for time-servers should all be wearing a target.

BUT CUTTING SPENDING IS not on the agenda of Sir Double Dipton.  Shuffling around the means by which he fleeces us is.

As Billy Bob and his boys have already signalled, what they mean by the bromide of “a fairer tax system” is simply a slight fall in income tax and a huge hike in GST and Land Tax—a  cynical piece of sleight of hand that will allow them to sock all New Zealanders while pretending they’ve belatedly kept their election promise to deliver income tax cuts.

There’s no possible way there’s anything “fair” about whacking up the price of land, or the price of everything everywhere.  There’s nothing responsible about making everything more expensive just to pay for this over-spending government, no matter how many worthies say otherwise.

MOST OF THE WORTHIES who talk about such things have been banging excitedly on for months about the prospect of a Land Tax—as if we don’t already have such a thing, and as if it would somehow have stopped the housing bubble from inflating.

It can only be abject ignorance that would allow any commentator to make either argument. 

No Land Tax or Capital Gains Tax anywhere in the world stopped any housing bubble anywhere—it can only be blind faith that keeps anyone insisting it will.

And New Zealand land is already subject to iniquitous financial impositions.  I look for example at a cost estimate prepared for a recent subdivision proposal in Auckland’s eastern suburbs, for which the grey ones will be putting their hands into someone’s pocket to the tune of around $40,000 per site, payable in advance.  That’s a $40,000 dead weight on which a developer will be paying interest, and a new-home buyer will have to make up.  That’s $40,000, plus GST!

No wonder the supply of new homes is already so restricted.  No wonder, with such a restricted supply, house-price inflation is taking off again (something that was easy enough to forecast some months ago). 

Now if that’s not a Land Tax that every new-home buyer is already paying, then I’m a banana.  And if there’s anything fair about whacking on higher taxes to New Zealanders who are already struggling, and consuming their savings as they do, then I’m a whole effing fruit salad.

UPDATE:  From Liberty Scott:

    “According to the NZ Herald, the Prime Minister said, ‘The Government would like to lower personal taxes.’
    “Great stuff.
    “The solution involves two words.
    “CUT SPENDING.
    “Don't increase GST …
    “Don't create new taxes …
    “Think about this John.
    “If income and company tax were reduced to a simple 20% with the first $10k tax free (hardly radical and not Libertarianz  policy), then how much MORE would that encourage a shift of investment from land to business?”

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15 Comments:

Blogger heisenbug said...

We have land taxes on existing properties, too - but we call them local body rates. One lot for the local council, one lot for the regional council. Very few people seem to see this... so the proposal is to levy three taxes on the same property, because you can bet your life the thieving bastards aren't going to *replace* existing taxes. They're just going to *add* to them.

Verification word is "folymaps" - a map describing the folly of land taxes, perhaps?

Richard

1/19/2010 08:49:00 am  
Blogger twr said...

Putting aside the desire for private services, how much of that $40k would be "legitimately" covering the provision of connections for water, sewerage, roads, etc rather than bureaucratic crap?

1/19/2010 10:12:00 am  
Blogger PC said...

@TWR: None of it. In the current example, provision of those services adds an additional sum of around $25,000 to each site.

1/19/2010 10:23:00 am  
Anonymous David said...

Do you have any figures on how much those 'easily quashed boondogles' actually cost? I've always been interested in exactly *how* and where Government manages to bleed money so easily..

1/19/2010 10:41:00 am  
Blogger Shane Pleasance said...

A 'fair' system might be one whereby I choose to pay for and receive state funded services - or not.

1/19/2010 02:02:00 pm  
Blogger Julian said...

Only a moral pygmy could ever say that the theft of private property is "fair".

Julian

1/19/2010 02:35:00 pm  
Anonymous Falafulu Fisi said...

I would urge Bill English not to chop the The Ministry of Pacific Island Affairs (MPIA), since that department has been very active in recent months in South Auckland , advising Islanders of how to cook/bbq their pets properly (ie, dogs, cats, etc,...) so as not to offend the wider NZ populations.

A source in Mangere told me recently that they use this humane method that is being advised by MPIA in which they invited their European neighbour for the kai and they (neighbour) loved it. The neighbour didn't even call TV1, TV3 or even the Herald to come and join them for the BBQ.

1/19/2010 03:44:00 pm  
Anonymous Anonymous said...

Someone please get me out of this nightmare!

National = Labour but their supporters don't even get it...

The left hates National....but National is exactly the same as Labour.

The right bemoans Labour, yet their party IS Labour (with a different logo)

What's it going to take for this all to end? Complete collapse of life as we know it? Complete economic and social melt down? Do we have to end up like all the communist block countries just before they fell apart? Really?

Is the only way to get out of this to vote green and get it over and done with as quickly as possible?

Someone make it stop!!

1/20/2010 05:24:00 am  
Anonymous LGM said...

PC

The $40,000 tax expropriated against each of those sites is $40,000 each of the new homeowners is going to have to pay (exactly as you say). That's $40,000 plus related fees above what they otherwise would have had to pay. The vast majority of people purchasing a home borrow money from the bank in order to be able to acquire said home. Over the life of a typical mortgage the extra $40,000 is going to cost them an extra $120,000 by the time it is paid off. That's $120,000 that they will need to earn (one way or another) and that won't be available for other purposes...

Fair?

Now watch the new Land Tax start to bite.

More fairness indeed.

Concentrated fairness.

Undiluted.

LGM

1/20/2010 06:49:00 am  
Anonymous the drunken watchman said...

Anon said "what is it going to take ... complete economic and social meltdown?".

Isn't that what it's 'going to take' not to stop it, but to complete it. Total meltdown = perfect excuse to print money and buy up everything. A bloodless coup, just been happening all over the world to various degrees.

So is there anything for Nanny to fear in a meltdown? She just has to find some matrix-like way of keeping her flock busy, and apart from a handful of malcontents, sufficiently happy.

1/20/2010 09:15:00 am  
Anonymous LGM said...

Watchman

You mean, something like a war?

LGM

1/20/2010 09:53:00 am  
Anonymous the drunken watchman said...

LGM - was that a serious question?

No. I mean a complete takeover, a coup by the state without a war as such. It's do-able. Have a melt-down, then buy everything up. Just gotta keep the flock happy, trick them into thinking they own their property so as to keep them striving to acquire more, otherwise everyone loses interest and ends up sitting round and starving like in Zimbabwe.

Properity by illusion. Just enough to keep the whole thing going and to make it worth the conjurer's while.

1/20/2010 10:50:00 am  
Blogger The Tomahawk Kid said...

I'm afraid anonymous is closer to the mark than I care to admit!

From where we are now, the fastest way forward will be to let them have their way and embrace the collapse, so that the grey ones may learn from their mistakes, and there is a clearer way forward - Unfortunately history also shows us that they NEVER learn from their mistakes - opting to do the same things that have failed in the past.

Were DOOMED - DOOMED Mr Mannering

1/20/2010 02:05:00 pm  
Anonymous the drunken watchman said...

Kid

You've been reading the news, right?

The recent 'crisis' has enabled governments all over to print money, nationalise assets and spread their grip. U think that bothers them?

The bigger the collapse, the worse it will be for you and me, Man, not for Nanny.

1/20/2010 02:24:00 pm  
Anonymous LGM said...

Watchman

No, it wasn't really a serious question. I was having a bit of fun. Having said that, last time things got real bad a war was arranged to mop up some excess people. It was a nice big one, as I recall.

LGM

1/20/2010 02:31:00 pm  

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