What tax cuts?

The spin has already been spotted in the wild, and by Budget Day this week the spin will be a tsunami.

I"m talking about the lie of tax cuts--the tax cuts that were promised before the election in the face of world economic collapse; the tax cuts the promise of which was broken because this government lacked the courage to  deliver the necessary spending cuts to match them; the “tax cuts” that are now being signalled in return for increases in GST, tobacco and alcohol taxes, and “carbon taxes” on power and petrol.

I’m talking about the spin that the few cuts, which will be more than outweighed by the increases, are somehow a return on that broken election promise. To that I say, “Bullshit!” The only “tax cuts” you’ll see are those with tax hikes that more than make up for that little. 

    “Look, over there; it looks like a tax cut.”
    “And look, over there; there’s a tax hike to match.”

At a time this government spends every week a quarter-of-a-billion more than it takes in, it shows no intention of stemming this fatal haemorrhage of red ink.  That is just one measure of its irresponsibility.

A measure of its duplicity is the gap between what was promised, i.e., real tax cuts, and what is being delivered, i.e., no real tax cuts--and to whom promises were kept and to whom they were broken.

The credibility gap is huge. There will be no tax cuts.  Today in New Zealand it’s finally “Tax Freedom Day”—the day when the median New Zealander stops working for the government and starts earning for him or herself. That day occurs later in the year here than it does in Australia, the US, or even the deeply troubled UK—and that day has not been moved back one iota by this government, but forwards in order to help bankroll them spending beyond their means.

And to whom are promises being kept?  Simple.  While this government is breaking its promises to producers and tax payers, i.e., the forgotten people who are always called upon to staunch the politician’s bleeding heart by paying for his vicarious generosity*, it considers it absolutely essential to keep promises to the parasites that their mis-named and unaffordable “entitlements” will be maintained.

It is the same delusion that is now dragging down every welfare state in the world.

The fundamental point that must be made again and again was said well by Henry Hazlitt:

The mounting burden of taxation not only undermines individual incentives to increased work and earnings, but in a score of ways discourages capital accumulation and distorts, unbalances, and shrinks production. Total real wealth and income is made smaller than it would otherwise be. On net balance there is more poverty rather than less."

Shuffling around that mounting burden does nothing for prosperity.  What is necessary is removing it.

A responsible government would do that.

That they won’t do anything close tells you precisely how “ambitious” they really are.