"The problem isn't a Government that won't cut spending or a Finance Minister who won't raise taxes. The problem is a New Zealand public with a bottomless sense of entitlement to government money."
~ PJ O'Rourke, from The Parliament of Whores, as translated from the American
It takes something for an opposition leader to get everyone talking, especially with everything else everyone's already got to talk about.
But talking about tax-cuts will do it: will immediately get everyone's attention -- either in opposition, or in support.
My immediate thought whenever a politician talks about tax cuts is "how much?" and then "what spending cuts are they promising to match them."
Every political hopeful everywhere promises to "attack waste" as a way to fund their promises. And Mr Luxon (and every mayoral hopeful) is no different. And as Eric Crampton points out, "there's a yawning hole yet forecast that needs dealing to. And we should expect that health and defence spending will be higher over the next decade."
Why does it matter? Because without commensurate spending cuts, the government's hand is still in your pocket -- any promised tax cuts are just irresponsible sleight-of-hand.
Governments you see have only three means by which they can obtain money to spend: taxes, borrowing, or the printing press. The higher their spend, the more one or more of these three hurdles are put in the way of successful capital accumulation. The more governments spend, the less private investment can happen.And that handbrake is government debt. Which, with tax cuts offered without any commensurate spending, cuts will only increase.
By that standard then, it should be clear that tax cuts themselves are only an indirect means by which to encourage growth, and without commensurate spending cuts are potentially more destructive than constructive.
In short, tax cuts without govt spending cuts simply imply that a different form of handbrake is to be applied.
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