Frank Newman: The State of the Universe Address

For politicians there is never a bad time to make promises about the future, after all making promises about the future is much more palatable than defending past and present failings. Labour and National have given their state of the nation addresses, and the Greens have delivered a state of the planet eulogy. Not to be outdone, I thought I would go one better and present an inaugural State of the Universe address. The speech notes go something like this:

Taxation
1. Tax people more and they will work less.
2. Like unwelcome relatives, once you allow politicians into your life they don’t leave until the fridge is bare.

Mike Butler: English, banks, and property

The Government deficit has shrunk, according to financial statements released this week, but policy sacred cows remain untouched and Finance Minister Bill English remains oblivious as to what his comments and his tax changes have done to the property sector. A $2.5-billion gain in the value of the New Zealand Superannuation Fund and ACC investment portfolios helped narrow the deficit to $4.5 billion in the year ended June 30, from a $6-billion deficit a year earlier. (1)

Roger Kerr: This Year's 2025 Taskforce Report an Important Stocktake

 Next month the 2025 Taskforce will be delivering its second report to the government. It is the most important taskforce reporting this year.

Achieving the goal of catching up with Australian income levels by 2025 would hugely benefit most New Zealanders and alleviate many social problems – stretched household budgets, the availability of high-paying jobs, housing affordability, resource constraints in health, education and environmental protection, and our ability to cope with an aging population.

Roger Kerr: The Dubious Benefits of Fiscal Stimulus

John Maynard Keynes once wrote: “There is no harm in being sometimes wrong – especially if one is promptly found out.” Unfortunately for the world, the problems with Keynes’ ideas were not discovered promptly, and the lessons were too soon forgotten as Keynesian thinking enjoyed a revival with the recent global financial crisis and subsequent recession.

Roger Kerr: Economic Fallacies And Their Consequences

A few weeks ago I decided to look out for examples of economic fallacies that routinely appear in our media. It didn’t take long to make a list. Local government is always a happy hunting ground. Mike Reid, governance manager of Local Government New Zealand, recently wrote that there wouldn’t be much interest in private financing of infrastructure like water services “as councils are able to borrow more cheaply than the private sector”.

Roger Kerr: Politics Should Be About Doing What Is Necessary

It’s often said that “politics is the art of the possible”, usually by politicians who know they should be doing something in the overall national interest but aren’t willing or able to do it. The contrast is with Winston Churchill’s statement, “It is no use saying ‘we are doing our best’. You have got to succeed in doing what is necessary.”

Mike Butler: The Budget and property investors

How bad did Budget 2010 get for property investors? The expected hit on depreciation deductions on buildings eventuated, from April 1 next year, with an unexpected proviso it applies to rental housing and office buildings with an estimated useful life of 50 years or more.

Roger Kerr: Spending Cap An Idea Whose Time Has Come

Next month’s budget is expected to include an announcement on some form of legislated cap on government spending. This could be one of the most important reforms the government has so far proposed. The initiative was foreshadowed in last December’s Budget Policy Statement, where the minister of finance Bill English noted that “Controlling the growth of, and getting better value from, government spending should be a permanent feature of the economic landscape.”

Mike Butler: Tax Working Group errors spotted

Errors have been found in the Tax Working Group’s report on the taxation of rental property by the Zealand Property Investors’ Federation and a leading academic. Writing in the April edition of The NZ Property Investor, federation president Martin Evans said that the working group advised the government that $200-billion was invested in New Zealand rental property, yet it lost $500-million per year resulting in tax refunds of $150-million.

Mike Butler: Nats create enemy on the right

Glad to see that the NZ Property Investors’ Federation is going into battle over the proposed changes affecting property tax. The NZ Property Investors Association said landlords would lose on average $1750 a year if they lost the tax rebate and this amounted to $34 a week, which would be passed on to tenants, according to ONE News. Labour MP Trevor Mallard echoed the warning when he said the increase could be as much as $45 across 400,000 households.

Roger Kerr: Does Economic Reform Mean Pain

Writing in the Dominion Post around the time of the release of the taskforce report on catching up with Australian income levels by 2025, prime minister John Key said, “Neither do New Zealanders need or want the government to embark on a hugely radical, disruptive policy agenda.”

The implicit reference is to New Zealand’s painful economic reforms of the 1980s and early 1990s. But do they bear comparison with what is needed today to catch up to Australia?

Mike Butler: Whanau Ora questions remain

A report on Whanau Ora separate Maori welfare, which was made available to the Government last week, remains under wraps while Prime Minister John Key has declared that the initiative would be open to all New Zealanders.

Possibly Mr Key wants to diffuse criticism since separate welfare plans based on race remain as unpopular as they were when the previous Clark-Cullen government backed away from its Closing The Gaps policy.

Mike Butler: Tax proposals from a landlord's perspective

The National Party was voted in on a policy of cutting personal tax. Last Tuesday Prime Minister John Key told parliament of an intended raft of tax increases, including hiking GST to 15 percent, to achieve an unspecified decrease in the top personal tax rate. He had ignored his pre-election promise of no increase to GST, so was obliged to weather accusations in the House of an astounding flip-flop. Even so, by Saturday he blithely claimed, in an interview on Radio NZ, that everyone would be better off.

Roger Kerr: Budget 2010 Will Be Test of Governments Resolve

Last month the government released its Budget Policy Statement (BPS) for 2010, along with its 2009 Half Year Economic and Fiscal Update.

Shortly the Finance and Expenditure Committee of parliament will be considering submissions on the BPS and the process of putting together the budget will be in full swing.

Mike Butler: Between rich and poor

While the 2025 taskforce shows a widening gap between living standards of New Zealand and Australia over 40 years, this blog shows where New Zealand and Australia sit between the world’s richest and poorest nations in terms of per capita gross domestic product (GDP).

The 2025 taskforce, headed by former National Party leader and Reserve Bank Governor Don Brash, produced a report entitled “Answering the $64,000 question: Closing the income gap with Australia by 2025”.

The report shows that average Australian incomes are around 35 percent higher than those in New Zealand, which means a gap of $64,000 for a family of four.

Mike Butler: Losing money on rentals

Property investors who offset rental losses against personal income would be surprised to find out that the Tax Working Group has not prescribed measures on loss attributing qualifying companies.

Possibly Prime Minister John Key’s comment about “closing loopholes” has sparked debate, especially among commentators who have been campaigning against these companies.

Frank Newman: Taxation review just one piece of the puzzle

The big news of the week is the release of the report by the government’s Taxation reform Group. The six main recommendations of the Group are:

1. To broaden the tax base beyond income tax and GST the Group recommended the introduction of a land tax of 0.5% of the unimproved land value of a property.
2. Increasing GST from 12.5% to either 15% or 17.5%.   
3. Reducing the 38% and 33% personal tax rates. The Group says it would like to see lower personal tax rates across-the-board to offset any increase in GST.
   

Mike Butler: Tax reform must benefit everybody, even property investors

Over the past 10 years, I have seen a steady stream of people invest in property to cope with their changing tax circumstances.

Therefore, I would agree with Tax Working Group chairman, Professor Bob Buckle, who wrote (in the Dominion Post, January 16) that raising the top tax rate in 2000 and the bringing in the Working for Families policy undermined the New Zealand tax system.