Kerre Woodham: The country we want costs more than we're willing to pay

The topic of tax has been in the news recently and it will stay in the news. It’s set to become an election issue with one of the few policies that Labour's actually committed to being a Capital Gains Tax – possibly more taxation/revenue measures. Watch the politicians dance on the head of a pin in the lead up to the election. The Fitch report, which looks at New Zealand's ability to pay its bills, said that a Labour Party coalition with the Greens and Te Pāti Māori would emphasise revenue measures as a means of making ends meet. The authors of the report said the National Party-led coalition would focus on expenditure constraint. There's been all sorts of argy bargy and we can go into that a little bit later, but already, even when we start talking about tax and about Labour introducing a Capital Gains Tax and more tax, it's said like it's a bad thing. Like it's a dreadful thing to contemplate more tax.

David Farrar: The ever growing black market

1 News reported:

The latest estimates put the market share for illegal tobacco sales between 25% and 65%, illicit tobacco and e-cigarette commissioner Amber Shuhyta told a Senate estimates hearing on Tuesday night.

Richard Meade: What ‘Jack and Jill’ can teach us about the (un)fairness of capital gains taxes

In New Zealand, capital gains tax debates spring up like zombies. Each time they get killed off, back to life they come.

New Zealand already has some types of capital gains taxes – such as the bright-line test (which taxes residential land bought and sold within two years) and taxes on other various activities. So the debate is more about expanding taxes on capital gains, rather than introducing a new tax.

Ele Ludemann: More tax for less

New Zealanders had the OECD’s second highest tax increase last year:

New Zealanders faced the second-biggest tax raises in the developed world last year, the Organisation for Economic Cooperation and Development (OECD) says.

The intergovernmental agency said the average change in personal income tax in New Zealand was 4.5 percent higher last year compared with 2022.

Bryce Wilkinson: Beyond tax tweaks - The real path to New Zealand's prosperity

This week, the National Party revealed its tax plans for the election. These are aimed at people with average incomes.

Overall, the changes are minor. Yes, many people would be able to earn more before moving into a higher tax bracket. And yes, there are some further tax cuts for low- and middle-income earners.

These tax cuts will cost $14.6 billion over five years.

John MacDonald: The tax arguments don't stack up

If I said to you, there was one thing all the political parties need to stop doing straight away, what do you think it would be?

One thing that pretty much every party is doing. The ones on the left. The ones on the right. The ones in the middle. They’re all doing it.

What do you think it would be?

Bryce Wilkinson: When debating tax, don't forget spending quality

An IRD report on effective rates of tax attracted much public attention last week.

It was launched by the Minister of Revenue, David Parker.

In proposing that high income people are not taxed enough, Parker asserted in the report’s foreword that: “New Zealand is not a highly taxed nation”.

This claim is false.

Bob Jones: Tax

Recent calls from predictable sources to emulate Britain and introduce a one-off “windfall tax” on petrol companies, are massively ill-considered.

An important principle of any tax system is consistency. Ad hoc “one-off” taxes are contrary to that principle.

Participation in market economies, be it owning a coffee-shop or an oil company, necessitate acceptance of unexpected events causing a windfall or a bankruptcy-facing collapse in demand.

Point of Order: Under-taxing the wealthy is a challenge for our Revenue Minister – but evidence for a new policy will be destroyed

Having got things admirably correct with his opinion as Attorney-General on the wretched Rotorua local body bill being promoted by Tweaker Coffey, it looked like David Parker had stumbled as Revenue Minister

The impression of a stumble was given by a Stuff headline which read Revenue Minister David Parker lashes very wealthy for being undertaxed, calls for new tax principles

But if someone is being undertaxed, very wealthy or not, shouldn’t someone at the Inland Revenue Department be hauled into the Minister’s office to explain what’s going on?

Mike Hosking: Ardern falls for Luxon's trap

Chris Luxon was having a good week until he caught Covid.

His tax ideas will be welcomed by most hard-working New Zealanders. The idea that you can earn the average wage yet be in one of the top tax rates is absurd and keeping more of your own hard-earned money is actually something all governments should aspire to.

It's the classic problem for left-wing governments when such debates arise, because what it exposes is their belief that they spend the money better than you. But, 99 times out of 100 that isn't true.

Mike Hosking: A lesson in life, the taxman is never far from your pocket

 

From our rock and a hard place file comes the revelations, if that’s not too strong a word, over the tax price you pay if you help your kid out buying a house.

National's Andrew Bayly has been making the headlines with this one and he is onto something many hadn't thought about or thought through. It doesn't help that the government already look greedy this week with the revelation, and that’s not too strong a word, over the number of people their new top tax rate grabs.

Heather du Plessis-Allan: Labour keep breaking their 'no new taxes' promise

 

I can't understand why Grant Robertson thinks proposing another tax on workers right now is a good idea.  

That is essentially what the unemployment insurance idea is; a tax.  

You can call it a levy or a contribution or whatever other euphemism you want to use but if you’re taking 1.39 percent out of a worker’s pay packet, it’s just going to feel like a tax. 

On a pay packet of $100K a year, that’s $1400 you’re losing. Every year.  

Frank Newman: Taxing issues

Tax has become a topic of hot debate. The precursor is the impending release of the first Final Report of the Tax Working Group (TWG), headed by former Labour Finance Minister, Sir Michael Cullen. That report is now with the Minister of Finance, Grant Robertson.

It's pretty much a given that the report will recommend a capital gains tax (CGT); that was the brief given to the TWG by the Labour led government. It's the possible finer details that are attracting a lot of commentary, and criticism. Commentators are rightly pointing out the many practical limitations of a capital gains tax.

Daniel J. Mitchell: Marginal Tax Rates Matter

Three years ago, I shared two videos explaining taxation and deadweight loss (i.e., why high tax burdens are bad for prosperity).

Today, I have one video on another important principle of taxation. To set the stage for this discussion, here are two simple definitions:

• The “average tax rate” is the share of your income taken by government. If you earn $50,000 and your total tax bill is $10,000, then your average tax rate is 20 percent.
• The “marginal tax rate” is the amount of money the government takes if you earn more income. In other words, the additional amount government would take if your income rose from $50,000 to $51,000.

Daniel Di Martino: Italy’s Taxes Drive Its Economy Underground

Milton Friedman used to say that “for many years Italy did well because of the black market.” 

Italy grew rapidly over the 20th century, and its black market was part of an important economic recovery after World War II. Italians made everything from low-cost toys to high-quality cars, from world-renowned coffee to thousands of movies.  

However, in 2018, Italy is one of only two European countries where GDP per capita has not recovered from the financial crisis. Italy has an unemployment rate of 11 percent and a youth unemployment rate of about 35 percent. In addition, Italians have the second-largest government debt in the world relative to their GDP.

Daniel J. Mitchell: Italy’s Countdown to Fiscal Crisis

As a general rule, we worry too much about deficits and debt. Yes, red ink matters, but we should pay more attention to variables such as the overall burden of government spending and the structure of the tax system.

That being said, Greece shows that a nation can experience a crisis if investors no longer trust that a government is capable of “servicing” its debt (i.e., paying interest and principal to people and institutions that hold government bonds).

This doesn’t change the fact that Greece’s main fiscal problem is too much spending. It simply shows that it’s also important to recognize the side-effects of too much spending (if you have a brain tumor, that’s your main problem, even if crippling headaches are a side-effect of the tumor).

Fiona Mackenzie: Our Fatal Flaws

I’ve just read a great book – “Why Nations Fail…….the Origins of Power, Prosperity and Poverty”.  Based on 15 years’ research, it’s no light read but it has much to say that is relevant to New Zealand. I hesitate to condense it, but feel some key messages are important.

The book dispels the arguments that wealth and prosperity can be due to climate, geography or culture. Rather it’s the openness and accessibility of institutions a country operates under (both economic and political). These determine whether people feel they have a chance of being heard and, most importantly, whether it’s worth investing their time, effort and resources in trying to achieve anything. Fundamental human psychology, really!

Mike Butler: Taxing the family home

The term “big kahuna” could refer to the Hawaiian surfing god, or could mean “important person” but for economist Gareth Morgan it is part of the title of his new book “The Big Kahuna – Tax and Welfare”. The basic idea is a variation on one that surfaced in New Zealand in 1987 when then Finance Minister Roger Douglas introduced a policy of a 23 percent flat rate of income tax and a new form of income assistance called guaranteed minimum family income.

Morgan’s proposal differs in that his unconditional basic income is available to every individual working or not working -- $8500 a year for those aged 18-20 years and $11,000 for those 21 years and over. This would be funded by a flat tax of 30 percent, as well as a comprehensive capital tax which includes owner-occupied housing.