Written By: - Date published: 11:52 am, November 25th, 2008 - 80 comments
Categories: dpf, national, spin, tax, uk politics -
Tags: gordon brown
National’s David Farrar has been running a series for some time trying to paint NZ Labour as out of step with Labour Parties around the world when it comes to their attitude on tax cuts. His intention, of course, is to portray Labour as extreme left and his mates in National as centrist and middle of the road. Problem is, he’s more interested in spruiking for the National Party than he is in getting his facts right.
Yesterday he reported excitedly that while NZ Labour was “almost alone in the world with its hostility to personal tax cuts”, in contrast the UK Labour Party is “delivering a massive package of tax cuts” to deal with the economic crisis.
We’ll forgive him for selectively ignoring the huge family tax cuts in Working For Families, the cut to the corporate tax rate, the personal tax cuts in this year’s budget and the tax credits for Kiwisaver and R&D – these are things National has to omit for its spin to make any sense.
But despite his obvious disdain for the intelligence of his readers he can’t get away with this one – under Gordon Brown’s tax plan that he endorsed so wholeheartedly the wealthy will face a hefty tax increase, while the cut is to VAT, a regressive tax similar to our GST that hits the poor the hardest.
Essentially, it’s a more progressive tax system, with tax reductions for those on lower to middle incomes paid for by tax increases on the rich, and it’s being described in the media as a rejection of Blairism and a return to traditional Labour values – values that would fit in very well with those of the Labour Party here that Farrar has tried to paint as extreme and “almost alone in the world”.
The only question is, given his enthusiasm for Gordon Brown’s plan, will Farrar now be rejecting National’s regressive tax plan – where families on less than $44k pay more tax so the rich can pay less – in favour of a system that’s fairer and more progressive? Somehow, I doubt it.
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Scoopit!
I admire pirates for their assiduous use of the subjunctive case.
Sod
Thanks for your reply. Ironically, I think your comments support the view that Labour took the “don’t rock the boat” strategy and largely went with the current. I do agree with your comments about capital gains tax although it does open up a pandoras box.
I’ve commented before about the 39% rate – it may be a good idea in terms of a progressive tax system but it’s impractical and inefficient when company rates are being cut to 30%. As to your other point, if govt spending is not increasing as a % of GDP (everything else being equal), there’s no argument against adjusting the thresholds.
It’s difficult to argue with the belief that Cullen was against tax rates on ideological grounds, more than economic ones.
Daveski – I’m not arguing Cullen as the perfect economic manager but he did better then most and under a lot of political pressure to do exactly the wrong thing…
Sod
Happy to agree. I’ll even go as far as to state he most likely disappointed those on the Left as much as those on the Right by steering a steady ship rather than responding to the different criticisms. He was brave in as much as he wouldn’t bow to pressure to change from the course that was set. Not all would agree that that was right but credit to him for doing so.,
However, I think he painted himself into a corner with his refusal to consider changes to taxation when he could have done so without rocking the boat.
FWIW, I don’t see WFF as tax cuts either.
Daveski: About the 39% vs 30%. Provides a pretty incentive to start companies rather than getting pay rises. Businesses are where the country makes money from exports. Perhaps it isn’t as silly as it looks at first glance.
captcha: bridge totaled
Where ?
Billy,
Of course tax cuts forever is patent nonsense; just as forever increasing taxes is. (I thought I made that perfectly obvious, but apparently you missed it.)
So why then do we ONLY hear constant bleatings for tax cuts? Why is it that most right wing commentators frame tax cuts as the magic formula for winning elections, turbo-charged economic growth, and wonderful happiness all through the land ever after? (And why no political aspirants who plainly propose to increase taxes in order that the country runs better?)
Any populist drop kick can promise tax cuts, it takes no skill, leadership or vision. Just the willingness to appeal to people’s basest sense of self-interest. But it is inherently a self-limiting formula. At some point it stops working. Then what do you dummies do for a slogan?
PB,
Yes the story of Joseph is one of the most complex and deeply layered stories in the Bible. The business of the seven years of plenty, followed by the seven years of famine makes an ancient and indelible case.
The years of plenty are rendered meaningless if society collapses and millions die during the years of famine.
Whoever the author of the story was, his condemnation of short-term thinking still resonates all these thousands of years later. Some truths never change.
Lprent,
You can start a compnay without starting a business. You can start a business without starting a company.
RedLogix – I agree there is too much bleating about tax cuts. Unfortunately all too often some post or comment includes the line “tax cuts for the rich”. While I am looking forward to having more money in my pay packet, I’m not opposed to lower income earners also having more money in their pay packet. I also don’t count myself in the ‘rich’ category.
I posit that as long as the line keeps getting rolled out there will be indignant reaction from those like me who could genuinely use the extra money in their hand for genuine reasons like housing and feeding their family.
Billy: Sure you can. But the joys of limited liability and lower tax rates sure help to swing it one direction.