Written By: - Date published: 9:47 am, May 26th, 2008 - 40 comments
Categories: election 2008, Media, national, slippery, tax -
Tags: Budget, granny, herald, john key, policy, tax, tax cuts
With a loving smack that would have brought a smile to Bob McCoskrie’s face, the Herald‘s editorial today rebukes John Key in the strongest terms it can.
Now that the Budget is behind us, the National Party has less excuse for indecision on most of the important economic issues facing the country at the coming election. As late as eight days ago finance spokesman Bill English could not answer a question as basic as whether National would keep the top tax tier, 39c in the dollar.
Of course, it’s patently ridiculous to think that the most serious economic problem facing New Zealand is the 39 cent tax bracket (off the top of my head: climate change, peak oil, food miles, low wages, water, the missing generation of trades people from the 1990s when National scrapped apprenticeships, the coming retirement of the boomers and subsequent housing market collapse) but, at least, the Herald is finally challenging Key to get serious about what he would do in government.
It goes on to dismiss the ‘tax cuts don’t lead to revenue cuts because people work harder’ argument as the wishful thinking.
If National promises to abolish the 39c rate, and realign the top personal rate to the company tax rate, it will claim that lower rates will keep high earners in New Zealand and improve their incentives to work, resulting in no loss of tax revenue. Conservative governments have seen their Budgets turn to grief on this belief.
New Zealanders are already among the most employed and longest-working people in the world – tax cuts won’t make them more so. But, being the Herald, the answer it finds is not ‘don’t cut the tax’ it’s ‘cut spending too’
the party will need to stick its neck out on expenditure cuts, too. It is not sufficient to say, as Mr Key did the other day, “National will direct spending away from low-quality programmes that push up inflation towards frontline services like doctors, nurses, teachers and police.” That sort of double-speak fools nobody. We need to hear serious policy soon.
The Herald‘s campaign platform would be less tax on high incomes funded by cutting government spending. That’s a wealth transfer from the poor to the rich, but at least it is a platform. Key is trying to get into government without one, and even his most ardent allies are getting sick of it.
[incidentally, the Herald says our tax system with higher tax in higher brackets is 'progressive in Labour terms'. It's progressive in mathematical terms; it's not a values judgement, it's a numerical reality]
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Scoopit!
SP: Nationals policy is to cap at 36,000 with the current size 43,000. That is a reduction of 7,000.
SP: “no, it would be a wealth transfer because we have a status quo in which different income levels keep different net incomes a proportion of their gross incomes, change that to increase the net income of the rich while cutting the social wage and that is a wealth transfer from poor to rich – we’re not living a theory, we’re in the real world and the question is who gets richer and who poorer from a proposed change to the status quo.”
Cute argument, SP. It is a wealth transfer from the status quo. But that ignores the original wealth transfer. It is a wealth transfer in exactly the same way as wealth is transferred whenever the police recover stolen goods (if, indeed, they still do that).
Bryan. National’s policy is not to cut the core public service, I’ve seen both Key and English specifically say that, even correct interviewers on that point, in the last week.
If you cut 10,000 core public servants, you would be gutting the government’s ability to upgrade policy and administer revenue, the courts, the public education and health systems, social welfare, defence, infrastructure etc etc.. you would probably have to fire some prison guards as well (they’re in the core public service as are social workers)… the remaining public service, over 250,000 employees would have to take over policy functions in addition to being nurses and teachers etc, and would not have even the flawed system we have now to ensure that money is spent effectively, so government waste would increase.
Only a fool believes that a government would rather employ 10,000 doing nothing than spend that money on something useful or cut taxes.
Billy.
We’re not living in the original world. The question is what effects changes we make to the way things are now will have.
Billy me old mate – I have to say you’re sounding more and more like a crazy libertarian every day. I know you don’t get out much but next time you do have a look around you. All those scary people? They’re society. Now what you might not understand about society is that it provides us with certain things throughout our lives such as public healthcare, free education and subsidised tertiary education (don’t get me started about that), access to libraries and infrastructure to ensure we can get to and from these things and to ensure that there is an internet too.
That means that clever people like ourselves get to be born and looked after and then educated by other people. Now this doesn’t come free. This society asks us to return the favour by giving back a small share of the wealth we gather from being healthy, well educated clever people.
Now I don’t know about your background but I can tell you the only reason I’m well in the top tax bracket and contributing productively is because of this whole society thing. I don’t come from a wealthy background at all but now I make a lot of money and I can talk in a well informed way about why James Joyce is overrated. Your way of doing things would have taken that from me.
“All those scary people? They’re society.”
And people only seem to sing its virtues when telling me I have to pay for it.
“Now I don’t know about your background…”
Course you do. I am a real estate agent. I look like a young Sophia Loren. I have a twitch, a stutter, an eye patch and an incontinence problem.
“I can tell you the only reason I’m well in the top tax bracket and contributing productively is because of this whole society thing.”
I suspect you are selling yourself short, ‘sod. A talented guy like you.
“This society asks us to return the favour by giving back a small share of the wealth we gather from being healthy, well educated clever people.”
I do not recall being asked, or having any choice at all in the matter. And if I’d known the result was that people would mis-read Joyce, I would have been objecting more violently.