A detailed analysis of Simon Bridges’ state of the nation speech

88 comments on “A detailed analysis of Simon Bridges’ state of the nation speech ”

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1. Nick 1

   30 January 2019 at 5:08 pm

   Blah blah blah… Vote for me
2. Dv 2

   30 January 2019 at 5:24 pm

   Indexing Taxation to inflation is actually a good idea.
   • Formerly Ross 2.1

     30 January 2019 at 5:33 pm

     So is having a productive high-wage economy. I’m guessing Simon didn’t talk about that. Remember when Key talked about closing the wage gap with Aussie? Yeah it didn’t last long.

     Out of interest, will indexing tax to inflation benefit the poor more than the wealthy? If so, how?
     • Paul Campbell 2.1.1

       30 January 2019 at 6:26 pm

       Richer people will get more back, but for people earning from the start of the (new) top step all the way up to full on billionaires it will be a fixed amount – likely something vaguely in the $1000 range – really we need that top 38-39% tax rate back (I am in that bracket)
   • Paul Campbell 2.2

     30 January 2019 at 6:21 pm

     I agree – it’s been suggested by opposition parties since for about forever, but never implemented when those parties actually get into power.

     If you’re a minister of finance it gives you a few extra % each and every year, and then you can promise a “tax cut” which is really a reindexing of the current steps (as Labour did in 2008 and National did in 2009)
   • Rapunzel 2.3

     30 January 2019 at 7:55 pm

     Less than 10% of the work force will get anything at all.
   • McFlock 2.4

     31 January 2019 at 12:14 am

     I’d actually index it to income medians, not dollar value. Deciles 1-2 (lowest incomes) pay zero, deciles 3 4 & 5 pay low rates, 5 6 & 7 middle rate, and the highest income 30% pay the highest tax rates,

     That way if inflation is kept low because inequality is increasing, the people benefitting from that redistribution pay more..
3. Fireblade 3

   30 January 2019 at 5:24 pm

   Vote for me. I’m gonna do tax cuts and stuff like this:

   Simon Bridges (Twitter)
   If National is elected in 2020 we will: ☑️ Repeal the Auckland Regional Fuel Tax ☑️ Ensure no increase in petrol taxes during our first term ☑️ Have no new taxes in our first term ☑️ Repeal a Capital Gains Tax

   Simon then asks “how the fuck are we going to pay for it?”
   • Sabine 3.1

     30 January 2019 at 7:33 pm

     by increasing GST and any other tax not mentioned in his tweet.

     Have a good look at what he promises and ask yourself where they main tax revenue comes from.

     also he is repealing a tax we are yet to have.
     • In Vino 3.1.1

       30 January 2019 at 7:52 pm

       Also – revert to deliberate underfunding of all socially important areas like Police, health, education, etc, etc. And then miraculously balance the budget books!
       • patricia bremner 3.1.1.1

         30 January 2019 at 8:00 pm

         1+
     • Ed1 3.1.2

       30 January 2019 at 9:21 pm

       We do have a capital gains tax – it is just that there are so many exemptions that many individual are not aware of it. If shares or property is bought for investment purposes and traded to realise gains, then prima facie that “income” from capital gains is taxable. I think there is a general exemption for an investors place of residence, or investments bought for long term benefits rather than investment gains – the “bright line” test introduced by National limited the exemption for properties sold soon after being bought – if you buy and sell a house days apart (as some real estate people have managed to do), then “capital gains” profits are taxable. Bridges appears to have promised to remove all capital gains taxes – it would be interesting to know what IRD’s estimate would be if that had applied in say the last year . . .
       (I am not a tax expert! – it would be good to know whether capital gains from share trading in a Kiwisaver Fund are treated the same as in an MPs “arms length” trust fund . . .)
   • mickysavage 3.2

     30 January 2019 at 7:54 pm

     I cannot begin to say how important the regional fuel tax is. Without it Auckland will grind to a halt.
     • Sabine 3.2.1

       30 January 2019 at 9:28 pm

       what labour could do is offer a refund of costs for public transport.

       in the same sense as a business/sole trader etc can claim fuel costs as costs of doing business so could a category be established that allowed public transport users that buy a monthly/annual bus pass and at the end of the year to claim a partial refund.

       it would be fair, and it would be feasable.

       i fully expect labour to not do anything even remotely to encourage people out of the car into the busses, but one reason the car is still the more attractive option is the cost of public transport and all of the other stuff like late buses, over crowded buses, rude drivers, not enough point of sales for bus passes, hop cards etc.

       the fuel tax is literally just bleeding dry those that least can afford it, all the other write it of at the end of the year as an expense of doing business.
       • Nic181 3.2.1.1

         31 January 2019 at 9:07 am

         Labour could counter by introducing a tax cut, if one is required, at the BOTTOM of the tax brackets. Ie, remove tax from the first ten or fifteen thousand. National consistently gives any tax cuts to those at the top of the heap. This could be a real point of difference.
         • Sabine 3.2.1.1.1

           31 January 2019 at 11:23 am

           .

           I think the first $ 25.000 should be earned tax free as that is literally the rent a person has to pay if they would like to live in a house costing 450$ per week.

           But then who would pay the taxes lost? Certainly not our rich tax avoiders.

           Also we could then possibly remove any and all accommodation benefits. 🙂

           But it seems that not one party in NZ, not one will argue for that.
   • SARAH 3.3

     30 January 2019 at 10:16 pm

     Well he’s going to scrap my winter heating payment so any gain I might have made will be gone.
4. rod 4

   30 January 2019 at 5:27 pm

   The latest Muppet Show . See it on all TV news networks tonight .
   • James 4.1

     30 January 2019 at 6:08 pm

     I think labour’s removing of KiwiBuild targets will be in the news more.
     • Michelle 4.1.1

       31 January 2019 at 10:01 am

       unlike sarah and Jamie saga it was abruptly shut down what does this say about our media
       • James 4.1.1.1

         1 February 2019 at 8:40 pm

         Yeah – everyone’s stopped talking about what a clusterfuck KiwiBuild is. Not.
   • Grantoc 4.2

     30 January 2019 at 7:03 pm

     I guess you’re referring to Labours kiwibuild programme?
5. Ad 5

   30 January 2019 at 5:35 pm

   Tax is his right angle, but it’s his only rational angle.

   But he doesn’t have a spokesperson with the competence to front it to camera.
   • In Vino 5.1

     30 January 2019 at 7:56 pm

     I doubt if the angle is right. I suspect it is either acute or obtuse. Knowing his tendencies.. Obtuse?
     • Ad 5.1.1

       30 January 2019 at 9:20 pm

       downward sigmoidal curve
       • In Vino 5.1.1.1

         30 January 2019 at 10:57 pm

         Oh dear. Poor devil.
6. Formerly Ross 6

   30 January 2019 at 5:40 pm

   Simon has of course made a huge faux pas. He says he will repeal a CGT. The trouble is we don’t have a CGT. The only way we will have a CGT is if Labour is re-elected in 2020. But that would mean National is defeated. So, Simon, the big reveal from today’s speech is that you’re expecting to be defeated in 2020? Looks like it.
   • Ed1 6.1

     30 January 2019 at 9:23 pm

     See 3.1.2 above – I believe we do have some tax raised on capital gains . . . if it as much as I think it is removing CGT may be a bigger tax cut than any changed to income tax rates. Guess who would benefit from removing CGT?
7. Daniel Jones 7

   30 January 2019 at 5:50 pm

   That’s unfair. He also floated the radical idea of favouring law abiding citizens over criminals. Perhaps this idea will be fleshed out into some system of punishing criminals using some kind of just legal framework.. I’ll call it the “Criminal Justice System”.

   To be honest, I just don’t know how we’ve managed without these wonderful, radical insights.
8. te reo putake 8

   30 January 2019 at 6:10 pm

   Worth less than block of cheese to the average worker and easily gazumped by Labour pre-election. Fail.
   • Fireblade 8.1

     30 January 2019 at 7:37 pm

     $8 per week to the average earner in 2021. For someone on $40,000 a year it’s $1 per week.
9. Tuppence Shrewsbury 9

   30 January 2019 at 6:20 pm

   tax creeps affect the average workers take home pay. Not the top end. The standard should be supporting the abolition of bracket creep and imploring the government to adopt it as policy.

   But what’s important is that any mention of tax cuts gets dismissed so that new taxes can’t be criticized. can’t wait for a CGT announcement.

   and the poll numbers after that
   • Robert Guyton 9.1

     30 January 2019 at 6:23 pm

     When you say, “tax creep”, do you mean … Simon?
     • te reo putake 9.1.1

       30 January 2019 at 6:35 pm

       If MS hadn’t beaten me to it, that was going to be the title of my post on Simon’s idea, Robert. Campaigning on tax is a loser, because you get associated with a perceived negative. And, when you tie yourself to a specific tax change 2 years out from an election, you make yourself a hostage to fortune. As I’ve already commented, it will be easy for Labour to make Simon look unambitious by simply lifting the brackets slightly higher.
       • mickysavage 9.1.1.1

         30 January 2019 at 7:56 pm

         Sorry TRP. I watched the speech and I was that underwhelmed I thought it was worth five words. No more …
         • te reo putake 9.1.1.1.1

           30 January 2019 at 9:14 pm

           Ha! To borrow a phrase, you nailed it 😉
     • ianmac 9.1.2

       30 January 2019 at 7:05 pm

       Clever pup you are Robert! Ha.
       • Anne 9.1.2.1

         30 January 2019 at 8:02 pm

         ditto. 😀
   • Psycho Milt 9.2

     30 January 2019 at 6:39 pm

     The standard should be supporting the abolition of bracket creep…

     Leaving aside the fact that The Standard isn’t a person, a lot of us on the left do support pinning the tax brackets to inflation. We also remember how Michael Cullen had a go at it and the media had such fun with National’s “chewing-gum tax cut” propaganda that he cancelled it. And how National spent 9 years in government enjoying the benefits of the bracket creep before suddenly realising it was a Bad Thing once it was no longer in power.
     • Shadrach 9.2.1

       30 January 2019 at 6:45 pm

       You’re far to generous to Cullen. He had the ability to give meaningful tax cuts that would have staved off some of the impacts of the GFC and he failed. It simply wasn’t in his DNA. In the event, the recession in NZ came earlier and was deeper than it needed to be.
       • mickysavage 9.2.1.1

         30 January 2019 at 7:57 pm

         Wow so Cullen could have solved America’s problems. He is even more talented than I thought.

         NZ had a pretty benign time during the GFC. Thanks to Helen and Michael. I suspect that you won’t agree …
         • Shadrach 9.2.1.1.1

           31 January 2019 at 12:11 am

           No, I don’t. The reason NZ fared better than others was the strength of our major banks, and the underlying structure of our economy. Of course Cullen played a part in preserving that, by what I’m sure you would call neoliberal policies. However he missed an opportunity to make the recession shallower.
       • Psycho Milt 9.2.1.2

         30 January 2019 at 8:36 pm

         You could give Robert Harris a run for his money when it comes to alternative history fiction. Cullen did indeed protect us from some of the potential effects of the GFC – by using the surpluses to pay down public debt rather than blowing it on tax cuts so the already-wealthy could inflate the property bubble even higher while enjoying more overseas trips. As usual, it’s only historians who’ll give credit where it’s due.
         • Shadrach 9.2.1.2.1

           31 January 2019 at 12:12 am

           Tax cuts are not ‘blowing’ anything. They are a way of stimulating an economy, which is mainstream economics. And btw all taxpayers received tax cuts when they finally came.
           • R.P Mcmurphy 9.2.1.2.1.1

             2 February 2019 at 12:43 pm

             that is bullshine voodoo economics instigated by ronny raygun and his claque back in the eighties last century. It has the same veracity as trickle down economics when the rich pee all over the poor.
             • Shadrach …

               2 February 2019 at 2:04 pm

               No, it’s pretty much mainstream. Unless you live in Venezuela.
         • Nic the NZer 9.2.1.2.2

           31 January 2019 at 7:57 am

           Surpluses don’t protect the govt from anything. The NZ govt literally operates the institution where all the tax and govt spending transactions occur and the only institution able to create the funds they occur in.

           The problem with Cullens record here is that the Finance company sector remained unregulated and was overheating through out and this almost certainly drove the property bubble in several regions. This drove spending up and increased the tax take generating a surplus, however had this been regulated driving fraud and speculation out of the NZ economy the surpluses would likely have evapourated.
10. Robert Guyton 10

    30 January 2019 at 6:42 pm

    “This is a huge and great announcement.”
    David Farrar Hurrah!
11. Chris T 11

    30 January 2019 at 7:00 pm

    Of all the Nat policy ideas they could have come up with, I am surprised the left would pick this one to criticise.
    • Sacha 11.1

      30 January 2019 at 7:36 pm

      Deliberately starving govt of funds seems like a basic policy to oppose.
      • Chris T 11.1.1

        30 January 2019 at 7:44 pm

        It is 690 mill’

        In the grand scheme of things it is naff all.

        Just ditch the one years free uni or making it loan and get a year wiped off only if you actually finish the degree would probably do it.

        And or cut Winston’s regional bribery money down a bit.

        There are also massive surpluses at the mo’
        • James Thrace 11.1.1.1

          30 January 2019 at 8:46 pm

          Massive surpluses and massive things to fix up.

          Like oooh, I dunno, the cluster fuck of a census because there wasn’t enough money to do it?
        • Sacha 11.1.1.2

          30 January 2019 at 10:12 pm

          Priorities.
          • Chris T 11.1.1.2.1

            30 January 2019 at 10:15 pm

            Which are being taken care of where exactly?

            Settling strikes?
    • Michelle 11.2

      31 January 2019 at 10:05 am

      chris they are criticising because there is only enough money for a small burger what about the chips
12. Andrea 12

    30 January 2019 at 7:01 pm

    To all those who bravely listened/watched – thanks.

    I couldn’t have faced it myself.

    Now. How well are his loyal people carrying the word out to the faithful? Who is hearing it first? Who is being flattered?

    Who is listening for feedback? (Not the razzz. Real words.) And what happens next? Does it live? Or does it die like cycle tracks?

    Who is getting creative with The Leader’s words and offering a different jam for tomorrow?

    Will they have a coup? What if no one turns up? Or offers to be the sacrificial mutton?

    Such fun…

    And – thanks again.
13. mary_a 13

    30 January 2019 at 7:15 pm

    Natz via Simon, in usual predictable form. Appealing to greed, what it does best! Now where was health, education, infrastructure, social justice etc? Did I miss it?

    IMO, nothing there to address the needs of ordinary Kiwis!
14. Pete George 14

    30 January 2019 at 7:24 pm

    It could be a smart move by National indexing tax brackets to inflation, especially if Labour go ahead as predicted and apply CGT to increases to assets as a result of inflation (another form of tax increase by stealth).

    But Labour have plenty of time to digest this and review the Tax Working Group report, and then decide on how to implement fair tax reform.
    • Paul Campbell 14.1

      30 January 2019 at 7:46 pm

      we already don’t index tax on interest income to inflation so to be fair we’d have to do the same for a CGT.

      On the other hand I do think it would be fair to discount both by the inflation rate, it would make actually paying tax accurately harder

      I’m also a fan of allowing CGT carryover against real (emphasis on the ‘real’) losses – if you lose money on a CGT-type investment you can write off the tax on future gains, if you actually make gains within a related business activity within a year or two – (business income already works this way, the US taxes capital gains this way) – if you allow this though an inflation rate discount (in multiple years) would be really really difficult to apply
    • Psycho Milt 14.2

      30 January 2019 at 8:42 pm

      It could be a smart move by National indexing tax brackets to inflation…

      Er, National don’t get to index tax brackets to inflation. That’s the whole point of proposing it now they’re in opposition, rather than actually doing it when they were in government and taking the resulting financial hit.

      On the plus side, having shot that bolt now, they’re fucked. Labour can spend the next 18 months examining it, then implement a slightly more generous version just in time for the 2020 election.
      • Pete George 14.2.1

        30 January 2019 at 9:50 pm

        I hope Labour inflation adjust thresholds every year rather than every three years, in response. If they don’t make more reformative adjustments to income tax. A few large range thresholds is an outdated way top do it.
        • Robert Guyton 14.2.1.1

          30 January 2019 at 9:57 pm

          “The amount in tax breaks that National Party leader Simon Bridges plans to leave in the pockets of Kiwi families is equivalent to what that party ridiculed former Labour Finance Minister Michael Cullen for, with his “chewing gum” tax package.

          The hypocrisy of that shouldn’t go unchecked”
        • lprent 14.2.1.2

          30 January 2019 at 10:13 pm

          Think of the implementation.

          There is really fuckall any government can do much that is significiant with the tax system until the IRD finishes upgrading the pile of antique shit that they are currently running.

          As far as I’m aware that isn’t likely to be completed before 2 elections away.

          See here is the approval in 2013 (about 5 years after it was approved in pinciple by the Labour cabinet – those lazy Nats…) when it was expected to take about 10 years.

          http://www.stuff.co.nz/national/8619006/IRD-computer-systems-1-5b-overhaul

          They finally managed to get a supplier in 2015 and at that point it was expected to take between 8 and 10 years. So basically significiant tax changes with high CPU and disk loads should be planned to start about 2025…
      • Chris T 14.2.2

        30 January 2019 at 10:09 pm

        Except it just makes them look like they have to be reactionary and can’t work this out for themselves
15. Sacha 15

    30 January 2019 at 7:34 pm

    Faithful hack Stacey Kirk dons those kneepads and praises the Nats for boldly boxing the govt into a corner using their flush coffers. https://www.stuff.co.nz/national/politics/opinion/110272126/stacey-kirk-politics-not-tax-the-point-of-simon-bridges-attack-on-income-bracket-creep
16. SPC 16

    30 January 2019 at 7:53 pm

    Labour should respond by indicating that they were looking at increasing the income at which the current top rate of tax applies from 70,000 to 100,000 (30 cents 48 to 100,000) and finance this with a new top rate of 35 cents. Both the level and rate 70,000 and 33 cents are too low.
17. DJ Ward 17

    30 January 2019 at 8:20 pm

    All Labour needs to do now is adjust the tax brackets to inflation.

    It is a reasonable idea to do that. If you don’t then the poorest in NZ begin paying more tax as a proportion of there real inflation affected income. IE the average tax on total income increases.

    I think Trump should react in the same way to the left in the US. Introduce a tippy top tax bracket but only a small amount like 10% above present rates.

    Ruin the oppositions proposal by doing similar as your own policy.

    The downside is governments that hold brackets have ever increasing tax take that makes them look good. False in reality. So by holding brackets they get more options for election spending bribes.
    • millsy 17.1

      30 January 2019 at 8:55 pm

      Increasing funding for health, education and other services are not bribes.

      Obviously you want to impose US style health care in this country.
      • DJ Ward 17.1.1

        30 January 2019 at 9:36 pm

        I never said that about health and never will. I think our settings are no to bad. The system is affordable to the government and wealthier NZers have health insurance. Obviously a system permanently in a level of chaos that drives its management towards efficiency.

        I think the US health system is ridiculous. Both from Obamas version and the ideology of insurance supported by Republicans. In effect insurance companies hold Americans hostage.

        The thing about unlimited healthcare is it has no limits.
        • Sacha 17.1.1.1

          30 January 2019 at 10:19 pm

          “a system permanently in a level of chaos that drives its management towards efficiency”

          Fanciful interpretation of how humans actually function.
        • millsy 17.1.1.2

          31 January 2019 at 12:04 am

          From 1990-99 National closed down scores of hospitals to pay for tax cuts. Bill English as health minister cared more about closing down hospitals than about giveing NZers health care.
          • DJ Ward 17.1.1.2.1

            31 January 2019 at 9:16 am

            You can see what your talking about on this graph.

            https://goo.gl/images/TjeEok

            As you can see drastic rebalancing occurred resulting in National balancing the books. This occurred around 93,94. Did they get everything correct, absolutely not. If we did nothing to modernise our ecomony we would be a failed state. You can also see Clarke and Curren switch policy to a private debt, immigration, housing driven economy. The GFC blip and the earthquake spend.
            So with hospitals there is many reasons for the closing of hospitals. Age of the hospitals. The cost per patient of those hospitals. The increased mobility of patients. The catering of the real need at a much lower cost, like 24hr emergency clinic, vs full hospital. Maintenance costs of the hospitals etc.

            The result is greater delivery of healthcare for the dollars spent. If the inefficient spend was continued, if modernisation costs was spent, etc then policy like free doctors visits for kids would not have happened.
    • Ad 17.2

      30 January 2019 at 9:19 pm

      you are not dumb
    • Chris T 17.3

      30 January 2019 at 10:12 pm

      “All Labour needs to do now is adjust the tax brackets to inflation.”

      Again the danger of just looking like they need the Nat’s to tell them what to do after an expensive working group.

      Go of it though. I am sure no one will notice

      It is actually quite a clever preemptive move by the Nats
      • DJ Ward 17.3.1

        31 January 2019 at 8:38 am

        Not really in my mind. It shows a lack of inventiveness. It’s just tweaking of settings rather than a marked difference in policy.

        National would be better focussed on industry and resulting job creation. Similar to Trump, support its base, buisinesses as well as undermining the lefts base of the lower income worker. It can’t win the tertiary student base due to election bribes and indoctrination.

        Plus it needs to seperate conversation from housing as it failed to address private housing debt and immigration as economic drivers, that begun with Clake and Cullen. The narrative and blame has fell on them, and they deserve it, so the voters won’t trust policy from them in that area.
18. R.P Mcmurphy 18

    31 January 2019 at 12:44 am

    I am still perplexed as to how one can analyse nothing.
    there was nothing in bridges oration of any substance whatsoever and flapping gums and pretending to say something when you are not saying anything is clever enough I suppose but the fact of the matter is the people of New Zealand had a gutsful of key and english and another dose from bridges and his forty thieves is more than the public of New Zealand can stomach.
19. Craig H 19

    31 January 2019 at 1:11 am

    0% up to $10,000
    15% up to $50,000
    30% up to $80,000
    50% above

    The same income tax raised as currently according to the Treasury Calculator (with the caveat that effects of large changes aren’t easy to forecast accurately), with lower taxes for people earning up to $81,000, and higher for people earning more than that.
    • Stunned Mullet 19.1

      31 January 2019 at 7:06 am

      50% tax rate for salary and wage earners over 80k – tax avoidance advisors would be pleased as would overseas employment agencies for professionals.
      • DJ Ward 19.1.1

        31 January 2019 at 8:49 am

        The affect of the 50% rate is huge. The revenue is small as the numbers are small. A single person who relocates Taxes to Singapore at 22% top rate destroys the gain from probably 10 people. You loose GDP, GST, economic activity from trickle down discretionary spending, and waste education investment.

        I think the self employed might have to buy a new car. It’s 50% off the ticket price. It’s well known tax take drops at some point.
        • millsy 19.1.1.1

          31 January 2019 at 8:53 am

          You cannot cut taxes without cutting services and benefits. Nationals mass closure of hospitals in the 1990’s underlines that.

          What services do you want to see cut Ward? Bearing in mind that services avalible to people now are a lot less than they were 35 years ago.
          • Nic the NZer 19.1.1.1.1

            31 January 2019 at 10:50 am

            “You cannot cut taxes without cutting services and benefits.”

            Demonstrably untrue, govt’s can, have and do this all the time.
            • dv 19.1.1.1.1.1

              31 January 2019 at 10:56 am

              Well demonstrate with data then Nic
              • Nicolas Croad …

                31 January 2019 at 5:16 pm

                https://en.wikipedia.org/wiki/2009_New_Zealand_budget
                Tax down, spending up, point made.
              • Nic the NZer …

                31 January 2019 at 5:22 pm

                https://en.m.wikipedia.org/wiki/2009_New_Zealand_budget

                Tax down, spending up, point made.
          • DJ Ward 19.1.1.1.2

            31 January 2019 at 11:01 am

            I don’t support cuts. That’s in your mind not mine. I support good decisions with a small surplus budget. If cuts are good decisions then do them, just as with increases.

            Plus that’s not correct. Regard to services.

            If taxes are cut resulting in less government spending, the taxpayer has more money increasing personal spending. So there is no cut, just a change in who is spending.

            It’s the voter based on promises that decides the direction of that balance.

            You just want things free for you.

            Wasn’t that including subsidies for farmers. Where you devastated when they cut them?
        • Craig H 19.1.1.2

          31 January 2019 at 10:04 pm

          1. Wage earners have no way of avoiding income tax, and if they relocate to avoid it, the job is still available, and the next person will be paid the same wage, and pay the same tax.

          2. IRD has a high wealth unit, and more than half of the people they monitor report annual income below the top rate so increasing the top rates won’t make them leave.

          3. Self-employed people buy cars, utes etc and claim them as work vehicles all the time – the tax rate makes no difference. GST and a top rate of 33% is already sufficient incentive. The Laffer curve is debatable, but the middle range of estimates for the top rate at which revenue decreases when the rate is increased is 70% – 50% is very unlikely to have that effect.
          • DJ Ward 19.1.1.2.1

            31 January 2019 at 10:34 pm

            Yep there’s definately a very seperate set of rules for the two groups. I think there was some move on the things like cars with fringe benifit taxes but I don’t know how that works.

            When a sole trader, Buisiness spends to increase expenditure, lowering profit they in effect get a discount at the tax rate. For many it is a decision driven by the accountant. We were told to buy new 4 wheelers one year. They hadn’t broken down and unusable but propably only had a few years left. We were told to buy a tractor last year as we needed a new one and we were making too much money.

            So yes people run there buisinesses just making profits while increasing assets. However in some ways it can be false. The person still needs to spend that money in the Buisiness. If they let it be profit, yes they loose the taxes but get absolute freedom on how that after tax profit is spent.

            Obviously the vehicle thing can be taking the piss. Wage earners pay for the vehicle to get to work plus petrol while a buisness person can cliam it all as expenses getting the tax discount. That is clearly unfair.

            That’s the error in people’s thinking regard super high taxes on earnings. Virtually all are able to shift earnings into expenditure. Hence you can encourage avoidance and get less tax.
            • Craig H 19.1.1.2.1.1

              1 February 2019 at 10:41 pm

              FBT has been around a while, and in theory applies to personal use of a business motor vehicle (and other assets above a threshold), but in practice that is ignored by most small business owners.

              Throw in the flash business phone with big mobile plan and laptop (all of which are largely exempt from FBT) and possibly home office expenses, and it’s quite easy to load a decent amount of personal expenditure into business expenditure and lower tax burdens significantly.

              High or low tax rates don’t change this behaviour because when GST is included, it’s always high enough to be worth it, and the specific rates don’t matter. Basically, I agree with you that it doesn’t affect the business owners much because they often don’t pay the top rate anyway. A common plan with higher rates is to run the business as a company, pay company tax, and then leave the cash in the company until National gets in and lowers the rates, then take it out as a windfall.

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