Desperation from Banks team

Written By: - Date published: 12:29 pm, September 14th, 2010 - 32 comments
Categories: auckland supercity, making shit up, tax - Tags: , ,

John Banks’ team really jumped the shark yesterday with their bizarre ‘poll tax’ attack on Len Brown. Banks claimed Brown was proposing a Thatcher-style poll tax to fund the Supercity instead of rates. Of course, Brown is proposing no such thing – he is saying we should look at replacing rates with income tax. Desperate, Banksie, desperate.

A poll tax is a fixed tax per person regardless of income. That’s totally different from an income tax, which is a percentage of income. And anyone with half a brain knows it. Poll tax is actually an idea that we regularly hear from dumb-arse righties who haven’t thought things through advocating from time to time.

Personally, I don’t agree with Brown’s idea of taking taxation off land and putting it on income. As a general principal, we should be taxing things we want to encourage (like working) less and taxing things that can’t be avoided instead (someone owns all the land). Brown’s proposing the opposite.

But what Brown definitely isn’t proposing is a poll tax. That Banks has resorted to trying to make up his opponents’ policies shows how bad things are going for him. All the smears and all the dirt have failed to bring Brown down. They have just made Banks look even worse. This poll tax rubbish was the final, desperate attempt at the king hit.

Swing and a miss.

32 comments on “Desperation from Banks team ”

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  1. smhead 1
    14 September 2010 at 12:43 pm

    I think the race is closer than you think. Which is why Brown is spending so much money on prime time TV ads during the news, and using rate payer money on an “information” mailout that is just what Labour did with the pledge card, get taxpayer money to pay for their campaign.

    Banksie’s claim of poll tax is no more stupid than the face slapper’s stupid claim last week that rates were bneing paid for by transport fines.

    • Blighty 1.1
      14 September 2010 at 12:48 pm

      so, it’s completely stupid, then?

      • joe bloggs 1.1.1
        14 September 2010 at 1:47 pm

        so, it’s completely stupid, then?

        No – what’s completely stupid is Brown’s claims that rates were being paid for by transport fines. Closely followed by his latest suggestion of a local city tax. Ironic that the pople hardest hit by Brown’s proposed tax are the state house tenants – the poorest amongst us.

        This is typical ambulance-at-the-bottom-of-the-cliff stuff.

        What about controlling council spending a little more effectively? Maybe spend a little less on meals, coffee or birthday bashes?

    • G8 1.2
      14 September 2010 at 3:06 pm

      Brown is running a very professional campaign and will run a very professional city. Banks has a billboard, can’t manage a campaign and cant manage a city.

      I have property in both Auckland City and Manukau and have received publications very recently from both councils. Most likely a requirement from the local government act on reporting to community. I notice the Manukau publication is printed on news print unlike the expensive gloss Auckland City sent out. Also note in that “very fine publication” the NZ Herald Election Guide Brown has keep rates down lower than Banks who has increased debt levels by over 260%. The facts speak louder than Banks continuous robotic bullshit.

  2. nzfp 2
    14 September 2010 at 12:53 pm

    Len Brown’s idea of shifting the tax burden from land to labour will be disastrous and result in wealth shift from labour to the Banks and Wealthy land owners.

    David Ricardo observed that taxes on land cannot be passed on to labour. However removing tax on land will result in the greater financialisation of land as Banks seek to increase the captialisation of land value directly peoportional to the amount of tax that was removed.

    In short the amount that was paid in tax could now be used to further bid up the price of land. Not only this, land and homes become preferred tax vehicles making them attractive to speculators and tax dodgers.

    It would be better to raise taxes on land with an equal lowering of income taxes – shifting the tax burden from labour and consequently productive industry such as 99% of New Zealanders – back onto Banks and wealthy elite where it is advised to be by all the Classical economists from Ricardo to Adam Smith.

    Another better solution would be for the Auckland City Council to borrow all of the funds necessary to run the Super City from the RBNZ at zero interest rate. The Public Finance Act 1989 No 44 (as at 30 July 2010), Public Act section 65L and section 47 explicity states that the “Minister, on behalf of the Crown, may lend money to a person or organisation […] on any terms and conditions that the Minister thinks fit” such as to the Auckland city Council at zero percent interest rates.

    For justification of this policy see my post HERE.

    • Rex Widerstrom 2.1
      14 September 2010 at 2:25 pm

      It would be better to raise taxes on land with an equal lowering of income taxes – shifting the tax burden from labour and consequently productive industry such as 99% of New Zealanders – back onto Banks and wealthy elite

      Hear hear. And introduce a significant differential between tax on income earned from speculation / investment (call it what you will) in productive enterprise – whether your own business or the share market – versus that earned from land.

      I realise it’s not as bad in NZ, but I find it bizarre that people in Australia sitting on a bunch of rental properties and doing nothing (other than taking an occasional call from a letting agent) can make vastly more money than someone who’s invested a similar amount in their own small business, employs several people, and works 40 hours a week.

      Just the other day there was a TV feature on some woman who’d been given her first apartment by her wealthy parents and used the income and tax breaks from that to buy another, then another… she has 40 properties and is a multimillionaire in her late 20s. Never done a day’s work in her life. She was held up as something to which others should aspire… yet if we’re all to become millionaire landlords, to whom are we renting our overvalued properties?

      • nzfp 2.1.1
        14 September 2010 at 5:05 pm

        Hey Rex,

        “introduce a significant differential between tax on income earned from speculation / investment (call it what you will) in productive enterprise – whether your own business or the share market – versus that earned from land”

        How about the introduction of a “Financial Transaction Tax (otherwise called a Robin Hood Tax)”, primarily targeted at financial speculation in accordance with a parallel decommisioning of taxes on productive business such as farmers, producers, manufacturers etc… for a zero sum gain that shifts the tax burden from the producing industrial economy onto the parasitical financial economy.

        The benefit would be that it would be less profitable to invest in unproductive and parasitcal financial speculation and more productive to invest in industry and the producing economy – we used to call this capitalism! The only problem with it is that it shifts the burden of tax from the 99.9% of New Zealanders onto the foreign owned (Australian) banks and the wealthy elite – freeing the rest of New Zealand to engage in productive – sustainable – business.

  3. ABC 3
    14 September 2010 at 1:09 pm

    When do the serious candidates turn up?

  4. tsmithfield 4
    14 September 2010 at 1:12 pm

    Larry Williams made a point on ZB last night that State House tenants don’t pay rates at the moment. However, under Brown’s proposal they may well have to dip into their pockets for rates.

    OTOH many of the wealthy will have mechanisms to minimise their personal income and may therefore pay a lot less than they do currently.

    • The Voice of Reason 4.1
      14 September 2010 at 1:29 pm

      Can you explain why the state house tenants don’t pay rates, TS? I would have thought their rent covered rates, but is there something unusual in the way state houses are owned and rated for council purposes?

      • tsmithfield 4.1.1
        14 September 2010 at 1:40 pm

        From my understanding of what was being discussed on the radio last night, state house tenants have their rents set according to their income so there is not a specific amount included for rates.

        • Ron 4.1.1.1
          14 September 2010 at 2:00 pm

          State House tenants don’t pay rates because they rent – they don’t own. No “tenant” pays rates for the property they rent. It could be argued that the landlord charges “rates” as part of the rent and that Housing NZ state house rents are set on a different formua but Housing NZ pays rates just like any other landlord.
          I wouldn’t listen to Larry Willimas if you paid me but if this discussion was an attack on tenanats for not paying rates then it’s pretty much par for the course for the intellectual standard on ZB. If it was an attack of STATE HOUSE teants for not paying rates then it’s par for the course for that station as well.

        • The Voice of Reason 4.1.1.2
          14 September 2010 at 3:02 pm

          It seems to be only the very lowest paid who pay just based on income, but I don’t know what percentage of renters from HNZ fit that category. Either way, rent is still paid at some level and therefore some, at least, of that money would be allocated to paying rates.

          In essence, all tenants pay for the rates on the property they occupy, even if it’s indirectly. It’s an interesting suggestion that they don’t and sort of snobbish and class driven, as I see it. Still, you wouldn’t get far in Kiwi politics if you deliberately left renters out of your constituency. You’d have to call yourself something pointedly exclusive like, um, Citizens and Ratepayers for a start.

          Extract from HNZ website:

          Working out your rent:
          Income-related rent is based on your income and, if you have a partner, their income. This includes Family Support, StudyLink payments and some boarder contributions.

          Your rent will be based on your income when you accept a house offered to you.

          After that, you need to apply for income-related rent every year, or any time your circumstances change. It is very important you let us know as soon as your circumstances change, as that may affect the rent you pay.

          How we calculate your rent:
          Tenants with income lower than the rate of New Zealand Super may be eligible for income-related rent. If you qualify and you live alone, your weekly rent will be 25 percent of your net (take-home) income up to the New Zealand Super rate. If you earn more than this, 50 percent of your net income that is above the Super rate will be included as rent. You cannot be charged more than the market rent for the property.

          For all other households, income-related rent is 25 percent of your household’s net income up to the married New Zealand Super rate. If you earn over this, 50 percent of your net income above the married Super rate will be included as rent. You cannot be charged more than the market rent for the property.

      • Graeme Edgeler 4.1.2
        14 September 2010 at 1:47 pm

        If you rent privately, and rates go up, your landlord can stick you with the extra cost as a rent increase. State houses are rented out based on income. Double rates, or abolish them completely and the rental won’t change on a state house.

    • Vicky32 4.2
      15 September 2010 at 4:39 pm

      All tenants pay rates, they’re factored into the rent, which is why it was decided years back, that everyone could vote in local body elections, not just the wealthy…
      Deb

  6. Uroskin 6
    14 September 2010 at 1:51 pm

    Rates are a feudal relic and the amount you pay bears no relation to your ability to pay (your income) or the amount of council services you purchase. Due to this inequity they have no place in a progressive society. They are a major cause of the gentrification of my island, where low income workers are increasingly being forced to commute from the mainland to work as there is no affordable accommodation (rent or purchase). Pensioners whose old time baches now command millions in (land) value (and thousands in rates) are being forced off Waiheke too.
    Local government should be funded by a bloc grant from the Government based on a percentage of income tax and GST your area yields to the Government. It would make administration simpler and more transparant. Local bodies wouldn’t need rating bureaucracies and be able to budget better as they know how much they can spend

    • G8 6.1
      14 September 2010 at 2:52 pm

      Agreed and this is where Brown is coming from “we need to have the debate and then implement a better system”

  7. Craig Glen Eden 7
    14 September 2010 at 2:48 pm

    So Banks cant wear his policy on his sleeve because no one would vote for him and if that does not work make shit up about your oppositions policy aye.

    Note to Banks: thats called lying John and God fearing folk should not lie!

  8. tc 8
    14 September 2010 at 3:18 pm

    Ah pull up a seat kiddies and bask in the warmth supplied by a long overdue burning to the ground of the political house of banksie……mmmm marshmallow anyone ?

    banksie so out of touch he’s borderline delusional and his performances around town have sealed the deal….his only hope is low postal returns and the BS working…which’s still possible….scary.

  9. Cactus Kate 9
    14 September 2010 at 3:42 pm

    I think it shows that yes, Banks’ lot don’t know what a poll tax is and that’s dumb but Brown is relying on South Auckland for his votes and he wants these people to now contribute to funding the Council with a rates replacement? That’s really dumb.

    But what’s really really dumb is any argument that removing rates and replacing them with something else will reduce rents. What landlord is going to pass on the savings?

    • Bored 9.1
      14 September 2010 at 4:05 pm

      Have not seen the details of Browns rates replacement, but you are onto it, landlords and rentiers always pass on costs and retain savings. Thats just good business savvy. What I want to hear is a candidate state a real way of making the businesses of Auckland pay a fair rent for the public services they use without passing it on to the public….bugger Catch 22, good business savvy will negate all attempts.

      There may be one way to make business pay…just let what public infrastructure they use run down, no public investment, to the degree they cant do business and they will pay for it. Yeah, right.

  10. nzfp 10
    14 September 2010 at 4:24 pm

    Hey Uroskin

    Rates are a feudal relic and the amount you pay bears no relation to your ability to pay (your income) or the amount of council services you purchase. Due to this inequity they have no place in a progressive society.

    I disagree and agree with you. I agree that “the amount you pay bears no relation to your ability to pay (your income) or the amount of council services you purchase”. However I disagree that “Due to this inequity they have no place in a progressive society”.

    Bear in mind that regardless of if there is a rate or not your island WILL be gentrified by people wishing to live (relatively) close to the city while enjoying the benefits of a rural lifestyle. This is a fact that was recognised as far back as the Sumerian empire where land taxes were levied against land in proportion to their ability to extract income.

    Let me be clear – land taxes are not and should not be uniform, they are progressive and are dependent on land maps that determine the economic value of the land in question. Consequently land in the center of Auckland (CBD) would be able to produce more economic rent then land in Otara – consequently land taxes in the Auckland CBD would be much higher then land taxes in the wastelands of South Auckland. This means that land taxes on Waiheke Island would reflect the value of land calculated by the ability to produce economic rent on that land (whether it is through production or other means).

    The land tax is the fairest means of taxation and allows for the burden of tax to be moved from the poor, middle class and even high income earners onto the wealthy elite and more importantly the banks and financial speculators. A land tax would have the added benefit of removing the preferred tax status on land consequently reducing it’s value.

    Any implementation of a proper land tax would need to be phased in over a long period of time and will require additional regulation.

    For more information and support for my comments please refer to “Why a landlord can not just pass on the cost of Land Value Tax to the renter”. In short the article quotes multiple economists throughout the ages such as:

    A. THE CLASSICISTS:

    1 Though the landlord is in all cases the real contributor, the tax is commonly advanced by the tenants, to whom the landlord is obliged to allow it in payment of the rent.
    – Adam Smith
    “Wealth of Nations” Book 5, Ch 2

    2 A tax on rent falls wholly on the landlord. There are no means by which he can shift the burden upon anyone else… A tax on rent, therefore, has no effect other than the obvious one. It merely takes so much from the landlord and transfers it to the State.
    – John Stuart Mill (1806-1873)
    “Principles of Political Economy” Book 5, Ch 3, Sect 2

    3 The power of transferring a tax from the person who actually pays it to some other person varies with the object taxed. A tax on rents cannot be transferred. A tax on commodities is always transferred to the consumer.
    – Professor James E Thorold Rogers
    “Political Economy” 2nd ed Ch 21, p 285

    4 A tax levied in proportion to the rent of land, and varying with every variation of rents… will fall wholly on the landlords.
    – Walker’s “Political Economy”, p 413

    5 The incidence of the ground tax, in other words, is on the landlord. He has no means of shifting it; for, if the tax were to be suddenly abolished, he would nevertheless be able to extort the same rent, since the ground rent is fixed solely by the demand of the occupiers. The tax simply diminishes his profits.
    – ERA Seligman
    “Incidence of Taxation” pp 244-245

    6 A tax on rent would affect rent only: it would fall only on landlords and could not be shifted. The landlord could not raise the rent, because he would have unaltered the difference between the produce obtained from the least productive land in cultivation and that obtained from land of every other quality.
    – David Ricardo
    “Principles of Political Economy and Taxation” Ch 10, Sect 62

    7 The way taxes raise prices is by increasing the cost of production and checking supply. But land is not a thing of human production, and taxes upon rent cannot check supply. Therefore, though a tax upon rent compels owners to pay more, it gives them no power to obtain more for the use of their land, as it in no way tends to reduce the supply of land. On the contrary, by compelling those who hold land for speculation to sell or let for what they can get, a tax on land values tends to increase the competition between owners, and thus to reduce the price of land.
    – Henry George
    P&P Book 8, Ch 3

    • Uroskin 10.1
      15 September 2010 at 3:56 pm

      I still do not see any connection or logic or necessity to link local government revenue to a rating system based on the perceived value of land and dwellings. Local Government can be funded by a myriad of other, more equitable, more publicly supported and more sustainable methods. Rates play a crucial role in gentrification of a desirable area – especially when a Council like ours starts rating your land on its subdivision value when as a land owner you have no plans or interest (or planning permission) to subdivide.
      My preferred local tax would be: 2% of all income tax collected and 2% of all locally generated GST should be transferred by central Government to your Council, with the appropriate tax changes to make it a zero-sum game for the Government.

  11. nzfp 11
    14 September 2010 at 4:34 pm

    Bear in mind that I am advocating an introduction of a land tax in parallel to the removal of GST and income tax for a zero sum gain with the addition of council funding provided by zero interest loans from the RBNZ. The RBNZ like all banks will determine the credit worthiness of the council but has the added benefit of defining the terms and conditions such that the loan repayment could be 10 years or 1,000,000 years – afterall it is our (public belonging to NZ) bank.

  12. Lazy Susan 12
    14 September 2010 at 7:11 pm

    More BS from Banksie’s team. Why does this not surprise me?

    Banks and C&R have that catchy little slogan “Keeping Rates Down” which I’ve always thought was a pathetic little bit of BS.

    If you look in todays’ Herald supplement however you realise they could have more honest slogans such as “Rocketing Debt Skywards” or “Getting The Kids To Pay”.

    For the last three years under Banks leadership Auckland City’s net debt has shot up from $322 million to $867 million a rise of 169%.

    Oh yes the banks love their namesake.

  13. ZeeBop 13
    15 September 2010 at 9:10 am

    Banks was?

    Considering it possible that Brown really might introduce a Poll Tax!

    Interspersed with little nuggets of nothing, Banks was sure to remind us
    that Key could work with him.

    Banks was batter and bruised, the best right punch was when it was pointed
    out the people of S.Auckland were left out, while they had no swimming pool
    banks was dumping sand on a beach for the rich community. Banks could
    have block and countered, with all the policies he had for the new bunch of
    poor rate payer the new Mayor would lead. But no. Banks fully ingrossed
    in big rich city politics.

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