Four new taxes and a climate funeral

Written By: - Date published: 8:48 am, September 1st, 2023 - 30 comments
Categories: climate change, national, same old national, science, tax - Tags:

The day of reckoning has passed.

For a long time National has been promising income tax cuts funded by cuts to wasteful spending.

But they have now released the policy on which they have clearly pinned their election chances.

Have they succeeded in appealing to people’s greed and overwhelming sufficiently their ability to reason?  Will individual aspiration overwhelm what we should be doing for the common good?

Let’s divide the announcement into more manageable pieces of information.

Basically National is promising $14.6 billion of tax cuts over 5 years.  To fund this they promise not to increase borrowing but instead will receive $6.3 billion in new tax initiatives and recoup $8.3 billion in savings and reprioritisations.

One of the new tax initiatives, the removal of commercial building depreciation, has already been announced by Labour and was going to be used to fund GST off fresh fruits and vegetables.

The other new proposals appear to be optimistic in the extreme.

The foreign buyer tax, imposing a 15% tax on foreigners buying residential properties worth over $2 million, would be so easily avoided I wonder why they are bothering.

To achieve this remarkable feat they will have to sell in the vicinity of 2,000 high value properties to rich overseas persons.  Given that in 2018 before the foreign national ban was implemented there were a total of 4,000 sales to foreigners of houses of all value this assumes some heroic levels of sales occurring.

And already the problems are emerging.  Who thinks it is a good idea to breach trade obligations with China?

The second initiative involves similar herculean assumptions about the money that can be raised by taxing overseas gambling.  The Government’s estimate of what can be raised is a third of the figure that National has proposed.

The underlying assumptions appear to be complete and utter bonkers.  And the proposal, geoblocking international casinos unless they pay a fee is likely to be met with the same rate of success that every other effort at geoblocking has ever achieved.

VPN anyone?

From Radio New Zealand:

The proposed online gambling tax would be set up by requiring online casino operators to register and report their earnings, with services that did not comply affected by IP geoblocking. It was expected to net about $179 million every year.

Edmonds on Thursday told reporters at Parliament offshore online gambling operations were already subject to GST after a change brought in by National in 2016, and far more gamblers would be needed to cover National’s expected costs.

“Based on the estimates I’ve seen we believe that New Zealanders lose $350m offshore due to online gambling, that’s based on the GST count that we’re getting,” she said.

Her colleague Kieran McAnulty said the $350m figure was backed up by figures produces by the TAB and Lotto as part of the review of the Gambling Act.

“The TAB has been producing figures to demonstrate why there needs to be regulation of online gambling, Lotto have done the same. If they believed there was four times the amount of people gambling overseas they’d say so because it would strengthen their case.

User pays is an easy but superficial proposal.  The devil will be in the detail, for instance what happens to refugee applications.

And getting advice from Sky City suggests rather a large gamble.

And the removal of commercial building depreciation is something that Labour has already booked.

The bureaucratic savings that are proposed are also herculean.  National has used the mantra of “back office staff”.  Ask any teacher if staff assistance they receive is a nice to have and I am certain they will give you an earful.

Cuts to Labour programs that they are proposing are in some instances strange and in other instances cruel.  Labour’s extension to early childhood education will be cancelled as will reductions to public transport charges.  Work on fair pay agreements and industry transformation plans will also be halted.  In calculating savings National has not taken into account the increased cost these cuts will result in.

It is National’s response to the climate dividend that is the most difficult to comprehend.  National’s briefing paper says:

Under Labour, New Zealand’s emissions reduction goals are at risk because the Government keeps undermining the ETS to protect polluters from the costs of decarbonising their businesses, including by giving them generous government subsidies for emission reduction projects they should be doing anyway and by intervening to reduce the ETS price.

Labour’s fiddling with the ETS has become so bad that at various points it has collapsed the pollution price and landed the Government in court.

National is conscious of the impact an effective ETS will have on the cost of living for everyday New Zealanders. This is because while the ETS is levied on polluting businesses, over time polluters are likely to pass on their increasing costs by charging higher prices for petrol, electricity and other goods.

National believes that the best way to reduce that impact is to return ETS revenue back to New Zealanders by delivering a Climate Dividend. This will allow people to make their own choices about reducing emissions in their daily lives in ways that best suit them.

The problem is that National’s proposal will cost the country plenty.  New Zealand will have to purchase carbon credits to cover any emissions over agreed levels.  And the greater the deficit New Zealand has to fill in the greater the price.

The attack on the New Zealand deal is strange.  As well as effectively removing 300,000 cars off the road the financials of the deal are outstanding.  As stated by James Shaw:

The economics of this really stack up, especially compared to current carbon prices. The lifetime abatement cost is forecast at $16.20 per tonne. Current carbon prices are around $55 per tonne. In the long term this saves the Government and the country money.

Sure you could let the market rule and the carbon price soar, which appears to be the policy of National and Act.  But in this case the price of steel would soar affecting consumers as well as NZ Steel.  And the change would have occurred later, probably much later.  And in the meantime huge amounts of CO2 would have been pumped into the atmosphere.

I have not attempted to detail the effects of mass cuts on the public service.  National has obviously put very little analysis into this area.  Clearly they do not care.

But the income from their proposed taxes appear to be based on herculean assumptions and the climate measures would undermine the slow but steady progress we have made as a country to meet our climate goals.

National’s response to the PREFU will be interesting.  For now I believe that we can safely conclude they do not know what they are doing.

30 comments on “Four new taxes and a climate funeral ”

  • Comments are now closed

  1. Tony Veitch 1
    1 September 2023 at 8:57 am

    we can safely conclude they do not know what they are doing.

    But . . . has that ever stopped them in the past?

    Think Muldoon's scrapping of the NZ Super scheme, or Richardson's 'Mother of all Budgets.' Or Key's asset sales, and increase in GST.

    As Chloe says, they (the NAct) only work for the big end of town!

  2. Barfly 2
    1 September 2023 at 8:59 am

    Wow where to start?

    Well how about the "geo blocking" of non complying betting sites for their new tax.

    Has the National Party heard of VPN's ? I hear they are pretty legal.

  3. Ad 3
    1 September 2023 at 9:07 am

    Good work Mickey.

    The tax arrangement with China really stuffs the proposal.

    • alwyn 3.1
      1 September 2023 at 11:21 am

      Why are you so keen to have Chinese buyers?

      There would seem to be a lot of interest from US residents.

      https://www.stuff.co.nz/business/132855849/us-billionaires-eyeing-up-auckland-as-national-party-teases-lift-of-buyer-ban

      • observer 3.1.1
        1 September 2023 at 11:36 am

        Nearly half of the big buyers (pre-ban) were Chinese.

        Is the National/ACT government going to say "Sorry, Americans only"? Wow. Stand by for trade retaliation from Beijing that would send NZ's economy into meltdown.

        Or we could be honest about it and admit it's all just a con. It's pre-election posturing, not a post-election policy. It will be quietly shelved in 2024.

        • alwyn 3.1.1.1
          1 September 2023 at 11:48 am

          Who put the pro-Chinese clause on the free-trade agreement?

          Why should there e retaliation anyway? Australian and Singaporean residents are treated differently after all and I haven't seen any protests from the Chinese Government.

          • observer 3.1.1.1.1
            1 September 2023 at 12:00 pm

            Australian and Singaporean residents are treated differently

            Because of existing agreements, in law!

            National are proposing to change an agreement in NZ's favour. Beijing will say "OK, what will you give us in return?". That's how it works.

            You think international negotiations consist of one-way deals, in favour of the smaller party? Not on Planet Earth.

  4. AB 4
    1 September 2023 at 10:12 am

    The Nats don't really care whether their revenue proposals are credible or not – it's a detail that they assume the punters won't hear as they think about how big their tax cut is. In a way, they don't really want the foreign buyers or anti-gambling taxes to work, because they view them as anti-aspirational and anti-business. They'll be quite happy to substitute other revenue sources to make up any shortfall – deeper spending cuts, state asset sales, GST increase – while still allowing foreign buyers access of course.

    We shouldn't naively assume that the Nats have to observe the same standards of credibility that is required of leftish governments.

    • observer 4.1
      1 September 2023 at 11:40 am

      Sadly true.

      Illustrated by both Stuff and Newshub running instant vox pop stories which basically asked people if they would like some more money. Not surprisingly the people said they would.

      Explaining the price they would pay to get it (or rather, not get it) was only a minor detail, something called "journalism". There hasn't been much of that.

    • mickysavage 4.2
      1 September 2023 at 1:33 pm

      I am afraid you are probably correct.

  5. Obtrectator 5
    1 September 2023 at 10:13 am

    PREFU = ???

  6. PsyclingLeft.Always 6
    1 September 2023 at 10:49 am

    where National will get billions of dollars from.

    you either need to have a significant amount of spending cuts or significant taxes to pay for it all."

    https://www.newshub.co.nz/home/politics/2023/08/election-2023-tax-expert-questions-where-national-will-get-billions-of-dollars-from-to-fund-expensive-tax-policy.html?utm_source=dlvr.it&utm_medium=twitter

    Absolutely. Question the Nats….needs a full frontal on this.

  8. Mike the Lefty 8
    1 September 2023 at 3:19 pm

    National's "get NZ back on track" billboards would be more accurate if they said "get NZ back onto roads".

    Tax cuts for the rich.

    Increased public transport costs for the non-rich.

    More roads for the Ford Rangers.

    The technology might have changed over the years, but National hasn't.

  9. Tricledrown 9
    1 September 2023 at 3:26 pm

    Nationals financial competence is a complete myth the only time National has outperformed Labour on economic growth was from 2010 to 2013 when $66 billion was pumped into the economy by insurance payouts and other money during the Canterbury earthquakes. But Luxon and Willis are lying about costings and fake revenue streams.The costing of the puhoi wellsford motorway Christopher Luxon's costing of $2.3 billion is $2 billion under the latest estimates and doesn't include the ongoing maintenance required in this slip prone section which is estimated could cost $400 million plus per year with regular storms affecting this area atleast once a year.Labour needs to remind NZers how bad National are.Less than inflation growth even in good times.Then meaningful Tax cuts for less than 25% of voters.Luxon and Willis body language looks like two kids who have been caught lying.

  10. adam 10
    1 September 2023 at 3:32 pm

    So if the Aussies get the whole climate boiling.

    Why has the main conservative party in NZ given up support of conservation?

    Below is the ABC interview about blackouts being a real possibility if the temperature gets 2 hot.

  11. adam 11
    1 September 2023 at 3:39 pm

    As for the tax cuts.

    We now have proof that the national party has no Christians in it.

    Only those led astray by Prosperity theology.

    Cult like blip??!?

    • Tricledrown 11.1
      1 September 2023 at 4:00 pm

      Calvinism only the wealthy deserve more money as if they don't have enough.The only people who did well off in the pandemic and Ukrainian war associated financial crisis the wealthy got$ 50 billion during the pandemic.Now National are doubling down giving the well off New Zealanders another massive load of money.while the bottom 70% get a few crumbs 1/2 a block of cheese. Corporate greed causing exorbitant inflation,on top of that the bottom 2/3 rds of New Zealand are being robbed to give the very well off even more under Nationals pathetic tax cuts for the peasants.

      • adam 11.1.1
        1 September 2023 at 5:37 pm

        I disagree IMHO the labour give crumbs off the table, national give nothing to the bottom 70%.

        As inflation is at 2%, the tax cut will be gone by next Thursday.

        Along with a cut in services.

        The greedy want their country back.

  12. MickeyBoyle 12
    1 September 2023 at 7:18 pm

    Labour are pissing in the wind against this new tax proposal. Rightly or wrongly, from what I am seeing, kiwis seem to love it.

    In my volunteer work, the people I meet and talk with, (several hundred per month). Don't really care about National. They just want Labour and Covid to be consigned to history.

    Unfortunately I can't see that changing before mid October. People want to move on from the last three years. Nothing will change that imo.

    • Drowsy M. Kram 12.1
      1 September 2023 at 9:10 pm

      Labour are pissing in the wind against this new tax proposal. Rightly or wrongly, from what I am seeing, kiwis seem to love it.

      From what I'm seeing, kiwi Gordon Campbell doesn't seem to love it – go figure.

      On National’s Tax Cuts [31 August 2023]
      Revealingly, National’s chart setting out the potential income gains has omitted everyone earning below $30,000 as if they don’t exist – and that’s an accurate reflection of how the “bottom feeders” simply don’t register on the centre-right’s voter radar.
      …
      In fact, despite all the gaslighting about helping the “squeezed middle doing it tough” these tax cuts are socially regressive. Like other such packages before them, they will further increase income inequality, and reduce the quality and range of public services.

      People want to move on from the last three years.

      Increasing inequality and cutting public services is certainly one way to 'move on'.

    • Tricledrown 12.2
      1 September 2023 at 9:51 pm

      Sorry to burst your bubble Mickey.Labour has lost trust because of Michael Wood and Kiri Allen under mining public confidence. Before there demise Labour were well placed. 70% of New Zealand won't get anything from Nationals $2 billion a year Rob the poor to give the few well off a tax cut and the wealthy a much bigger tax cut .National never look after the squeezed middle they con them with crumbs

    • PsyclingLeft.Always 12.3
      2 September 2023 at 8:12 am

      Nic Willis : let them eat cake !..icecream! ..whatever !

      Here's how Willis reacted when asked about how much she stood to personally receive from her party’s tax cut proposals:

      ’In our family of two incomes we’d get $80 a fortnight. And kids, that means instead of movie night meaning DVDs and Tip Top at home, we might go out to the movies.”

      Really? Apparently, those poor Willis kids still have to watch movies on DVDs, rather than streaming them. One of the two incomes coming into the Willis household is worth $206,637 before perks.

      But wait…of course Ol' Nic and her "maybe" DVD watching kids probably dont use public transport. Do the people (apparently several hundred per month) you meet/volunteer with use it ?

      As…

      In particular, the cost of public transport will rise significantly, to the detriment of the already disadvantaged. The cuts envisaged by National would deliver a $1.5 billion reduction in support for public transport.

      "Doubling the price of public transport for people on lower incomes, under 25s and disabled people is unfair and counterproductive. It transfers wealth from those with less to those with more and discourages public transport use meaning more congested roads and higher emissions," says Nash, the council's transport committee chair.

      https://www.scoop.co.nz/stories/HL2308/S00055/on-nationals-tax-cuts.htm

      Of course there are more Nat fish hooks amongst the "icecream".

      More will be revealed I'm sure…

  13. newsense 13
    2 September 2023 at 5:40 am

    Someone has to come out fighting for the poorest section of New Zealanders. And against just giving wealth to those that hoard property and do fuck all for getting money into our productive sectors.

    This recent National proposal is for a government by bullies.

    1- someone has to come out and fight for Fair Pay Agreements.
    Say no to bullying our weakest, former members of the essential workers club. Say no to returning to an immigration race to the bottom, with stretched government departments unable to check employers. It’s not good now and National plan for it to get worse. Respect at work, in every job.

    2- Come out and fight for the kiwi home when it is a rented one. Nothing is like the anxiety of uncertain housing and someone having the power over your life that National will grant to landlords. Want to get your kids settled into a school or joining a local club? Not with National’s landlord policies. Kiwis who can’t break into the ridiculous housing market where the jobs are still live in homes and have lives.

    3- the cost of living hits those who have a higher proportion of their income taken up with necessities the most. There is no tax relief for them and this will be inflationary to boot.

    4- other measures such as free public transport for youn uns, free prescriptions, GST off fruit and veges and other measures which would benefit those on the lowest rungs will be scrapped under National. There’s no hand up or hand out.

    5- this is even before the cost of climate failure is accounted for. Both in terms of insurance costs, increasing bailouts by taxpayers and rate payers and the cost of treaty obligations.

    • PsyclingLeft.Always 13.1
      2 September 2023 at 8:22 am

      And aye ! NAct… are sure fighting against all of those you speak for in 1 to 5.

      NZ will be screwed if they and their creed gain power.

      We can and must stop them.