Green alternative budget

Written By: - Date published: 9:12 am, May 18th, 2010 - 53 comments
Categories: budget 2010, class war, greens - Tags: , ,

The Greens do good policy work. They confront the real challenges and try to offer real solutions. Policy is generally adequately detailed, it’s costed, it’s plausible, it offers a clear way forward. It’s the kind of thing I hope to see Labour doing well before the next election.

Most of this policy is collected and presented in the Green New Deal which “tackles the economic crisis, the environmental crisis and the climate crisis at the same time”. The New Deal is a portfolio in three parts, all accessible from the previous link: a green stimulus package (we covered it here), a second stimulus and environmental package (covered here), and now a Green alternative budget.

The alternative budget was released by Metiria Turei. Called “Mind the Gap”, it focuses on the inequality between rich and poor in NZ. Such inequality is rightly called “the scourge of modern societies”, and it’s great to see the Greens tackling it head on:

This package contains eight simple solutions in four areas to take us towards greater equality and to reduce the gap between rich and poor in Aotearoa New Zealand. These are not intended as a comprehensive solution to the problem of growing inequality, but as eight simple, practical initiatives that can be implemented immediately.

Fair tax
Solution 1: A tax-free $10,000
Solution 2: A comprehensive capital gains tax (except on family homes)

Addressing energy poverty
Solution 3: Progressive electricity prices

Income support
Solution 4: In-Work Tax Credits for all low income families with dependent kids
Solution 5: Reinstate a discretionary Special Benefit

Housing
Solution 6: 6,000 new state houses in the next three years
Solution 7: Investment in community housing
Solution 8: Secure long-term rental tenure

Media coverage of Mind The Gap includes here, here, here, here, and even the National Business review here.

Labour’s Phil Twyford wrote on inequality in a post (also titled “Mind the gap” – anyone who has used the London Underground will get the joke) here. Phil wrote: “For my money the challenge for Labour is to get inequality back on the political agenda”. Well I’d say the Greens have just done that! Come on Labour, what’s next after The Many not The Few?

As a postscript, on the subject of alternative budgets, a post by Bernard Hickey summarises an interesting competition: “The Productive Economy Council and the New Zealand Manufacturers and Exporters Association (NZMEA) have launched an inaugural Alternative Budget Competition for all university students”. Hey students, can you do better than the double dipping Minster of Finance?

53 comments on “Green alternative budget ”

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  1. r0b 1
    18 May 2010 at 9:36 am

    Before we need to repeat an argument from another thread, the gap between rich and poor was narrowing under Labour. All that is at risk now.

    Gap between rich and poor shrinks, Maori and Pacific make gains
    28 August 2008
    For the first time in 20 years the gap between the rich and poor is closing.

    Figures released today in the Ministry of Social Development’s 2008 Social Report revealed income inequality between the top 20 percent of earners and the lowest 20 percent has dropped – the first decrease since 1988.

    The report also found there are fewer people living on low incomes with 13 percent of the population living in households with low incomes compared with 22 percent in 1997.

    From 2004 to 2007 incomes for households in the low to middle income range grew more strongly than incomes for the top 40 percent of households.

    • Andrew 1.1
      18 May 2010 at 10:10 am

      Most likely to do with strong labour demands and close to full employment pushing up wages and less people on welfare. Nothing much to do with labour, they just happened to be at the helm at the time. Unfortunately due to the worldwide and domestic recession for the last 18 months unemployment has risen, wages have stagnated, and so on. As the economy improves so will those on lower incomes due to the demand in skilled and unskilled labour.

      In a nutshell that’s about it, you will all be queueing now up to let me know how off the mark i am and how i have lost touch with reality, but ask most economists and they will tell you the same story.

      • Clarke 1.1.1
        18 May 2010 at 11:17 am

        I think you’ve just made an argument that Labour are much better economic managers than National, as they managed to achieve something close to full employment where National can’t be bothered. It’s a valid point that better employment opportunities create greater equality, which is pretty much an ipso facto argument that National don’t even have equality on their radar.

        • Draco T Bastard 1.1.1.1
          18 May 2010 at 1:38 pm

          Actually, Jonkey said that he wanted wages to drop, ergo, he and National wants inequality to increase. So, not so much that they can’t be bothered to achieve full employment but that they work against it.

          • Andrew 1.1.1.1.1
            18 May 2010 at 2:52 pm

            He wanted Australian wages to drop, not ours … Queue howls of outrage from those that actually believe there is a secret hidden agenda to drop wages in NZ to satisfy his greedy business owning elite.

            • Draco T Bastard 1.1.1.1.1.1
              18 May 2010 at 4:11 pm

              And/or he was joking…

              Yeah, right.

            • Pascal's bookie 1.1.1.1.1.2
              18 May 2010 at 8:03 pm

              Andrew. The question he answered made it quite clear. He was responding to an employer struggling with wage pressure coming from the low unemployment and increasing inflation. His response was that he’d love to see wages drop; that inflation shouldn’t be used as a reason to raise wages, only productivity should.

              This makes perfect sense, if you think that the cost of inflation should be borne primarily by wage earners. It also means that in real terms, in times of inflation, he thinks the answer is to see wages drop. He wasnae being secret about it, he just denied it afterwards and put pressure on the paper to ‘clarify’ his comments.

              • Andrew …
                19 May 2010 at 10:30 pm

                no he wasn’t, well that was discussed in the same conversation, but that quote was in reference to people jumping across the ditch to Australia and the like because wages were much higher. Well that’s the way i saw it anyway. the red side will all see it your way and the blue side will all see it my way. No side will ever be able to convince the other they are wrong.

              • Armchair Critic …
                19 May 2010 at 10:50 pm

                Andrew – Yours will be the second of two things in comments today where JK has said one thing and meant another.
                At best, he’s not much of a communicator.

              • felix …
                19 May 2010 at 10:53 pm

                Andrew you’re the first of the “blue” side I’ve seen actually come out and say that they really think Key was talking about Australian wages.

                Mind you most of the righties around here are more of the “yellow & blue” variety and they tend to be very open about what they ‘d like to see wages do. And they’re not talking about Australian wages either.

              • Draco T Bastard …
                19 May 2010 at 11:09 pm

                Well that’s the way i saw it anyway. the red side will all see it your way and the blue side will all see it my way.

                And yet there is only one way to see it and that is that Jonkey and National want to see wages drop because that’s what he said.

    • B 1.2
      18 May 2010 at 10:14 pm

      “Before we need to repeat an argument from another thread, the gap between rich and poor was narrowing under Labour. All that is at risk now.”

      Its not just at risk- it has already widened under national.

  2. 350ppm 2
    18 May 2010 at 10:20 am

    “It’s the kind of thing I hope to see Labour doing well before the next election.”

    Why? Just vote Green.

    • r0b 2.1
      18 May 2010 at 10:46 am

      The Greens can’t deliver anything without Labour, hence Labour needs to be strong and well organised. And sometimes I do vote Green – I really don’t care much about specific parties, I care about good policy and good results.

    • Draco T Bastard 2.2
      18 May 2010 at 1:39 pm

      I’m not going to vote Green because of their MoU with National.

      • outofbed 2.2.1
        18 May 2010 at 4:48 pm

        I’m not going to vote Green because of their MoU with National.

        So the choice is therefore
        National
        Act
        Labour
        NZF
        Maori Party
        UF

        Hm Which way you going to go Eh?

        I am voting for the party with the most progressive of social justice policies in spite of a MOU with National 🙂

        • nzfp 2.2.1.1
          18 May 2010 at 5:12 pm

          Well there is still New Zealand Democrats for Social Credit and the Progressives and Alliance.

        • Draco T Bastard 2.2.1.2
          18 May 2010 at 5:42 pm

          Good policies combined with sheer stupidity…

          Yeah, not the best option.

        • Rich 2.2.1.3
          19 May 2010 at 8:15 pm

          Don’t Labour also have an understanding with National? Produce no decent alternative policies, keep Goff as leader, and generally act as the most pisspoor opposition since English was National leader.

          It’s an effective partnership.

          (Where *is* Labour’s budget alternative? Is it just going to consist of: “you should have done that sooner”, “we wouldn’t have done it it quite like that” and “I suppose that’s a reasonable idea”?)

      • toad 2.2.2
        18 May 2010 at 6:22 pm

        FFS, Draco – the MoU has almost no substance, concedes nothing from Green policy, and is essentially a PR tool to convince people that the Greens are not ultra-left and can cooperate with all parties where there is an issue in common.

        Labour have voted with the Nats far more often than the Greens have since the last election. They are not the answer – we will probably get more of the same, with just a wee bit more of a social justice perspective and probably no more of an environmental perspective.

        Surely, Green has to be your vote of you want to make a real difference. And remember that Green MPs are bound by policy made by the membership – they can’t just make it up on the hoof as P.Goff and J.Kannibal do.

        • Draco T Bastard 2.2.2.1
          18 May 2010 at 7:51 pm

          the MoU has almost no substance, concedes nothing from Green policy, and is essentially a PR tool to convince people that the Greens are not ultra-left and can cooperate with all parties where there is an issue in common.

          Propaganda isn’t the best way to sell yourself especially when it’s not actually correct. If your policies are the best then be prepared to back them and don’t try to hide behind a substanceless MoU with a hard-right authoritarian party.

          Labour have voted with the Nats far more often than the Greens have since the last election. They are not the answer we will probably get more of the same, with just a wee bit more of a social justice perspective and probably no more of an environmental perspective.

          Not yet they aren’t but they could become so although I’m not holding my breath – they still believe in the delusion that is capitalism. Besides, I didn’t say I was going to vote Labour.

          Surely, Green has to be your vote of you want to make a real difference.

          And which party I did vote for – I just won’t be doing so again.

          …they can’t just make it up on the hoof as P.Goff and J.Kannibal do.

          http://blog.labour.org.nz/index.php/2010/04/29/openlabournz-a-new-way-of-doing-things/

  3. nzfp 3
    18 May 2010 at 10:29 am

    Due to time constraints I don’t have time to read the budget but I do have a couple of questions for anyone who has and may be able to respond:

    1. How are the Greens proposing to finance this budget?
    2. Have the Greens addressed the privatisation of money?
    3. Have the Greens addressed privatisation in general.

    • Bill 3.1
      18 May 2010 at 11:08 am

      The answer to your first question was in one of the very short links. I notice that most of the links don’t mention this and so leave the impression that the Greens want to produce money from thin air or whatever.

      “The Green Party says if it was in Government, it would introduce a capital gains tax, except on family homes, that would raise up to $4.5 billion per year.

      It says the money raised would cover the cost of its other proposals, including making the first $10,000 of income tax-free and building 6000 state homes.”

      • frustrated 3.1.1
        18 May 2010 at 11:41 am

        Can you point me to the data on a capital gains tax raising 4.5 billion per year as it sounds a bit like pie in the sky to me.

        • frog 3.1.1.1
          18 May 2010 at 2:16 pm

          Pie in the sky? Get real. We don’t make this stuff up. Treasury does. Go to page 46 of this background paper from the Tax Working Group that recently reported to Bill English. It also appears in the official final report, I’m just too lazy to dig up that link as well.

          http://www.victoria.ac.nz/sacl/cagtr/twg/Publications/3-taxation-of-capital-gains-ird_treasury.pdf

          The Mind the Gap package could be fully funded via one of the options put on the table by the government’s own Tax Working Group. I reckon we just cancel a handful of John Key’s new roads, and that alone would pay for it all.

          That’s not pie in the sky. that’s common sense. When equality improves, every member of society benefits, including the rich. That’s a fact.

          • frustrated 3.1.1.1.1
            18 May 2010 at 2:23 pm

            Thanks for that Frog – but I do note that the Green’s webpage states that

            “Australia has a comprehensive capital gains tax that exempts the “family home”. A rough estimate of the revenue from applying this model to New Zealand suggests that a CGT similar to the Australian system would raise around $500m per year in New Zealand.”

            http://www.greens.org.nz/misc-documents/capital-gains-tax

            I’m all for a CGT but we need to be realistic about how much it will raise.

        • nzfp 3.1.1.2
          18 May 2010 at 2:35 pm

          Hi frustrated,
          I can’t speak for Bill but here is a link to a comprehensive study done by Australian economist and Brian Kavanaugh who asserts that an appropriately applied land tax would result in the potential gain in GDP of “Au$35,000 per year for every man, woman and child in the country”.

          You can find Kavanaugh’s report here

          This report collates Australia’s real estate sales since 1972 to create ‘The Barometer of the Economy’. As the barometer demonstrates a delayed inverse relationship between property bubbles and the economy, we investigate the extent of Australia’s publicly-generated natural resource rent in order to assess the scope for ‘Unlocking the Riches of Oz’ currently suppressed by the deadweight costs of taxation. Re-calculating GDP on the assumption of the notional public capture of one half of Australia’s resource rent since 1972, we show the benefits that would flow to all Australians, the environment, housing affordability and industrial relations by reducing taxes in favour of greater reliance on resource rents to be substantial.

          As an aside, property bubbles are funded by the creation of money by private commercial banks – not by the Australian government or by the Australian citizens. This report clearly demonstrates a correlation between the bursting of property bubbles and each recession. While it is unfair to assert that the clear correlation demonstrates cause and effect without further review it does leave much to question about the role of commercial banks left with the power to create money and the occilation of business cycles.

          • frustrated 3.1.1.2.1
            18 May 2010 at 3:23 pm

            …potential gain in GDP of “Au$35,000 per year for every man, woman and child in the country’.”

            hmmmm yes but this is pretty meaningless unless we expect the capital gains on properties to show the same growth from now for the next forty years and regardless no large political party will campaign on a land tax so it’s a moot point.

            • nzfp 3.1.1.2.1.1
              18 May 2010 at 9:01 pm

              “no large political party will campaign on a land tax” then don’t vote for a large political party. Economics is the center of every division within our society – get the economics right and the rest will fall into place.

              Australia is heading in this direction. The recent Australian Henry Tax review recommends Resource Rent tax. This is one step away from a significant land tax.

              TheAge January 22 2010 Henry review recommends resource rent tax

              THE Henry tax review has recommended scrapping the state-based royalty taxes that apply to mining projects and replacing them with a uniform national resource rent tax that would raise billions more.

    • Ari 3.2
      18 May 2010 at 11:48 am

      It’s an alternative budget… they’re not proposing any privatisation, so what exactly are you talking about?

    • nzfp 3.3
      18 May 2010 at 12:08 pm

      Thanks Bill and Ari
      Bear in mind however that ALL money in New Zealand is created out of thin air, whether it is the 1.7% of notes and coins created by the Government (out of thin air) or the 98.3% created by the private mainly Australian commercial banks in the form of loans via the monetization of promises to repay – on primarily private and commercial mortgages. This practice is inherently inflationary and results in the the mainly Australian private banks controlling the money supply and more importantly who gets to use the money.

      My second question is fundamental to the Greens or any political parties budget . If our money supply has been – as it is currently – privatiszed, then the Greens – or any other political party – can only finance their budget through either tax, or borrowing from private banks that create the money out of thin air. The Greens could borrow the money from the RBNZ who, just like the National Australia Bank or Westpac, could create the money out of thin air – or even better the Greens (et al) could instruct the Treasury to creat the money themselves. Either way the Greens (et al – National, Labour, Maori, United, Act etc…) either by the Treasury or RBNZ could fund the budget without the added interest load on loans to private banks or via tax (as we are all – except the rich – taxed too much).

      Until changes to the manner in which our money has been privatized have been made then it is irrelevant who the Government du jour is. The real power lies with who controls the money, 98.3% of our money is created and controlled by private banks – ergo private banks control our economy and consequently our nation.

      If the Greens are not going to tackle this problem then their budget is rhetoric and nothing else.

      Don’t get me wrong – I belive in environmental sustainability, I believe we borrow the land from our children. I would like to see a New Zealand with guaranteed equal rights for all citizens and an economy that encourages entrepreneurial activity and allows citizens to benefit from the fruits of their labour. However, until we have a truly democratic system, a system that does not kow tow to the financial whims of the banks that control alomost ALL of our money, it is irrelevant who is in power.

      Neither Labour nor National address this issue. The media doesn’t address this issue and to date no major political party beyond Social Credit or the Progressives have ever addressed this issue. I believe this should have been central to the Greens policy as it dictates all aspects of our economy including environmentally responsible business practices. I would welcome correction on my assertion, so if you know another party that does address monetary policy and economic democracy let me know.

      • Clarke 3.3.1
        18 May 2010 at 12:34 pm

        Your analysis isn’t quite right at the technical level, so it’s skewing your outlook on how economic policy actually works.

        The RBNZ – not the commercial trading banks – creates money by government authority, and then controls how it enters the economy. The government doesn’t need to “borrow” from the markets as it can create as much or as little money as it needs; however the current prevailing economic meme is that borrowing forces some discipline on the government, and the interest it pays (by simply printing more money) acts as a form of corporate welfare.

        The government can control the amount of money in circulation via the banks quite tightly, by adjusting capital adequacy ratios, overnight deposit rates and the like. If they wanted to fully nationalise the banking system they could do so in a heartbeat, so it’s not true that our money has been privatised – if it was, we’d probably be using “ANZ OzBucks” or somesuch, instead of NZ dollars.

        • nzfp 3.3.1.1
          18 May 2010 at 1:06 pm

          Hi Clarke,
          According to the New Zealand Banking Association (NZBA)

          4. THE CREATION OF MONEY AND CREDIT
          Constraints on the Process (page 20 of 50)

          2. The government’s fiscal policy influences the level of money and credit. If the government runs a fiscal deficit by spending more than it earns in taxes, it can have an impact on the amount of money in the economy. If it finances its excess of spending over revenue using new cash provided by the Reserve Bank, it increases the amount of cash in the economy. This provides the basis for banks to create a great deal more money and credit. At the other extreme, if it finances the fiscal deficit by borrowing from the public, no additional cash is created.

          Clearly the Banks still create and control who gets first use of the new money. Not only that, the system is admittedly inflationary as any money created by the government (interest free as credit) is used as the bases for more commercial bank money creation, at interest as debt.

          As far as the Government “controlling” the money supply, they only do this through monetarism using the OCR. However the process of increasing the OCR to cool domestic lending creates an opportunity for money market arbitrage (Ask Currency Trader John Key what that is and how it hurts economies) which results in New Zealand tax payers paying foreign private bank profits and destabilieses NZ exports and imports as the NZ dollar value is affected which in turn affects local and domestic prices of NZ manufactured goods whch is not good for NZ manufacturers. The increase in interest rates results in an increase in the requirement for money creation (whether domestic or through foreign investment or cut-throat international trade practices) to service the increase in debt due to interest which is again inflationary.

          [lprent: Fixed the link. Use </a> to end an anchor. Your <a> started a new anchor. ]

        • nzfp 3.3.1.2
          18 May 2010 at 1:16 pm

          Very interesting point Clarke “If they wanted to fully nationalise the banking system they could do so in a heartbeat” then why haven’t they? I’m not advocating nationalising the banks – not at all. I am advocating control of money creation.

          It isn’t nationalising the banks that is the issue – it is who creates the money. Money is a public utility like water, or air or land, or libraries, or police, or fireman (etc…) and should be controlled by the public. Do you suppose we should privatise libraries and police and the army and the firemen? If not then why should we privatise the creation of our money?

          Money – as shown by both the RBNZ and the NZBA – has been privatized, that is why 98.3% of our money is created by commercial banks and not the RBNZ. It is this private creation and control of who gets access to new money that is the problem. Until this issue is addressed then the respective governments budgets are irrelevant.

          Here is a link showing the M3 aggregates – you can work out for yourself the total money pool created by Australian banks (by law, as debt to NZ citizens, at interest).

          • Clarke 3.3.1.2.1
            18 May 2010 at 2:29 pm

            It’s an interesting quote from the NZ Banking Association, but remember they’re an industry lobby group as well as a source of information!

            There are many more controls than simply the OCR available to the RBNZ, including capital adequacy ratios which govern the amount of credit that can be created from a given capital base. However given the neo-liberal proclivities of our times, these controls are only used infrequently. In fact, many of the issues you mention – from the abdication of credit creation to the privatised and offshore owned commercial banking sector – are the result of political and policy decisions, not any structural issues with the banking system.

            So to go to your original point, there’s no inherent reason why the Greens (or Labour, or any other party winning government) couldn’t reset the policy approaches to stop rewarding Australian banks and start running a more Kiwi-centric banking system.

            • nzfp 3.3.1.2.1.1
              18 May 2010 at 3:17 pm

              Hi Clarke,
              I see I don’t disagree with you at all. What frustrates me about the money creation issue – as highlighted by the NZBA – is that any Government that attempts to monetize public infrastructure or services as they should in my opinion – immediately leave themselves open to inflation as the money finds its way back into the commercial banks who immediately create loans for speculation on asset bubbles (primarily property). These asset bubbles could be anything, from tulips to property to the latest disgusting banking scam, an asset bubble in personal life insurance, with collateralised life insurance policies. The point being that the Government is frozen into inaction or worse poor action (tax increases, GST hikes, foreign borrowing) so as not to ignite the torch of inflation by creating money themselves that serves as the basis for further credit creation by the commercial banks.

              Take away the power to create money from the commercial banks and leave it with the treasury and the Government can create and spend directly into the economy without tax or inflation or interest all of the funds that the nation needs for public services and infrastructure. As far as growing the money supply as per the needs of a growing economy, that could be done with the Government creating and spending more as necessary – how much more can be worked out by the treasury, that’s what they’re there for and that’s why we have over paid economists. If we need to “deflate” the money supply the government could pull it back into the public coffers and destroyed by taxation.

              The banks can still operate, but without the power to create the money they would need to borrow it from the Treasury or loan out deposits which is what most New Zealanders think they do anyway.

              But in short you are 100% correct, monetary policy is just trhat – policy, which should be controlled by a democratically elected Government and not an appointed Govenor on a board of economists with private banking histories – hence economic democracy. Where is Don Brash now?

  4. freedom 4
    18 May 2010 at 12:05 pm

    The first $10,000 of income being tax free is a fundamental necessity in any attempt for fair taxation. Regardles of your level of income, the first $10,000 spent is injected directly into the economy through basic living costs. For many this is accommodation, or a portion thereof, for some it will also include part of their spending on food or utilities.

    I bring this question up in as many discussions as i can, with as many different people as i can and the unanimous answer is a tax free base of $10,000 is a welcome, and in too many cases, a desperately needed solution to rising costs.

    With climbing inflation, increased g.s.t., and the approaching shadows of financial meltdowns, the security this move provides to the housing and retail environments shows it is possibly a question of can we afford not to do it?

    • nzfp 4.1
      18 May 2010 at 12:23 pm

      A solid land tax doesn’t hurt either. Well it will hurt land owners and the rentier class who will argue that the costs will be passed to the renters, but I’ve got 11 economists including the classical economists Adam Smith, John Stuart Mill, Professor James E Thorold Rogers, ERA Seligman, David Ricardo and Henry George who agree with me.

      here and here

  5. prism 5
    18 May 2010 at 9:30 pm

    I have made the point before, about having a tax-free bracket, that it is unwise from a sociological point of view. We pay tax as part of a community. Those who don’t pay tax, or get special advantages such as Working for Families, to balance their extra costs and needs as parents, are criticised sometimes despised. Everyone should be able to say they pay income tax say 10%, otherwise there is a perception that they are freeloaders. Income tax is seen as a personal input. GST is seen as a universal government levy.

    It seems difficult for some people while thinking about the shape of an economic system to consider how it impacts on individuals. When an individual explains, that will be called an anecdote which can’t be given any credence.

    There are some burdensome taxes on lower income people – secondary tax, the low earning level allowed for beneficiaries before reduction in payments, the practice of counting wages as income triggers, instead of the after-tax net income figure received.

    But to do something about such matters is to waste time on the people to whom every small change would have the most effect. However it is considered that such people are low income because they aren’t very bright or high-rating in society, thinking about them doesn’t make for a prestigious study.

    • nzfp 5.1
      18 May 2010 at 9:38 pm

      Why should we pay tax at all? I prefer a solution where no one other then the absolutely filthy rich like John Key and his tax credit best mates, pays taxes at all. When I say tax I mean an income tax on labour. There are many mechanisms within our control that could provide us with all our nations needs without the need for income, value-add, GST taxes including, Resource Rent Taxes, Land Taxes (essentially a special class of Resource Rent taxes), company taxes and Financial Transaction Taxes. Alongside this our Government could create and spend the money needed for our infrastructure directly into the economy.

    • prism 5.2
      19 May 2010 at 2:52 pm

      Reply to my own reply. What a hope to try for some practical thinking about making things better here and now. What I hear is pie in the sky – lovely theoretical arguments. What a bunch of dreamers, visionaries looking into the blue distance.

      If the intensity of thought that goes into utopian ideas and stating dogma went into applied solutions now we would improve the present, and get policies continuing to improve into the future and provide continuing lines of productive ideas coming forward. Idealistic pragmatism. It is not an oxymoron.

  6. clandestino 6
    18 May 2010 at 11:29 pm

    I agree nzfp. A land value tax is a great way of taxing wealth without negative impacts on productivity. I disagree on GST though, as it is a good way of encouraging saving and investing, you could exclude all unprepared food though. Raise GST to 18-20% and make income taxes go 0% to 26k (min wage) and low thereafter. Cue howls of outrage from wingnut landlords

    • nzfp 6.1
      19 May 2010 at 12:21 am

      Hey clandestino,
      GST represents a tax on the products of labour which is passed to labour and is detrimental to the productive economy. The tax on labour results in a less purchasing power for labour and ultimately less capital available to labour to purchase the products and services within the economy, consequently the manufacturers and businesses within the economy suffer.

      A tax on labour of any kind results in capital redirected away from the productive economy and into the unearned income (free lunch of the neo-liberal free market) of the land owning class. If the Government needs tax revenue it should be taken from the land owners in the form of a resource rent instead of labour in the form of GST.

      A land resource tax cannot be passed to the renters as the market dictates the price the renters will pay to rent the land. Instead the landowners will be forced to pay less to the banks in interest as the interest on the mortgage loans represents capitalised rental payments. It is entirely feasible to create a zero sum gain of tax revenue by shifting the tax revenue of GST off labour and onto the banks in the form of land resource rents.

      The positive gain of such a step (in conjunction with other regulations) would be the reduction or even the eradication of land speculation and consequently land asset bubbles in the form of housing booms, lower mortgages for all New Zealanders and zero GST. A land resource tax correctly applied could also result in the removal or reduction of other taxes such as income tax.

      Here is a list of 11 economists including the classical economists Adam Smith, John Stuart Mill, Professor James E Thorold Rogers, ERA Seligman, David Ricardo and Henry George who agree with me.

      Here is an article detailing why land tax cannot be passed to the renters.

      Pero, este es me opinion solo clandestino.

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