Nats in line for big $$ from own tax reforms

Written By: - Date published: 11:23 am, January 27th, 2010 - 31 comments
Categories: economy, tax - Tags:

Fran O’Sullivan has a piece pointing out the vested interests of senior Nats regarding tax reform:
“More than two-thirds of the National line-up have beneficial interests in trusts (entities that the Inland Revenue believes are responsible for a $300 million hole in tax revenues at the current 33 per cent tax rate).”
– National wants to drop the trust tax rate to 30%.
“even before the Buckle team reported, Prime Minister John Key said he was not in favour of broad-brush capital gains taxes. Key contends they are difficult to implement, something the IRD agrees with and now also the Buckle group.
How fortunate.
A glance at Key’s own list of pecuniary interests shows he would be a sitting duck for a capital gains tax regime given his tally of top-class homes and the share portfolio which he has tucked away in a blind trust. His colleagues (and party supporters) will have breathed a sigh of relief that the Buckle group did not make an overwhelming recommendation to pursue this tax.”
“If capital gains tax is a political no-goer, the next most obvious option is a land tax (basically a bit like an extra rates bill which goes to the Government rather than local authorities). The political downside for the Government is this tax could badly affect some farmers, retirees and Maori land trusts. Federated Farmers has already started lobbying against the tax. Grey Power and the Maori federations will not be far behind.
The MPs’ register shows most of the Maori Party’s MPs have beneficial interests in Maori land trusts. They’ve already scored a sweetheart deal to back emissions trading legislation. Their chances for a repeat performance have to be good.”

– What’s the point of power if you can’t line your own pockets? that seems to be the attitude of the Maori Party and National’s corrupt ministers

“National insiders suggest that increasing GST is more likely”

– GST is a regressive tax, hitting people on lower incomes hardest and less on people like National MPs and their supporters. But the Nats would rather make the poor pay than put tax on themselves.

Of course, O’Sullivan misses the elephant in the room. Thanks to their salaries, all the National, ACT, and Maori Party MPs, and many of their wealthy backers, are in line for massive windfalls from dropping the top income tax rates to 30%.

Cutting the top rates would net an ordinary MP $5,540 a year, ministers outside Cabinet would get $11,404 a year, ministers inside Cabinet would be in line for $14,556, Bill English would pocket $17,196, and John Key would get an incredible $26,500 tax cut – nearly half of Kiwis earn less than that in a year. And that’s just from their Parliamentary salaries, every $1,000 of extra income would yield another $80 in tax cuts. While the 78% of people with incomes below $48,000 get absolutely nothing.

It’s quite clear whose interests the Government is acting in. And it’s not yours and mine.

31 comments on “Nats in line for big $$ from own tax reforms ”

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  1. Marty 1
    27 January 2010 at 11:32 am

    yeah, drop the top tax rate on the big earners like themselves, and increase gst on the biggest taxpayers, the paupers to pay for it all.

    key lied when he said he wouldn’t raise taxes. the suckers fell for it hook, line, and sinker

  2. PT 2
    27 January 2010 at 11:35 am

    all the rich nat mps made much more money before they were in parliament, they didnt go to parliament to make money and arent interested in cutting tax just before their own benefit, what a stupid envy post

    • DeeDub 2.1
      27 January 2010 at 11:41 am

      It’s not ‘envy’ to stand up for 78% of NZers who will be considerably worse off if these changes take place.

      I’d also like to see some kind of proof that “all the rich nat mps made much more money before they went into parliament”? Did Paula Bennett for instance? Hmmmm? It’s actually beside the point anyway, but if you’re going to throw wildy sweeping statements like that around here you’d better be able to back ’em up…

    • roger nome 2.2
      27 January 2010 at 2:08 pm

      PT:

      “all the rich nat mps made much more money before they were in parliament”

      True – up to a point, having more money is useless when you have enough, and what you really crave is the power to shape society in your own grotesque image.

      Of course they’ll never say no to another $10,000 here and there when it costs them no effort at all.

  3. Marty 3
    27 January 2010 at 11:38 am

    oh PT, so thats why they don’t wanna implement a captial gains tax, or a tax on trusts?

    and thats why john key lies so much about tax.

  4. tc 4
    27 January 2010 at 11:45 am

    Partly correct PT…. they went to parliament to serve their own interests due to the absence of any talent in the national benches driven out through the 90’s and early 00’s and have comfy positions awaiting them after they exit……yours is a naive post that shows up your lack of understanding the big picture.

    Bring it on I say…….this ‘reform’ along with performances of Tolley/Brownlee/Smith/Hide/Bennett will see them get thrown out in 2011 for the do nothing/reward the already well off/burden the lower levels of NZ

  5. Gooner 5
    27 January 2010 at 11:46 am

    Wrong Marty.

    They wouldn’t actually get anything as the tax reforms are going to be revenue neutral. There is no way Karori Bill English will agree to billions of dollars going from income tax revenue unless it was taken from somewhere else, which is what the TWG recommended and what Key & Co. have always suggested will happen.

    oh PT, so thats why they don’t wanna implement a captial gains tax, or a tax on trusts?

    Trusts are already taxed Marty.

    • Rob Carr 5.1
      27 January 2010 at 2:46 pm

      The tax rate of GST is recommended being raised which will have a very marginal cost to them. They will then get an 8% tax cut on their income. GST raise will probably affect them less than 1% of their income. Total revenue neutral not individual person Gooner.

  6. BLiP 6
    27 January 2010 at 11:47 am

    Personal taxes will be further reduced from 1 April 2010 and from 1 April 2011. As a result, by 1 April 2011 around 80% of New Zealand taxpayers will end up paying no more than 20c in tax for every additional dollar that they earn.

    This programme of tax reduction is a central part of the economic plan of my Government, because it believes in encouraging New Zealanders to get ahead under their own steam, and it views personal tax reductions as an essential step in ensuring that can happen.

    John Key

  7. Daveo 7
    27 January 2010 at 11:50 am

    Wrong Gooner.

    The plan is supposed to be revenue neutral in total, but not for each individual or class interest. What we’ll see is an overall decrease in tax for the wealthy, offset by an increase in tax on the poor and middle income families.

  8. Gooner 8
    27 January 2010 at 11:54 am

    Okay, fair point Daveo.

  9. NindianZ 9
    27 January 2010 at 12:15 pm

    Key donates his entire salary to charity anyway, so the $26,500 increase will go straight to whoever he donates to.

    Plus, its not as if labour/green MPs are not rich either. So whatever changes are made to the tax structure will no doubt benefit them to the same extent as well.

    Do you believe that Labour would honestly vote against legislation that would benefit them personally?

    • Pascal's bookie 9.1
      27 January 2010 at 12:26 pm

      “Key donates his entire salary to charity anyway ”

      I bet you can’t cite anything that even comes close to showing that this is true.

      • IrishBill 9.1.1
        27 January 2010 at 12:56 pm

        What about the earnings on his $50m+ of investments? And are they taxed at a company rate, a trust rate or at the top personal tax rate?

        • fizzleplug 9.1.1.1
          27 January 2010 at 1:22 pm

          That would obviously depend on the structure that holds the investments. And applies to all those who hold trusts, not just National MPs (hint: other parties MPs also use trusts for tax purposes).

          More than likely the investments are held in a Trust (or multiple) so that they are taxed at 33%, although I am sure that he earns some interest in his own name, which would have RWT deducted at the top rate of 39%.

          • Draco T Bastard 9.1.1.1.1
            27 January 2010 at 4:42 pm

            Yes, correct, trusts as they are presently used are completely immoral and should be banned.

      • NindianZ 9.1.2
        27 January 2010 at 2:24 pm

        I apologise – he donates a good chunk of it to salary:

        http://www.stuff.co.nz/national/politics/573560

        • felix 9.1.2.1
          27 January 2010 at 3:02 pm

          Source please? All I see is him pledging to do so – and we all know what his pledges are worth, especially where money is involved.

          Every month or so one of you brings this up and states it as fact. So far no-one has been able to show a shred of evidence that he donates any of his salary.

          I suggest that you retract your statement and replace it with one which states that in your opinion it is likely he donates or whatever.

          That’s if you want to be taken seriously – if it’s just another standard troll under a throw-away name then you needn’t bother but to do so would show good faith and intellectual honesty. Then we can discuss the relevance of the assertion in the first place.

          • lprent 9.1.2.1.1
            27 January 2010 at 3:05 pm

            I’ll bet that you don’t get a reply.

          • NindianZ 9.1.2.1.2
            27 January 2010 at 11:15 pm

            Well if he doesn’t follow through on his pledge it would be pretty dishonest of him.

            Is there anyway of checking whether he does or not? I would assume that it would be getting paid to him and then to the charity.

            Unless there is any evidence to the contrary, I will be accepting his word, just like I would anyone else’s, regardless of political affiliation.

            Maybe I’m foolish.

            • felix 9.1.2.1.2.1
              27 January 2010 at 11:48 pm

              Maybe you are. That statement was made as part of a campaign to win an election – a campaign in which he also promised tax cuts “north of $50 a week” for working people.

              Did you believe that too?

              It was around the same time he was telling us he could deliver “ultra-fast broadband” within a couple of years.

              You still believe that one too?

              Maybe you are a bit naive – I don’t know – but have you ever thought about what the phrase “a good chunk” might mean? You heard it a while ago and assumed it meant most (or all) of his salary.

              Let me ask you a serious question: If you were to donate 20% of your income to a charity would you consider that to be “a good chunk”?

              What about 10%?

              What about 5%? 5% of a PM’s salary is a pretty “good chunk” by most people’s standard.

              Face it, you have no idea how much – if anything – he gives or who he gives it to. It’s utterly laughable that you would make such assumptions based on such a vague throwaway line in an election campaign with no facts or figures whatsoever to base your assumption on.

              The bottom line is what he does with his money is his own business – he gets paid and he can spend it how he likes, just like everyone else.

              If he chooses to give some of his money to someone else, that doesn’t in any way excuse him from his responsibilities as PM any more than you or I would be excused from our responsibilities because we might donate some part of our income to a cause we support.

              [lprent: Exactly. I donate a ‘good chunk’ to running this site and more to other causes that I support. ]

          • NindianZ 9.1.2.1.3
            27 January 2010 at 11:20 pm

            I tried replying, and hit submit, but for some reason the page just refreshed and my comment was nowhere.

            What I did say was along the lines of:

            Well if he doesn’t follow through on his pledge it would be pretty dishonest of him.

            Is there anyway of checking whether he does or not? I’m not sure.

            Unless there is any evidence to the contrary, I am willing to accept his statement. Just like I would of anyone else, regardless of political affiliation.

            Maybe I’m foolish.

            [lprent: It does that sometimes, often because it goes into auto-moderation (like this one), or spam, and sometime because the net ain’t perfect. Hit the back a couple of times and resubmit. If it moans about it being dup, then you know we have it (and one of us will be along to release it soon). ]

  10. gingercrush 10
    27 January 2010 at 12:18 pm

    Stop talking crap. Labour MPs have the same interests the National MPs did. Which is exactly why in the middle of the largest growth ever in house prices in this country. Labour sat on their hands and did absolutely nothing. No doubt Helen Clark enjoyed seeing her rental properties go up in value.

    This ignores the whole fact that the economic boom was not an extension of greater growth in our exports but the boom was because of house prices. That was never sustainable but Labour didn’t care. They just sat on their hands and didn’t do a thing.

    Secondly, stop talking bullshit about GST. Any increase in GST would require offsetting for those on low incomes. That is what the tax review says and is exactly what the government has said would be done if they implemented an increase in GST. That you lot keep insisting on repeating the same bullshit line on GST is laughable.

    Thirdly, for those repeating the lines that the rich are getting tax cuts while lower and middle income people are getting tax increases. Would you please actually tell me what those increases would be? Or is this the same line bullshit that Quoth and Daco constantly come up with in regards to the rich being subsidised.

    • Zaphod Beeblebrox 10.1
      27 January 2010 at 1:07 pm

      why no CGT then?

      • John 10.1.1
        27 January 2010 at 4:56 pm

        Because even the poor would have to pay one. You know, the 65% of people who own their own homes. They’re not all rich Nat voting pricks.

        CGT is one of the more avoidable taxes worldwide, so it’s close to pointless introducing one.

    • snoozer 10.2
      27 January 2010 at 1:14 pm

      “Labour MPs have the same interests the National MPs did.”

      yeah, and they didn’t vote massive tax cuts for themselves.

      “Secondly, stop talking bullshit about GST. Any increase in GST would require offsetting for those on low incomes.”

      Only for those on benefits, ginger. For everyone earning up to $75K there is either no tax cut or a tax cut smaller than their increased GST Bill.

      “Thirdly, for those repeating the lines that the rich are getting tax cuts while lower and middle income people are getting tax increases. Would you please actually tell me what those increases would be?”

      see: http://www.thestandard.org.nz/who-wins-and-who-loses-from-tax-reforms/

    • bobo 10.3
      27 January 2010 at 3:28 pm

      Sounds like hell of a lot more tax bureaucracy for an already over worked IRD using offsetting for lower incomes to compensate an increase in GST ? Wasn’t the goal making the whole system less bureaucratic and simpler ? I prefer a CGT and a tightening up on LAQC’s out of the options but National never campaigned on that did they or any actual tax increases.. Tax is a bit like computer hacking the hackers are always smarter than those who design the system..

      Trusts are the real elephant in the room and I don’t think any political party wants to tighten up those.

  11. prism 11
    27 January 2010 at 12:31 pm

    gingercrush – you take the biscuit.
    Before someone kindly offers you some of your requested facts, perhaps you should shut one of your mind portals. That way some info may not shoot right through but stay long enough to be absorbed, remembered and cause change in your current levels of data.

  12. Marty 12
    27 January 2010 at 12:54 pm

    Tax cuts for the wealthy that are subsidized by everybody else via a gst increase.

    • John 12.1
      27 January 2010 at 4:59 pm

      Shouldn’t those who pay the most tax deserve some benefit from them being reduced?

      • snoozer 12.1.1
        27 January 2010 at 5:10 pm

        Yeah. But should they take all the benefit?

        Try to get this understood John: cutting the top rates gives NO tax cut to 78% of taxpayers and huge ones to people on very hgh incomes.

        The fair way to cut tax is a 0% bracket.