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OECD report leans left

Written By: - Date published: 11:56 am, June 5th, 2013 - 23 comments
Categories: economy, greens, labour, national - Tags: ,

Both sides of the political spectrum will draw some comfort from the recent OECD report on our economy, but overall the report is much better aligned with Labour / Green policy. As the 3 News summary puts it:

An OECD report on New Zealand supports key elements of the Labour and Green parties’ policies for making the economy grow faster and distribute wealth more fairly.

Its two-yearly review of the economy recommends a capital gains tax, permanent deposit insurance for banks that are “too big to fail” and raising the age of government pension entitlement, all of which are key Opposition party policies.

However, it also says “policies are generally on the right track”, with the government seeking to reduce its spending and public debt as a proportion of the economy, and appropriate monetary policy despite the New Zealand dollar being more than 10 to 20 percent over-valued. …

It also found “income inequality is higher than the OECD average” and that “the system of taxes and transfers reduces inequality less than in most OECD countries”, leading the OECD to recommend New Zealand adopt a capital gains tax.

Key has already painted himself into a corner on Superannuation, and is also refusing to budge on capital gains tax – now recommended by the OECD, the IMF, the Reserve Bank, Labour and The Greens. The Dom Post sums up:

OECD call for capital gains tax

New Zealand should bring in a capital gains tax on property, raise the pension age in line with an ageing population and target Working for Families payments more tightly on the working poor, according to the OECD.

The lack of a capital gains tax exacerbates income inequality in New Zealand because much of the income at top levels was in the form of capital gains, the Organisation for Economic Co-operation and Development said.

The lack of a capital gains tax also reinforced the bias toward “speculative housing investment and undermines housing affordability”, the OECD said in a report made public today.

But the Government immediately ruled out a comprehensive capital gains tax on all assets, including the family home.

National is focused on only one goal, reducing the government deficit, irrespective of the damage that it does in achieving it. The misguided politics of austerity has seen the tradable sector languishing and another damaging property boom beginning. In short National has completely failed to “rebalance” the economy. As long as it keeps ideological blinkers on its continued failure is guaranteed. Time for a change.

23 comments on “OECD report leans left”

  1. freedom 1

    “New Zealand should bring in a capital gains tax on property, raise the pension age in line with an ageing population and target Working for Families payments more tightly on the working poor.” AND introduce an across the board income tax free level of at least 15k, which would still be well below what Australia currently offers its citizens.

    • Or even simplify the benefit and tax system somewhat by introducing a negative tax bracket that functions an a PAYE sort of basis, and consider it a base benefit that gets eaten up by the next, positive tax bracket around 25k- which is a bit less than what you’d earn working full-time the whole year on minimum wage. That would not only save on costs for WINZ (most of which is incurred in the fact that the organisation is around gatekeeping benefits. We could also solve a lot of problems by considering benefits exempt from taxes other than GST and then re-figuring them on that basis)

  2. tracey 2

    When will someone actually push the Government on ‘what next”. What do they plan when this magical surplus is reached? Will more surplus work, or is it the passage of time they are relying on?

    • Macro 2.1

      What do they plan when this magical surplus is reached?

      That’s easy – more tax breaks for the uber-wealthy

  3. tracey 3

    Can someone remind me what Peter Dunne stands for? I seem to recall it used to be families but he seems tohave abandoned that position judging by his recent voting history.

  4. Macro 4

    “Can someone remind me what Peter Dunne stands for?”

    Tobacco Companies and Hair Salons – and himself.

  5. Enough is Enough 5

    “The misguided politics of austerity has seen the tradable sector languishing and another damaging property boom beginning”

    Yet you and Labour advocate another form of austerity by cutting entitlements to pensioners. This country is wealthy enough to support those workers who have worked their butts off until they are 65. It is all about choice.

    I choose to support our workers and tax the wealthy appropriatley.

    • JK 5.1

      Me too, Enough. Its not necessary for Labour to increase the super age to 67 years. All they need do is continue the govt contributions into the Cullen Super Fund, and that Fund will help meet the so-called baby-boomer bump which is not due for quite a few years yet. Plenty of time to get ready for that without penalising older folk.

    • Murray Olsen 5.2

      Increasing the retirement age is not a policy that would be promoted by a party that was still influenced by, or spoke for, manual workers. Two extra years in the workforce for a rest home cleaner, a factory hand, or a drainlayer is a real physical burden. Two extra years for a lawyer or someone who has only ever worked for parliamentary services or managed their rental properties is just another couple of years to make more money. I am far from being a proponent of Waitakere Man or front bum ideologies as promoted by Trotter and Tamihere, but this has gone too far. Bloody hell, drop the age to 63 and help more of our unemployed youngsters into decent work. For a start.

      • Colonial Viper 5.2.1

        Labour isn’t much of a social democratic workers party any more. More of a hang out for the intellectual elite and identity politics social liberals, caught in a headspace of fiscal and monetary orthodoxy.

        • Binders full of women 5.2.1.1

          Someone’s finally said it!! Labour I used to vote for was a workers’ party… now it’s factionalised special interest groups worried about themselves and yes… urban/liberal elite who claim to speak for lower classes whilst staying away from them. There will be tension post election when the party that was a workers’ party (and if memory serves correctly formed on the West Coast) tries to coalesce with an anti-mine-worker party. We’ve seen it already with Shane Jones vs Clint’s puppet.

  6. Bill 6

    permanent deposit insurance for banks that are “too big to fail”

    That’s allowing the banks to blow everyone’s cash and then having the self same people whose cash they’ve blown (depositors) bail them out via the public purse, no? (And throwing in a bit extra to cover the investors to boot)

    and raising the age of government pension entitlement

    Regressive bullshit and the argument that pension bills are or will be too expensive is utter crap. We have supported a far higher proportion of the population with a much lower proportion of the population earning than any of the scenarios I’ve seen for retirement payments.

    target Working for Families payments more tightly on the working poor

    The old deserving versus undeserving poor bullshit again.

    The only policy that a left leaning social democratic party should be looking at is the CGT. All the rest is right wing garbage that funnels money upwards and gouges victims of the fallout from such shenanigans. If ‘the left’ are aligned with a fair proportion of that other stuff, then we don’t have a left…not really.

  7. Saarbo 7

    Yes, this OECD report proves what Parker has been saying, NZ is a 2 speed economy that needs to be balanced up with a Capital Gains tax.

    Labour/Greens policy is spot on the mark to help get NZ on the right track.

  8. Lefty 8

    Its a sure sign policies are fucked when the OECD endorses them.

    It should be a signal to Labour to look again at its far right approach to pensions.

    And while a capital gains tax might marginally change housing prices it hasn’t been a game changer in the housing market anywhere else in the world, and won’t be here.

    Support for a capital gains tax by some sectors of the business community and financial commentators/ advisors is simply because they want more money put into their poxy shares instead of property, not because it will benefit the ordinary people. Even less people will benefit from overpriced shares than benefit from overpriced housing that at least gets inherited by future generations, rather than periodically disappearing when share prices drop or the theiving bastards businessmen get caught out and go broke.

    Labour and the Greens need to get their heads around the idea that it’s redistribution that is needed, not rebalancing the rotting capitalist deckchairs on this listing ship of inequality.

    • Colonial Viper 8.1

      You must be a stinkin’ communist.

      And while a capital gains tax might marginally change housing prices it hasn’t been a game changer in the housing market anywhere else in the world, and won’t be here.

      I believe that’s probably one reason that the proposal was warmly welcomed in the MSM and by financial commentators.

      • aerobubble 8.1.1

        I disagree. Surely the purpose of not include the family home is to reduce the incentive of speculators to buy and rent homes for the financial gain, and so they will redirect theier investment elsewhere (and so still have an effect on the economy). Its not a game changer its a sideways regulatory measure that will bring relief to renters and first home buyers.

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