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Tax cuts! No! Yes! Maybe! Look over there!

Written By: - Date published: 7:02 am, May 17th, 2016 - 90 comments
Categories: bill english, election 2017, john key, making shit up, spin, tax - Tags: , , ,

No country with record, climbing debt and homeless living in cars should be considering tax cuts. Bill English was right to rule them out for this term:

Budget 2016: Government rules out tax cuts

The Government says tax cuts are now off the table in this year’s Budget and possibly next year’s Budget as well. … “At this point, we’ve prioritised additional debt repayment over setting aside money in Budget 2017 for tax cuts.”

Just to be clear:

Government pours cold water on 2017 tax cut possibility

Because of a larger spending allowance in 2017, up to $2.5b in tax cuts were seen as real possibility in 2017.

However, in a pre-Budget speech in Wellington today Mr English stressed the focus for his government – if it has any spare money – will be paying down debt, not allocating money for tax cuts in 2017…

But what does Bill English know! He’s only the Finance Minister. Here’s Johnny to set him straight:

John Key hints he’ll fight election on $3 billion package tax cuts

Prime Minister John Key has effectively kicked off National’s 2017 election campaign, saying he is confident National could afford up to $3 billion in tax cuts after 2017 and he believes pressure for those tax cuts will grow. …

This isn’t just a case of National’s two top ministers being at odds. English is right, Key is lying and he knows it. But Key would rather we were talking about the mirage of tax cuts (again) than current events like the protection of corrupt tax havens or our homeless living in cars.

90 comments on “Tax cuts! No! Yes! Maybe! Look over there!”

  1. Fustercluck 1

    Just because it is obvious it does not mean it is ineffective. Expect to hear “tax cut” popping out in completely unrelated bits of news and PR for the foreseeable future.

  2. vto 2

    the slippery snake oil salesman strikes again

    • mary_a 2.1

      @ VTO (2) …

      “the slippery snake oil salesman strikes again”

      He’s been striking repeatedly for almost 8 years now, saturating NZ with his vile venom! And will continue to do so, if he’s not removed from office!

    • Peter 2.2

      …. with the help of radio friend Mike, one of the propagandist looking to control NZ group think …..

  3. vto 3

    asked about the clunky sound in the engine…. the salesman talks about how fast the car will go if you paint it red…..

  4. vto 4

    make something up to fill the gap ……… then just keep talking

  5. vto 5

    the oldest tricks in the book

    oldest tricks in the book

    some bunch of New Zealanders still falling for the oldest tricks in the book

    no wonder we have so many clunky sounding old cars

  6. reason 6

    Tax cuts did not work for boosting Don Brash in the polls …….

    http://www.nzonscreen.com/title/the-hollow-men-2008

    So they went for racism ……… and it almost got them over the line …

    It’s tried and trusted for them ………

  7. mauī 7

    If he’s talking tax cuts why not go the whole hog and launch the “KiwiTrusts” scheme for all NZers based in the Cook’s.

  8. Richardrawshark 8

    there could possibly be tax cuts..i might or might not… exactly

  9. I like this song… its far more sensible than the dark wizardry of John Key.

    Enjoy .

  10. Wayne 10

    You seem to forget that National believes in moderate taxes. Part of its core ideology. Just to deal with bracket creep/fiscal drag after 7 years requires a tax cut by lifting the thresholds.
    If the left does not think that is a good idea campaign on it.
    Any decent election should offer voters real choice. National inevitably will have a tax package that at least deals with bracket creep. No doubt National will also have a social package as well.
    The left presumably will want to increase taxes, otherwise their various social promises, which will always be larger than National’s, cannot be afforded.
    It could mean the next election will provide a very clear choice.
    Presumably that is what Standardnistas actually want.

    • vto 10.1

      you missed the point of the post Wayne

    • Sabine 10.2

      @ wayne
      The left presumably will want to increase taxes, otherwise their various social promises, which will always be larger than National’s, cannot be afforded.

      absolutly i agree with you.

      Roads? Who needs them?
      Schools? Who needs them?
      Hospitals? Who needs them?
      Surgery? Who needs them?
      Housing? Who needs that?
      Electricity? Who needs it?
      Water? Who needs it?
      Public Broadcasting? Who needs it?
      Libraries? Who needs that?
      ACC? Fuck it
      Unemployment benefits? Loosers not trying hard enough, we don’t need that?
      Working for Families? IF they can’t afford the kids they should not have them!
      Sickness Benefits? Its not my problem if your child, spouse, mother, father or other relative has health issues. Get on with it.

      Yeah, lets abolish taxes, all of them, Income Tax, Paye, GST, Gasoline Tax and whats not.
      If you need to travel a road or two, you will pay for it.
      Your water main is leaking, you will pay for it. Your child needs some education, you will pay for it.
      Your wife will also bring you food to the hospital in which you are – of course you will pay for that too – staying for the duration of your surgery.

      I so totally agree with you, taxes are for left leaning wussies that have no idea about how business function and only national will save us from these left leaning wussies and their social agenda of a well being citizenry being good for everyone. And when everything is a pay as you go we don’t need politicians either anymore, and they can finally get a real job and learn how to work. And they better do work, as there will be of course no unemployment benefit either.

      • Wayne 10.2.1

        Sabine,

        National never offers a binary choice of all tax cuts or all social and infrastructure spending, notwithstanding your caricature.

        Obviously National will offer a blend of the two.

        Just to take the first of your examples; roading. In Auckland everyone is aware of the huge projects on the northwestern motorway and western ring route tunnel. When these are complete next year traffic flows in Auckland will quite dramatically change, freeing up blockages right throughout the city. Many of the existing problems arise from the fact that everyone is forced onto a single motorway route. From next year there will be two routes.

        • Paul 10.2.1.1

          The M25.
          Look it up.

        • Draco T Bastard 10.2.1.2

          In Auckland everyone is aware of the huge projects on the northwestern motorway and western ring route tunnel.

          Yes, we got more bloody roads when the majority of people wanted better public transport.

          When these are complete next year traffic flows in Auckland will quite dramatically change, freeing up blockages right throughout the city.

          Wow, are you truly that delusional?

          We’ve been promised lower congestion from more roads for the 50 years and every time we get more roads we get more congestion.

          Insanity: Doing the same thing over and over again and expecting a different result.

          From next year there will be two routes.

          And from next year there’s going to be another point of congestion and the pollution level which is killing hundreds of people every year will get worse.

          • Wayne 10.2.1.2.1

            Draco,

            Good road design does actually work. It is now 15 years since the central motorway interchange was rebuilt, increasing its capacity by 50%. Since then it has always flowed more freely than it did prior to the work being done.

            That is why I am confident that the Western ring route will have a major beneficial impact. A lot of the traffic currently going south on the Harbour Bridge will take the western ring route. Similarly airport traffic will be split between the current Epsom suburban routes and the western ring route.

            It probably means a new Harbour crossing can be put back for many years

            Just to take a small example of how intelligent road engineering males a difference. When an additional northern lane was added between Northcote and Esmonde Rd, there was a permanent improvement in traffic flow. If the same could be repeated going south from Esmonde Rd to Northcote this would be a huge advantage. It would avoid the back up on Lake Rd, since the motorway entrance could be two lanes instead of being choked from two lanes into one.

            • Draco T Bastard 10.2.1.2.1.1

              When an additional northern lane was added between Northcote and Esmonde Rd, there was a permanent improvement in traffic flow.

              I think you’ll find that it was the bus lane that did it and not the roading. Or, at least, not the single lane of roading without the rest of it.

        • Sabine 10.2.1.3

          yes dear.

          and also, can i have some of that stuff your are indulging in? cause it is good shit. really. really good.

    • dv 10.4

      “that at least deals with bracket creep

      Ohh you mean the chewing gum tax cuts Wayne!!!

      • dukeofurl 10.4.1

        Thats good , had forgotten about that one.

        And the zinger from Cullen 10 years ago

        “He noted that National did not alter the top personal tax rate during its nine years in government.”

    • Colonial Viper 10.5

      The left presumably will want to increase taxes, otherwise their various social promises, which will always be larger than National’s,

      Or just keep borrowing like the NATs
      Or reacquire the $$$ producing assets that the NATs keep selling off to mates
      Or simply issue new NZD instead of taking them from your savings.

    • Ovid 10.6

      This gives the Left a $3 billion kitty to develop new packages, even without tax increases. The “show me the money” refrain is well out the window.

    • Huginn 10.7

      Wayne:

      Bracket creep happens when inflation pushes everyone into a higher tax bracket.

      We haven’t got inflation; we may actually have deflation.

    • Oh yeah, a 2.5% increase in GST for everyone, the most paid and most regressive tax, is totally a “modest tax.”

      Get off it. National believes in selective tax relief for its mates, hence why they love “tax cuts” instead of permanently adjusting down tax rates.

      The fact is, the difference on the economy and taxes is that left-wing parties manage both better, and right-wing parties just rack up debt.

    • mikes 10.9

      Wayne, National is the tax and spend party, they just increase indirect taxes and fool many people. It is a fact that the best periods of economic growth and prosperity for most western nations have been during periods where the top income tax rates were much higher.

      Regardless, I think you missed the point of the article.

    • Expat 10.10

      Bracket creep only occurs when wages go up, not down.

      It’s a BS argument when the countries experiencing deflation, only those with a limited number of brain cells would fall for this argument.

    • UncookedSelachimorpha 10.11

      New Zealand needs a large increase in tax on the wealthy, to be used to fund increased social and community spending. Good for NZ, good for the economy.

  11. Enough is Enough 11

    r0b

    As I said yesterday this is a good thing for Labour and the left.

    New Zealanders do not want tax cuts.

    Everyone knows that tax cuts are daft as they will lead to the rich getting richer and core public services being cut. If National want to do this then I suggest we quietly allow them to, so that they can be hammered during the election campaign. This a suicidal policy for them which they will be pay for for in the election.

    Labour should campaign on much higher taxes for the rich with a proportionate increase in public spending with a genuine commitment to end child poverty within three years.

    Who will vote against that?

    • Richardrawshark 11.1

      You underestimate the power of the dark side. Tax cuts, the greedy people will vote for tax cuts. They don’t care!

      • Enough is Enough 11.1.1

        If that is what people want then so be it.

        If it is such the bad idea that r0b and I both agree it is, then surely it wont be an issue and people will vote against it in favour of higher taxes and more core publics services.

      • Pat 11.1.2

        if there are a majority that cannot see the perversion in this we are stuffed anyway…

    • BM 11.2

      Middle NZ.

    • OneTrack 11.3

      Exactly how much higher taxes should Labour, the Greens and NZ First campaign on? And how do you define “the rich”? Those on 40K? 50K?

      If it is true that the 1%, has all the money, then you could double/triple the taxation on them, and it still wouldn’t add up to much. Which means you will have to cut into the 99% to fund the promises. I am interested how far into the 99% should be cut.

      • Enough is Enough 11.3.1

        There should be a lot less focus on the top 1% and more focus on the bottom 30%.

        The top 1% are looking after themselves quite nicely at the expense of the poor.

        Quite frankly no one should give a shit what the 1% have to say on tax because they will still be rich if we tax the 80%.

        All our focus should be on the unemployed and working poor. Lets work out what they need. We can work backwards from that point and then tell the rich how much of their fortunes they can keep.

      • mikes 11.3.2

        Exactly. Income tax has no affect on the rich, only those on salaries and wages.

      • UncookedSelachimorpha 11.3.3

        The top 10% own 50% of the nation’s wealth, while the bottom 50% own only 5%.

        So if you change tax on only the top 10%, to transfer only 10% of their wealth to the poorest half of NZ, you would double the wealth of the poorest half.

        If the likes of John Key could get by with $45m instead of $50m, the poorest half of NZ could have double what they currently have – which would give a profound benefit to NZ society and would be of more help to the NZ economy than JK’s extra $5m.

  12. Lanthanide 12

    National and Key have repeatedly said they’ll use the surplus to pay down debt (they said the same thing about the proceeds from the asset sales too). But that day never comes – it’s always used up for tax cuts instead.

    • Colonial Viper 12.1

      Paying down public debt destroys money from circulation out of the economy. It’s a bad idea.

      • Lanthanide 12.1.1

        Paying interest also destroys money from circulation out of the economy. Paying down debt means we don’t have to pay interest.

        • Colonial Viper 12.1.1.1

          You’re thinking like an individual.

          Instead, think like a country or a corporation.

          You never make an out of pocket payment on the interest or the loan principle, you simply roll the debt over and keep it increasing.

          • Lanthanide 12.1.1.1.1

            Eventually your creditors stop wanting to play that game; eg Greece.

            • Colonial Viper 12.1.1.1.1.1

              They’re still giving Greece money.

              Remember that the money the creditors lend to Greece goes to paying off themselves and their mates.

              The alternative of course is to let Greece default.

              But notice how that isn’t being allowed by the creditors?

            • Nic the NZer 12.1.1.1.1.2

              Greece and NZ are fundamentally different. While Greece is in the Eurozone its financially beholden to the EU and their direction of the ECB. Those are the creditors we are discussing.

              In NZ there are no similar creditors. Parliament can modify the reserve bank legislation if it needs. There is no higher institution so NZ can not have the issues of Greece.

            • Nic the NZer 12.1.1.1.1.3

              http://www.slate.com/blogs/moneybox/2016/05/09/donald_trump_says_the_u_s_can_t_default_on_its_debt_because_it_prints_money.html

              Pay careful attention as Donald Trump explains that you (like swathes of the left) have been had for a fool.

          • Stuart Munro 12.1.1.1.2

            Paying down debt isn’t always the best use of money, but it’s better than flying sheep to Saudi or pimping flag referenda. Running up debt to no purpose, as Bill English has done, is not an indicator of competence.

        • Nic the NZer 12.1.1.2

          You have a fundamental missunderstanding. When an institution (say an insurance company) lends to the govt they expect to and do get more than they lend back. In NZ this is basically a risk free investment as the govt can always get the RBNZ to repay the funds by crediting this institutions reserve account (which is why the interest rate here is sometimes referred to as the risk free rate of return).

          The interest the govt pays on its debt does not destroy money (it creates a small amount). The issue is that you are subsidising businesses like insurance and banking by guaranteeing them a risk free investment.

      • If you believe your country is in a boom, (ie. overvaluing economic growth) arguably paying down debt is a very good idea, as reducing the money supply will slow down the economy.

        So there’s the cyclical reason to pay down debt.

        The other reason if if you think you’re overleveraged on resources, paying down debt might slow down the extractive sector slightly. (although that’s a bit of a blunt tool where more precise regulation would probably work better)

  13. Byd0nz 13

    Smash capitalism, stop voting for its bullshit.

    • Colonial Viper 13.1

      What do you want to replace capitalism with

      • BM 13.1.1

        Some system where he/she gets more of other peoples money.

        • Colonial Viper 13.1.1.1

          I must say that I find the term “other peoples money” stupid. Is it your name you see on the dollar notes? Nope, its that of the Reserve Bank of NZ. Is it your face you see on the coins? Nope, its the head of Queen Elizabeth II.

          These things should give you a clue to whose money it is, and who it is that gives that money any worth or acceptability.

          TL/DR: money that you issue or that I issue ain’t gonna be worth shit. The money is issued by and given value by, the government.

          • BM 13.1.1.1.1

            Money is the representation of some persons labour/service or product.

            • vto 13.1.1.1.1.1

              Jeez BM, that is the entire problem with you right wing types – the simplicity you crave just misses entire swathes of reality. Your statement is worthless

            • Draco T Bastard 13.1.1.1.1.2

              Not really. It’s actually the debt that the society owes to the person in resources. This is why private ownership fails.

              The actual money still belongs to the state though.

            • Paul 13.1.1.1.1.3

              You believe that?

              • BM

                It’s what most working people think.

                You work a 40 hour week and in return get $xxxxx amount of dollars, that money received is payment for the hours work.

                You’ve swapped your labour/skills for dollars.

                • Colonial Viper

                  It’s what most working people think.

                  but surely you don’t fall for that?

                  Further the name of the system is “capitalism” – it is capital which makes money, not labour. Labour’s share of income has been falling for decades.

                • Colonial Viper

                  You’ve swapped your labour/skills for dollars.

                  you’ve sold yourself for money, while someone else gets the benefit of your physical production and intellectual output.

                  Hence the original term “wage slavery.”

                  • BM

                    That’s how the system works, I work for whoever they pay me for work done.
                    If I think I’m worth more I can work for my self but that comes with much more risk and uncertainty.

                    This explains why tax is unpopular and tax cuts are popular as the individual has more money in their pocket at the end of the week.

                    • LOL so simplistic.

                      You could also run a business and have other people work for you. (ie. owning capital, hence the name “capitalism”)

                      Tax itself is unpopular, sure. But when you survey people about whether they’d rather pay a higher level of tax and get more public services, more than a simple majority say they would prefer that option. People know that tax buys things and that sometimes the government can get something that they can’t (by being a large enough buyer, or through economies of scale) on an individual level.

                    • BM

                      You lefties terribly over complicate basic stuff, this is why you get no traction with the voter, they just don’t know what you’re on about.

                      If the left ever want to get elected again they have to see stuff through the eyes of the average working New Zealander.

                    • b waghorn

                      “they just don’t know what you’re on about.”

                      Bm suggests that national voters are thick, who would of thought. 🙂

                    • ropata

                      I could support lower income tax, as long as there were commensurate taxes on land & financial transactions / speculation & capital gains.

                    • BM

                      I agree, we all know that taxes are a necessary evil and without them the country wouldn’t function.

                      More indirect taxation is the best approach, income tax and gst are rather in your face and people tend to take notice of those.

                      You want tax people without them knowing they’re getting taxed.

            • UncookedSelachimorpha 13.1.1.1.1.4

              Or rent extraction

      • riffer 13.1.2

        I’d like to replace capitalism with contributionism, a la the Ubuntu model.

        Yes, it would require a complete societal change. I’m good with that.

  14. Jack Ramaka 14

    Red Herrings and Dead Cats are the best bait to get the general population distracted from hotter topics fascinating these are being tossed around with the state of the NZ Economy wallowing in $120 Billion Debt?

  15. Observer (Tokoroa) 15

    .

    The Opposition should promise tax cuts and additional Services because they will have access to real wealth.

    The money will be provided by the very wealthy who over many years have indulged in Tax avoidance and Tax evasion. Evasion and Avoidance are in fact the same thing and are against the spirit of Democracy.

    The first declaration of the Opposition should in fact be the proud and clear enunciation of what a Democracy is. Evaders and Avoiders have no rightful place within a Democracy.

    If people are are unhappy with that, they should seek succour and shelter somewhere else and live under a Despot.

    Greed and lack of care for fellow human beings cannot be tolerated by a Democracy.

    We have witnessed the laziness of a Tory swill. We have witnessed their callous ways. Eight years of selling the assests of our Democracy. Eight years of providing no housing for new born or new arrivals. Eights years for greasing their asses at the expense of others. Eight years of self indulgence on a colossal scale.

    They are the Evaders and the Avoiders. They belong to Despots and not to Democratic Aotearoa.

    • OneTrack 15.1

      And when all of the evaders and “avoiders” have been imprisoned or forced offshore, who will pay the required taxes in Year 2?

      • Gabby 15.1.1

        You reckon they’re irreplaceable?

      • dv 15.1.2

        DUH
        evaders avoider Don’t pay now.

      • Augustus 15.1.3

        The ones who do now, instead of the evaders and avoiders? I’d even wear a GST rise to pay for the prisons

      • mac1 15.1.4

        I reckon it would be a fair deal to offer the people of New Zealand. We will give you $3 billion tax cuts when the evaders ante up with their estimated $7.4 billion annual share.

        “Dob in an evader, and save.”

    • Gabby 15.2

      Course, it could be Ponyboy trying to panic Labour into making dopey promises.

  16. Repateet 16

    And both of them would rather no focus being on the Ministry of Education corruption at Rangiora High.

  17. Policy Parrot 17

    The correct response for those guiding Labour here is to wait: let other groups do all of the talking/criticism. Simply state that “we are working on our tax policy, and will release details in due course.”

    Whether tax cuts are moral or not is not the question here, it is more; “are they politically popular?”, and “are the trade-offs worthwhile?”. If tax cuts become politically toxic, sock the government with their commitment, and if they become popular, think about how to respond in kind, i.e. a “tax cuts plus” type policy.

    Key has pre-announced a number, do some opposition prep and think about the various likely scenarios they would come up with (that would be popular both with middle voters and National’s base), and formulate some counter-proposals, i.e.

    – Tax cuts for lower/middle income earners are kept/similar to proposed Nat package.
    – Reintroduce the 5th threshold (old 39%/38% rate axed by National into 2010)
    – Essentially the message for middle income-voters is that Labour can deliver the same tax cut, but also increase social spending for underfunded areas, i.e. police, education etc.

    Wait for a few weeks after the 2017 budget for media coverage to clear, and then announce a shadow budget, with large contingencies, float ideas, and drip feed non-specific announcements, until campaign proper, and announce final costed plan 10 days out from the election.

  18. Observer (Tokoroa) 18

    .
    . To One Track

    . The wealth of the commoners.

    You see, poor chap that if Greedy Trolls aren’t gathering all the profits for themselves, putting it in hidden undisclosed places, as well as shipping lots overseas to their greedy friends, year two will pay for itsself.

    It sounds to me that you have been unable to understand that wealth goes to relatively few people with excessive cupidity for money and assets.

    If you had stayed at school until you were 7yrs old, you would have understood that babies need housing. Parents need jobs and living wages. They simply cannot afford to have the wealthy take all the resources and money out of the community.

    The resources have gone to wealthy people here and overseas. Which is why Auckland is the cruelest place in the world. Highest Housing costs; highest rentals; lowest relative wages.

  19. NZJester 19

    We could not afford the tax cuts they originally gave the rich when they first became the government, but that did not stop them borrowing us into debt to give them those tax cut.
    They will find the money somewhere for them and I’m betting it will be by flogging something off if they get back into power again. They have been systematically borrowing this country into debt and getting our assets ready to flog off. The making us a tax haven is just the icing on the cake for their rich backers.
    If you could trace where a lot of those anonymous donations to the National Party come from, I doubt much of it comes from New Zealand, as few people here could afford to fund them in the amounts they regularly receive (Makes air quotes gesture and winks) “anonymously”.

  20. Ben 20

    The merits of tax cuts aside, if you read the post slowly you will comprehend that BE stated no tax cuts in 2016 and 2017, and Key stated there was room for tax cuts after 2017.

  21. Ben 21

    The merits of tax cuts aside, if you read the post slowly you will comprehend that BE stated no tax cuts in 2016 & 2017, and Key stated there was room for tax cuts after 2017.

  22. Daveosaurus 22

    I still haven’t seen the ‘north of $50’ the lying fuckers promised me back when. Right before they put my taxes up.

  23. Chuck 23

    Oh my…objective achieved by National. Left in total disarray over possible tax cut for 2017!!

    Like moths to the light.

  24. Jack Ramaka 24

    The tax cuts are purely a ploy to get re-elected whether we can afford them or not.

    • whateva next? 24.1

      just like Thatcher (Rust in Peace) did, trouble is it worked…took everything else, and threw some coins at us…until….the poll tax, I am waiting for the tipping point here, what will it be?

    • ropata 24.2

      yep another bribe to keep their constituency on side and to quell any stray pangs of conscience

  25. I don’t disagree that tax should remain where it is in order for the government to be robust, but the trouble is telling people that they are financing the state when they don’t see where their money is going…

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