Boris Johnson has done a great service for politicians everywhere by testing the political waters for tax increases. He and his Chancellor of the Exchequer, Rishi Sunak, are ratcheting up Britain’s taxes to pay for care homes. And Covid of course. Pretty much everything it seems.
The new tax is not really that new: a levy on labour incomes (i.e., salaries, wages and self-employment) of 2.5 percentage points, with an increase in dividend taxes of half that. Boris – with flagrant disregard for Econ 101 – claims that business will share this burden. Sorry Boris and Rishi – labour taxes fall on labour.
Meanwhile, the Financial Times gloomily opines that the move will raise the UK’s tax burden to the highest level since 1950 – about the time when Boris’s hero, Winston Churchill, was heading for a second term as PM.
Boris has a reputation for being better on the strategic than the tactical decisions. So, will the tax increase work?
Continue reading “Boris keeps on gambling”
The Green Party’s major new election policy for a wealth tax has, not unexpectedly, had a mixed reception, not least from politicians of other parties.
The policy to tax the wealthy to fund a payment of at least $325 a week for anyone not in full-time work, predictably brought cheers from trade unions and child poverty lobby groups. But it provoked scorn from the other side of the fence, where the idea undermines the core principle of capitalism as the driver of economic growth.
Interestingly, one sample of public opinion on the issue showed 85% against—and only 15% in favour.
But that lopsided result has its upside for the Greens and brings a glow to those within the Green Party who worked up the policy. It could guarantee the Green Party is not overwhelmed by the halo effect at present enveloping Prime Minister Jacinda Ardern, which could result in the kind of election landslide delivering an outright majority in Parliament for Labour.
If it lifted the Green Party’s current ratings of around 6-7% to double-digit levels it would be a major victory. Continue reading “How the Greens’ wealth tax proposal could be a political lifeline for Winston Peters and his party”
After a string of spending decisions over the past two days, the Government today announced some cheering news on the revenue-gathering side of its activities. It is moving to ease financial stress for around 149,000 taxpayers by changing the rules around write-offs for tax debt.
As a consequence, fewer people will have tax bills to pay this year.
But not too many fewer.
According to Treasury figures, we have 3,850,000 taxpayers who generate $36,850 million of revenue. Around 4% of those taxpayers – by the looks of it – will benefit from the Government’s relaxing of the rules.
Revenue Minister Stuart Nash said Inland Revenue’s end-of-year automatic income tax calculation process for individuals is currently underway and is expected to run until early July.
This is the annual wash-up which results in people either having tax to pay or receiving a refund. Continue reading “Oh, goody – Nash says some tax relief is in the offing but only a few of us will benefit from it”
Cabinet, we are told, has signed off on the budget, to be presented next month. This year the focus is to be on “well-being”.
It’s a phrase that captures the style of the Prime Minister Jacinda Ardern. If the budget delivers, it will reinforce public perceptions of Labour’s leadership whose ratings have shot up in the wake of the Christchurch mosque massacre.
But will the budget be “transformative”?
NZ’s economy under Labour over the past six months has shown increasing signs of slowing.
Recent indicators of a weakening economy include rising job-seeker numbers, stalled job growth, a rising cost of living, lower economic growth forecasts by all major banks, weakening business confidence, and the Reserve Bank signalling a cut in interest rates to stimulate economic activity. Continue reading “The capital gains tax is scrapped – but revenue raisers are looking for other ways to skin us”
So how is the debate on a comprehensive capital gains tax going?
Not well, some would say, particularly if you have to pay more than a $1000 a day for a PR snow job.
Questioned in Parliament why the government is paying Sir Michael Cullen more than $1000 a day of taxpayer funds to engage in political debate for four months after the Tax Working Group has been disbanded, including two months after the government will have announced its own position, Finance Minister Grant Robertson explained the contract had been extended “because it’s necessary to respond to all of the misrepresentation and lies about the report”. Continue reading “Sir Michael is being paid well while he takes his tax report for a spin”
Anticipating the release of the Tax Working Group’s report, Point of Order on Tuesday said the question of a capital gains tax being endorsed by the government is whether the concept can be sold to NZ First. Its leader, Winston Peters, in the past has been vocal in his opposition to a broad-based capital gains tax.
Early yesterday, a few hours ahead of the report’s release, the NZ Herald echoed our thinking.
Whatever Sir Michael Cullen recommends in his final Tax Working Group report today may be off the table if Labour can’t get New Zealand First and Winston Peters’ support for it.
Peters has made it clear in the past he is not a fan of a capital gains tax.
Just before the 2017 election, he told TVNZ’s Q&A that a capital gains tax was “off the table.”
“The two factors are – it doesn’t work and the second thing is there is no fairness if you haven’t got capital losses as well.” Continue reading “Capital gains tax: hear what Peters (as PM) has to say about something NZ First opposes”
The highly anticipated Tax Working Group’s final report, to be unveiled on Thursday, is expected to propose a broad-based capital gains tax, possibly along with an inheritance tax. Policy wonks and commentators typically say the devil will be in the detail (particularly the exemptions, if any).
Both the Labour Party and the Green Party have supported a capital gains tax and few doubted – when the Ardern government named Sir Michael Cullen as head of the Tax Working Group – he would lead the charge in favour of extending whatever forms of taxing capital gains (the brightline test) apply at present into a much more broadly based framework.
Cullen has been a staunch believer that the “rich pricks” don’t pay their fair share of tax and he’s an enthusiast for rebalancing the tax structure. Continue reading “Gunning for the “rich pricks” through tax changes brings the risk of an electoral recoil”
Motorists will be bracing themselves for another round of petrol price increases—not only because the government is increasing petrol tax by 3.5c a litre on October 1, but also because international crude prices are rising and the NZ dollar has depreciated around 13% since March.
Prices for West Texas and Brent crude have risen between 35% and 40% since this time last year. At the pump the national fuel price last month for 91 octane was $2.32 a litre, with prices of up to $2.50 in some regions.
Stations in Wellington and many parts of the South Island, and other areas which use the so-called “national price”, are now charging $2.409 a litre for regular petrol, the latest in a series of record highs seen in recent weeks.
Diesel prices, at $1.809, are at the highest level in just over a decade.
Continue reading “Motorists brace for higher fuel taxes while the govt paves the way for more cycling”
The Labour-led Government wants a capital gains tax — why else would it have a Tax Working Group spending months studying how to frame it?
The problem for Finance Minister Grant Robertson is that it could be politically toxic, as David Cunliffe found when he campaigned on it. So he’s now seeking a final recommendation from the TWG which makes taxing capital gains politically acceptable — at least to a majority of voters.
It will take all the political cunning of the old master, Sir Michael Cullen, to come up with the answer Robertson needs. Continue reading “The taxing task of making a capital idea less toxic to voters”
So will Sir Michael Cullen’s Tax Working Group in its interim report due out soon propose the government implements a capital gains tax?
When the TWG was set up most people believed its main purpose was to design a broad-based capital gains tax, not just to capture a new source of revenue but to make the tax system fairer and reduce inequalities.
But a report in Stuff this week speculated the TWG has stopped short of recommending a broad-based capital gains tax. Continue reading “Capital gains: the taxing task of balancing economic and political considerations”