Boris keeps on gambling

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”

How the Greens’ wealth tax proposal could be a political lifeline for Winston Peters and his party

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”

Oh, goody – Nash says some tax relief is in the offing but only a few of us will benefit from it

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”

The capital gains tax is scrapped – but revenue raisers are looking for other ways to skin us

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”

Sir Michael is being paid well while he takes his tax report for a spin

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”

Capital gains tax: hear what Peters (as PM) has to say about something NZ First opposes

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”

Gunning for the “rich pricks” through tax changes brings the risk of an electoral recoil

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 brace for higher fuel taxes while the govt paves the way for more cycling

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 taxing task of making a capital idea less toxic to voters

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”

Capital gains: the taxing task of balancing economic and political considerations

 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”