So much for your tax cuts

http://www.nzherald.co.nz/nz-election-2008/news/article.cfm?c_id=1501799&objectid=10536172

one looks forward to the day Mr Key doesn't have to back track on a proposed promise

Good work from Labour, run the coffers dry so your opponents can't promise anything

yup the global recession was a cunning plan perfectly setup to snatch the rug out from under National...

doesn't look as though things are going to perk up anytime soon either.

Shame.

What you gunna do now national voters?

cry in my chardonnay

Its quite possible they will offer increased tax cuts for a segment of the voting public. Maybe at the low end as they are more likely to be the swing voters?

more like as per the article businesses to try and stimualte the economy

I wonder though if our small businesses haven't been neglected for too long by Labour anyway? They do need some attention. I know from personal experience and through others that they are hurting real bad at the moment.

Internationally they are hurting bad.

They cut the tax rate for businesses some time ago didn't they?

Recently yes but locally speaking, this extends back a few years now before the current financial crisis.




Harvey, not sure mate. I can't recall any significant tax breaks.

Yeah they dropped it from 33% to 30%?

Did anyone notice their extra money in this weeks pay? i got my payslip today, i get a whole $10! Wooptee fucking dooo

I didn't even notice.

if I wasn't finishing up next week I'd need to wait until the 25th to see mine.

Also Bob pretty sure they are talking about wage earner tax cuts to stimulate businesses... as everyone spends their extra money.


You might have to spell out the joke Dalai.

I can't see them cutting taxes for the lower income groups which means the money goes straight into the economy

no doubt some flawed trickledown effect thinking here

I'm actually surprised they haven'tpushed the tax cuts as planned and increased infrastructure spending they were going on about previously as whilst they would have to borrow to finance somefo that it would lead to job creation plus more money direct to the economy

It's just... You'd think I might have noticed that...

One wonders where we reside on the Laffer curve?

FYI, this is what the cuts entail

http://www.beehive.govt.nz/release/tax+cuts+all+workers+1+october

I'm not sure when the change to the company tax rate was phased in but I think it was when Kiwisaver started.

Anyway.. they are actually releasing their plans for personal tax cuts tomorrow so it will be interesting to see.

If it's true, and really has been altered to take into account the new economic outlook then well done Mr Key. That would be the first principled, reality-for-the-country-over-politics play I've seen in a while.

Was thinking the same thing actually.

"When the facts change, I change my mind. What do you do, sir?" John Maynard Keynes

I think a lot of people are going to be highly unimpressed with what the tories have to offer tomorrow.

In order to give anything meaningful to those on incomes lower than the average wage you have to spend a lot more money in total to put a dollar in someones pocket - if they do this the cuts will be easily attacked as compounding the PREFU figures. If the cut is more aimed at the top they are pandering to the already well off (the 11% on the 39c rate).

Then of course is the problem of what to cut to pay for them if deficits are not being increased. Do the tories plan on reducing govt contributions to Kiwisaver? Scaling back WFF (which for the target group delivers far more than a tax cut)? Sell off assets? MOre user pays in social service? Cut benefits?

Given the current global situation in NZ we may find that all of a sudden Labours record in govt saving to offset private debt is not so bad after all and that changing the jockey is not a wise thing to do this year.

Be interesting to see how those lower paid start viewing the election as they potentially could be turkeys voting for an early Christmas should they tick a party of the centre right who are not exactly known for being kind to those at the bottom..

You can't do much but laugh really. Micheal Cullen admits that he wouldn't have provided as large a tax cuts going forward if he knew then what he knows now. So it takes 9 years to get a meagre cut all the while he spends like a man possessed. How much productivity growth have we had since Labour came to power, and how have we achieved in their stated goal of moving up the ranks of the OECD. You guessed it SFA.

Much of the commentary from economic types that I have heard seems to be saying that the books are in pretty good shape considering the global situation.

Peter Dunne would have you believe that he is in charge of taxes, not Cullen.

I think this danger of cutting taxes is a little overstated. If we are generating surpluses it implies "fiscal drag" which can be just as bad for the economy.

vote for national anyway? I like Key better than horse face.

Our books are in pretty good shape in global comparisons.
And while we shouldn't be completely appalled at the thought of a deficit (countercyclical deficit funding etc), the rate of change worries me and the ten year deficit forecast is way too long for my comfort. And deficit spending needs to be careful used.

you must be related to the person i saw today in a new holden ute with the custom made sticker across the whole rear windscreen "don't blame me, i didn't vote for the hermaphrodite"

why we let some people have the vote i have no idea....

was that really necessary?

I like Key better - so what, I'm not telling anyone else they have to?

was horse face really necessary? no, it wasn't was it?

tongue in cheek vs you personally attacking me?

I thought Sarah Jessica Parker held the horse face nick-name.

Clark just has bad teeth and Baldrick from Blackadder's haircut. aside from that she's a bit of a milf...

Oh wait... no kids..

Must be a lesbian.

Anyway - back to reality.. tax cuts. Having now seen the books surely it's a good thing that Key has reconsidered them since the situation is worse than expected?

R

I think maybe he's personally related

yes, let's postpone the lolly scramble

one wonders who many people understand the concept of the laffer curve, where you cut tax rates and end up wiht an increase in tax revenue. From memory treasury modelled the optimum tax rate at 19%, but labour decided they didn't like the study so chucked it out.

Then again, the economy is fucked, govt has spent way too much, almost at a situation like where we were in the 80s, its time to bring Roger back to fix the country.... again.

oh so that makes it ok.... sure...

in any case, I'd be happy with a National Government but since I'm shit at articulating my thoughts on politics & feel like shit I'm not going to bother. It's also likely I'll just be told I'm stupid & I don't have the resilience for personal attacks today.

I think Biggie is the only place I know of where the majority seem to be Labour supporters.

meaning most people that I come across daily don't like the government we do have and think it is time for a change.

it's actually a pretty even split sparkymo, with labour slightly ahead on the last poll (although, that may have changed by now. maybe somebody can do another poll).

But one possible reason might be that biggies on average are probably more educated & younger than the general pop...

also, if you don't want to be called idiot don't post like an idiot.

Seems contradictory. If lowering tax rates increases tax revenue, then surely you are supporting increased government spending, as what else would you do with the increased tax revenue?

You saying an outcome with higher revenues, lower taxes and higher wealth is a bad thing?

hey it's not my fault people don't get my humour sometimes... sigh. Some of the stuff I say is just half formulated thoughts that I haven't considered fully & some of it is my own quirky humour. For the record I find other peoples political/ religious/ whatever views really interesting! I'm also sometimes rather useless at articulating my thoughts!

ta

Not what I said at all.

You attacked higher government spending, but supported lowering tax rates, which would according to you increase total government revenue.
What would the government do with that tax?

Assuming this 19% is the optimal rate on the Laffer curve, any number of things Vadhino.

1. Pay back debt at the world bank

3. Upgrade the Huntley power station to IGCC technology.

3. Cut R&D tax rates down to 10%

The possibilities are endless..... an economists wet dream.

1. Agreed, although should a nation be at zero% debt? Minor leveraging may still be useful.
2. That's Govt spending
3. That's a decrease in tax revenue.
It's a valid point from vads - tax revenue needs to have SOMETHING done with it. No point in achieving an optimal tax take if you're not going to do anything with it (e.g. afraid of crowding out etc). Better to sit just shy of the optimum and leave it in the economy.

Mike - I'd love to see this study that suggested the maximum tax take would be achieved at a (presumedly flat) rate of 19%

I was thinking about the laffer curve a little and how it conjures up two very different situations if a government decided to make it to the optimal point...
* Flat tax of 19% in NZ's case - off quick estimatess using treasury numbers if you earn less than approx $38k as an individual a year this means you pay more income tax. This would mean about 1.9 million out of the just over 3 million aged 15+ would be worse off.

* Progressive scale to achieve this - what both main parties are tinkering with. In order to achieve the 19% tax rates above $40 on the current system would have to come down. Assuming they moved for both corporate, trust and individuals all I am seeing is big reduction in tax take as 'tax efficient' behaviours will still be employed to further minimise tax paid. Stage 3 was a while ago so I am a bit hazy on where the revenue increase comes from in the absence of either high immigration or lots of successful start-up businesses (the latter seriouslyg going against reality). As with trickle-down I do know that humans have a habit of irrational behaviour that ruins a lot of seemingly sound economic theory.

National already announcinng they will "review" defence funding.

Translation: Just like 1991, we're going to slash it.

Fuckers.

National will say something like "we won't cut government spending by one dollar."

But they won't increase it in line with inflation either, so that'll amount to an effective 10-15% cut over three years. Defence will be cut like everyone else.

National will rely on Labour's nine years of rebuilding of our countries infrastructure to give them a three year breathing space where they can again neglect our roads, schools and hospitals in favour of tax cuts for the rich.

To keep their crony capitalist mates happy they'll slash the employer contribution to kiwisaver and mortgage tomorrow for a tax cut today.

I can GUARANTEE there will be no increase in benefits or the minimum wage for three years if they are elected.

They'll seek to get "efficiencies" in ACC by letting Australian insurance companies rip you off for increased levies in the name of "competition."

These are the efficiencies that are over and above the ones that PriceWaterhouseCoopers said that ACC already enjoys over the Australian model? Or are the efficiencies of shareholders getting top dividends at the expense of efficiency is injury rehabilitation and compensation?

Which isn't much different to increasing funding by X% and only gaining a tenth of that in increased productivity as Labour have done in some key areas.

R

I believe it is the latter -

"...the efficiencies of (Australian) shareholders getting top dividends at the expense of efficiency is injury rehabilitation and compensation..."

Have to see on that first one - suggestions are they've actually removed the higher-earner tax cuts now that the PREFU was so bad...

And if they do the second - water down Kiwisaver - they will absolutely finally totally say goodbye to my vote. That will fuck me off no end...

BREAKING NEWS
Nat tax cut: $47 a week by 2011... details soon

which include the tax cuts labour have currently implimented

neck and neck to the polling booth

So, how much more are they offering than Labour? Much at all?

Well they were saying this morning to expect around $50 pw for the average wage. I think that is roughly double what Labour has implemented in the long term for the average wage.

Not really breaking news.

Approx $16 more for the average wage earner. More for those with income >$70k as the 39 rate is phased out. Top rate to be 33% above $50k by 2011

Also 2pc min contribution for employees and employers to Kiwisaver, no employer tax credit, R&D tax credit scrapped for business, weekly rebate in 2009 of $10 a week, rising to $15 from April 2010 for those with incomes of between $24,000 and $50,000 who do not receive any form of financial entitlement.

So, $16 a week more than Labour for someone on a average income. Of course, if you are on the minimum wage you can kiss goodbye to any increase in that.

huh? so national is going to sting employers (increased costs, higher taxes)?

I thought they were about cutting taxes?

I would guess that they've taken it down from 4% to 2% as the minimum an employer has to contribute to Kiwisaver.

National has announced three major changes to KiwiSaver which would help pay for its tax cutting programme if it forms the next government.

Party leader John Key unveiled the long awaited tax policy in a speech in Albany, Auckland today, in which he pledged workers on the average wage would be $47 better of by 2011.

But finance spokesman Bill English also announced significant changes to the KiwiSaver scheme, cutting the tax credit to employers, and reducing employees' and employers' minimum contribution to 2 per cent of gross income.

So there is the choice folks - you can gut our future for less than $15-20 per week, or you can vote to protect Kiwisaver.

If anyone wants to know the consequences of letting the National party get it's hands on Kiwisaver, read this article from Brian Gaynor -
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10465138&pnum=0


Kiwisaver is critical to our future as a nation, and the pandering to short term greed encapsulated in Key/English's willingness to attack it is symbolic of the short-termism that is endemic to the National Party and its big business backers.

looks like they just decided your vote!

Tax cuts for the average under National.. all that (Labour's package) and a block of cheese

good thing the price of cheese is on the fall

useful explain? I would love to live in a country that was in the + rather than the -



Of course, but then not every economists is anti government spending and remember depending on how its spent, can minimize crowding out effects and inflationary pressures.



And an influx of the worlds companies performing their R&D on our shores, which may in fact, lead to better employment opportunities and more tax revenue over the long term.



Agree with this but then doing SOMETHING with tax doesn't particularly bother me, provided it is utilized in non inflationary areas that will derive benefit.



Disagree with this, if we can archive various aspects described above, why would we not utilize it? Purposely running the tax rate at less than optimal just for the sake of not having revenue seems quite prudent, you never struck me as that sort. Cullen move over eh?



So would I actually, to be honest I am skeptical its 19% and remember the optimum can vary for each country and is quite difficult to pin point.

Are any of you familiar with the Neo Laffer Curve? Look it up. lolz

Ok - someone correct me if I am wrong!

BUT Labour has not "promised" any tax cuts – but rather implementing a PETROL tax which could raise prices to 9c a litre!

John Key did not realize the “financial strain” on the NZ economy – ok, fail but it is not like he REVOKED them completely and it’s not like he said it AFTER the election (if he was voted in)

Fuck, stop whining!

You’re lucky you’re getting something



S xx

Labour has implemented tax cuts starting this month and they are being phased in over a few years.

Kris linked it above.

Where will National find the billion dollars for the extra jails its parole policy will require?

Will they sell the frigates?

http://www.beehive.govt.nz/release/tax+cuts+all+workers+1+october

Sugalicious Labour isn't promising tax cuts as they are currently implimenting tax cuts

nationals proposed cuts include these that labour has given us

I think only politicans didn't see the next few years as being tough for the economy

meanwhile what will inflation do to the tax cuts? Will we actually be any better off?

National will also slash the extra money provided to MFAT, destroying our chances of future free trade deals.

End result: a poorer, weaker New Zealand

My thoughts exactly.

Que Milton Friedman's Negative Tax Rate!

Hope not.

only the dud ones

If you want to be better off, don't rely on a tax cut. You'll need to get a pay rise.

And there is nothing in National's industrial relations policy - with its first 90 days no rights, rolling back of workers rights to bargain collectively and attacks on work place ACC - that will help you there.

Sure.. But wouldn't that counteract now with this petrol tax being brought in?



S xx

Well that petrol tax is regional, however I hope that a 9 cents a litre increase isn't going to be larger than the average persons $30 a week increase.. Unless they are spending $666 a week on petrol or so.. Which would be kind of hard considering their income.

Maybe they should take the train in that case and get a monthly pass? Luckily the 9 cents tax is going to go towards improving rail infrastructure.

The regional petrol levy is being implemented by the ARC, not central government - and it only going to be .02c a litre targetted exclusively for public transport infrastructure across the Auckland Region. I would rather not pay it, but the money for trains and buses and the like has to come from somewhere.

Just chalk up as yet another legacy of ten years of neglect of infrastructure under National in the 1990's.

I really think this is being overstated given the situation. I mean usually in traditional Keynesian philosophy, when times are tough you lower the interest rate to increase the "marginal efficiency of capital" and/or cut taxes to increase the "propensity to consume". But given the worlds present financial crisis seems to be revolving around a credit crunch, lowering interest rates will only have the effect of reducing burden on those who already have debt, as its not likely it will encourage an increase in lending. Therefore I would have thought a tax cut would be perfectly apt right now.

If there is inflation, I don't think it will be caused by tax cuts.

explain this then

I didn't say that - inflation will rise probably due to the recession... thus the tax cuts may not actually benefit anyone except to offset inflation

Thats what we meant. Well at least I didn't. I wasn't trying to relate both. All I was agreeing with (if that's what bd meant), is that with inflation increases, few years down the track tax cuts (which essentially give us more money) will mean fuck all to us. Therefore making no difference to financial situation of ordinary citizen.

And Fish Boy, my vote will not be based on tax cuts. You've gotta be a fucking moron to choose government on just those grounds.

Sweet bd, we had the same idea.

Well you'll be better off as opposed to no tax cuts, and if your wages go up with inflation (and I hope they do), you'll be even more better offer due to the tax cuts.

Or, that money can be spent on policy which slows down the inflation or stops it all together (although from I've learned, it is not possible to stop inflation all together, not forever anyway).

Recessions usually cause deflation.



If inflation is rising anyway due to say? petrol prices causing cost push inflation, then imagine how worse off you will be with no tax cut?

You need to rely on an increase in wages to match it (I have come to call this an "inflation adjustment" rather than a pay rise) or you are worse off.

snap

To slow down inflation you:

1. increase interest rates
2. sell central bank bills or treasury bonds and take the money handed over for them, out of the economy
3. increase taxes

These are all the worst things we could do right now given the present economic crisis. People need to continue spending.

I'll be happy if my tax cuts take me up to minimum wage level.

But, with current situation, by decreasing interest rates I don't think we will see the increase in spending... Imo. People simply don't have the money for it and banks and other lending outlets are getting tough with lending policies. So where does it leave the economy?