Monday, January 25, 2010

ZenTiger Greens offer Tax Support

THE GREENS say they will support the government if it wants to introduce a tax on land and a comprehensive capital gains tax. Why is that a news story?

Give them half a chance and they'd be in favour of new sets of taxes on roads, petrol, diesel, fizzy drinks, possum fur, Indonesian sourced furniture, banks, deposit accounts, shares, hydro power, alcohol, non-approved tuck shop food, fatty food, fast food, foreign food, beef, lamb, chicken, fish, pork, plastic bags, new cars, old cars, construction, renovation, soap products, non-hemp clothing, teeth alignment, plastic surgery, religious institutions, non-government charities, catholic schools, non-recycled paper, advertising, business loans, television sets, socks, the SIS, the army, guns, toy guns (including water pistols), any children after the first one, farming, fishing, forestry, mining, the Tiwai Smelter, Invercargill in general, tourists, airports, exports not being shipped by sail boat, shower heads, single flush toilets, incandescent light bulbs, personal grooming products, closed shoes, and quite possibly "one or two minor things we'd like to add at the time the legislation is passed".

Have I missed anything?*

Proving the Greens don't always have a great command of the English language, or indeed, reality, Turei added:

"A land tax is not Green Party policy, but we support an open debate on how a comprehensive package, including a land tax, could help us to access the affordable housing we urgently need."

The problem being that Turei mentions that a "comprehensive" package would not include land owned by Maori, that CGT would exempt the family home, and somehow enable the market to provide more land to poor people by increasing taxes on land. I suspect tax isn't in itself going to solve that particular problem. And stop saying "comprehensive" if you are going to provide exceptions.

"Comprehensive" is used because there is a realisation that if "exceptions" are provided, it creates loopholes. So to ask for a comprehensive tax, and then ask for loopholes, just weakens the moral integrity of the statement.

And to cover all bases, Turei asserts:

"The Greens will not support any package that includes cuts to the top levels of income tax or any increase in GST because these changes would exacerbate the differences between the rich and poor in our society."

This statement isn't quite accurate. I agree that GST increases at this time would hurt the poor. It would also hurt the middle class. Sure, the very rich have a lot of loopholes to exploit, but the middle ground sees up to 76% of the net tax take paid for by the top 10% of earners. It's the middle ground that would be the ones that benefit from the top tax rate sliding down, and it's the middle ground that deserve some tax relief as much as any group.

The obvious action would be to align all of the top rates to one level, which minimizes loopholes, and to provide a tax free threshold which compensates for any GST raise. I'm against a GST raise however. It might be that the top tax rate can be set back to 33% in exchange for a CGT, or even that the 38% tax rate does not kick in until much higher than present - rather than 70K, perhaps 200K?

Although I suspect the government would collect around the same amount of money just by aligning the top tax rate with the trust and company tax rates.

So no GST increase is one area where there may be some similarity in our positions, even if for different reasons. I'm unclear though, from the Green's press release if they will want to hit investors with CGT in exchange for a uniform top tax rate, even if GST was taken off the table. We will not really get any indication until John Key himself decides what tax grab is going to be on the table in the May budget.

And still no discussion on the level of government spending.

*OK, I'm being very argumentative to make my point. The point being that CGT has been Green party policy for some time, and the concept of a Land Tax would not upset them as they think it will mainly affect "the rich". All the other items in my list they want to tax or ban to varying degrees based on their Eco-Tax policy, which is based around the idea that everything that harms the environment needs to be taxed, using tax as the disincentive that will stop environmental damage. For example, the Greens argue NZ's cow population is far too high, they'd like about half or a quarter of the number of cows, presumably enough for dairy and reduce the amount of meat available on the market. They'd quite like to tax it out of existence.

Greens keen to tax the goods, the bads and the uglies

3 comment(s):

KG said...

"And still no discussion on the level of government spending."
And government spending--of course--is the core of the problem.
From Muriel Newman's latest newsletter on this subject:
"Even the Secretary of the Treasury, John Whitehead, has criticised the present level of government spending, estimating that an astonishing 65 percent – some $40 billion – of the government’s $62 billion budget is of a questionable quality."

Ciaron said...

it's the middle ground that deserve some tax relief as much as any group.

I don't think the greens believe in a middle group, you're either downtrodden or a rich prick in their eyes.

Sean said...

"THE GREENS say they will support the government if it wants to introduce a tax on land and a comprehensive capital gains tax."

Hm-mm. Straight from the masters of economic management. And now, can you think of a better reason not to implement them?

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