Wednesday, November 3, 2010

ZenTiger Gift Tax

Here's a gift - Speaker Lockwood Smith has backed down over hiding MP Expenses. That should please Goff, because you can't sell the public the policy of envy if you aren't quite sure what there is to be envious about. Sure, we could misoverestimate, but that would be beating about the bush. The Key word is transparency.

And the other gift this week was the announcement of intent to abolish Gift Tax.

It was never a fair and sensible tax, because the workarounds were many. It does however, illustrate a fundamental point about the process of tax collection - how much money it wastes. Apparently, the Government would spend half a million dollars to collect a relatively paltry 1.5 million (or 2.2 million depending on what you read). And the Public would spend up to 70 million in compliance costs to pay (or avoid) the tax.

This demonstrates the point I was trying to make about excluding GST on some food items. The industry could do it, but the compliance costs would ultimately be passed on to other product margins, and we'd simply pay higher prices than necessary for an item.

Another point to make about the tax is the "free threshold" of $27,000. This value was set in 1984 and never adjusted for inflation. That was 26 years ago! When are we going to get legislation that moves the tax thresholds automatically according to inflation?

The abolition of Gift Tax hasn't actually come into effect as yet, but according to Peter, it's a Dunne deal. Keep it up Mr Dunne.

See also: Good Riddance

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