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Thread ID: 63618	2005-11-16 22:07:00	What Price Tax Cuts....again	Terry Porritt (14)	PC World Chat

Post ID	Timestamp	Content	User
404841	2005-11-16 22:07:00	. . . and now for the news headlines . . . . "Finance Minister Michael Cullen appears on a collision course with his own economic advisers after refusing to accept Treasury advice to slash income tax . " "Cullen calls Treasury comments an "ideological burp" . stuff . co . nz/stuff/0,2106,3481232a10,00 . html" target="_blank">www . stuff . co . nz "Rodney Hide claims Treasury report calling for tax cuts could have been taken straight from the ACT party manifesto" National Radio news 7 . 0am today . Ok, lets deal with Rodney first . Of course the Treasury report echoes ACT Party policy, how could it do otherwise? Over many years the Treasury has been actively staffed by those of New Right persuasion, those who haven't held those views have long since gone . " . . The Treasury has had a policy of importing foreign advisers, consultants, and staff, who are out of touch with New Zealand in all sorts of ways . . . . " . eastonbh . ac . nz/article157 . html" target="_blank">www . eastonbh . ac . nz . otago . ac . nz/news/news/1999/21-07-99_press_release . html" target="_blank">www . otago . ac . nz " . . . Other consultants who deviated from the tight new right ideological line of the Treasury soon found themselves also cut out of government consultancies (and they suffered petty harassments too), while the more compliant were favoured with contracts and appointments . Within the Treasury, dissenters were repressed, found their careers blocked, and eventually left . . . . . " . eastonbh . ac . nz/article539 . html" target="_blank">www . eastonbh . ac . nz Then we have ex Treasury Secretary Graham Scott at number 5 on the ACT candidates party list . . act . org . nz/news-article . aspx?id=27139" target="_blank">www . act . org . nz So, of course Cullen is perfectly right to call the report "an ideological burp", and Rodney is just proving that 1=1 . QED . However the situation is much more serious than that, the Treasury is calling for tax cuts in the name of growth . But they don't define AFAIK what they mean by growth . Here's my cynical spin on what is meant by growth: But first ponder this; 1 . Growth cannot mean increasing exports, because the dollar is too high . 2 . Growth cannot mean increase in manufacture of hardware goods for domestic use and consumption, because we have very little manufacturing capability left and nearly all our hardware goods are made in China . So what is left? There are two areas for growth that tax cuts will bring about . Firstly, cuts in personal taxes will bring about an increase in domestic expenditure . This will result in even more Chinese made goods being purchased, so it can be argued that personal tax cuts will go straight into Chinese pockets . Another effect will be yet even more pressure on housing, Alan Bollard will be charmed to say the least, interest rates will be in double digit figures as he tries Canute (or Knut if you want to be precise) fashion to stem the tide of inflation . Secondly, cuts in corporate taxes will bring about a growth in the export of profits for those foreign owned companies . We are also like to see a growth in the remuneration and bonus packages paid to their CEOs . Then of course CEOs of State Owned Enterprises will have to be paid a commensurate increase . Maybe, corporate tax cuts should apply only to wholly New Zealand owned companies? But even more sinister, could be a likely growth in financial manipulation and money shuffling . Remember the 'Wine Box' tax credits scams and money laundering? This is an activity generally confined to one sector of the population, the hoi-polloi is excluded, and is another way of effectively printing money for that sector, as we saw in the 80s . Yet we have guru Gareth Morgan saying as recently as 3 November that it is "Time to Raise Taxes" . infometrics . co . nz/time-to-raise-taxes_1035 . html" target="_blank">nbr . infometrics . co . nz	Terry Porritt (14)
404842	2005-11-16 22:31:00	Well said.	KiwiTT_NZ (233)
404843	2005-11-16 23:14:00	Terry - Rod Oram, a well repected financial commentator, has just been on National Radio making much the same points as you. He had a name for it:- bad growth.	Dally (6292)
404844	2005-11-16 23:54:00	Even I, Terry, am inclined to agree with some of what you say. There is an argument that higher taxation is sustainable in a strong economy - provided it is used for capital infrastructure - schools, hospitals and roads. When the economy eventually tanks, the tax rate should be reduced to provide relief to the general populace. Unfortunately this isn't what happens. In a weak economy, the need for social services - unemployment benefits etc rises and the government can't drop its tax requirements. So doing it now in a moderate way would be sensible. As to growth - the Japanese, the Swiss, the Germans, and the Americans all do just fine with high currencies. So why would the strong $NZ be a barrier to us exporting more? It is really a matter of what we export - and that is changing. We now aim to sell expensive food and technology products (Fonterra, Fisher and Paykel) to wealthy buyers. Long may it continue. :thumbs:	Winston001 (3612)
404845	2005-11-17 00:17:00	maybe NZer's will save the difference. Hahah, that'll be the day.	DangerousDave (697)
404846	2005-11-17 01:38:00	Quite a while ago, I happened to see one of the least notable MPs (I don't know who he was, but it was probably from one of the right fantasy parties) being given his 15 minutes of fame on TV. His "argument" for tax cuts was (and I am not inventing this) that he knew people who were "borrowing money to maintain their standard of living".	Graham L (2)
404847	2005-11-17 02:28:00	. . . As to growth - the Japanese, the Swiss, the Germans, and the Americans all do just fine with high currencies . . . Exactly, Winston . In the days before China took over as the worlds manufacturer this was even more especially true, though they are finding the going pretty tough now . And, people beat a path to those countries doors begging to buy their products, this was especially true of Germany and Switzerland, and is why their currencies were so high during the 1960s and 70s . Indeed Swiss Francs were an international trading currency . They made products like precision machine tools and measuring equipment that other people wanted and would pay a premium for, strangely enough by the Japanese too . The Japanese bought the best Europe could produce so that they could in turn build somewhat cheaper machine tools and measuring equipment, and then capture the western markets in general machine tool equipment and also bearing manufacture . As examples, the Japs bought Rank-Taylor-Hobson roundness measuring machines, the best in the world, in order to check their own lesser Mitutoyo versions . In the same way they bought Leitz 3 co-ordinate measuring machines, again the best in the world, to assist their production of cheap Mitutoyo 3-axis measing machines, and so on . One Japanese ploy was to sell precision rolling element bearings in the US and elsewhere at well below cost until they had captured the market, and driven firms like Barden Bearings to near the wall . They then set up Japanese factories like NTN in the US to make bearings, and prices were then lifted . I'm waiting to see if China will play the same game . No one beats a path to our door to buy logs or sheep meat . Ah, how foolish we were in the 1970s thinking that we could turn New Zealand into the Switzerland of the southern hemisphere :( If there are going to be tax cuts I'd like to see them given to the self employed and to small NZ business's, like Metla :thumbs:	Terry Porritt (14)
404848	2005-11-17 03:02:00	Quite a while ago, I happened to see one of the least notable MPs (I don't know who he was, but it was probably from one of the right fantasy parties) being given his 15 minutes of fame on TV. His "argument" for tax cuts was (and I am not inventing this) that he knew people who were "borrowing money to maintain their standard of living". I must be having a blonde day Graham but I don't get your point. The fundamental issue is that your income is your money - not the governments. So the correct starting point is no income tax at all - like Alaska and Saudi Arabia. From that point we then compromise saying that we like having roads, police,teachers and social welfare safety nets. So we grudgingly give some of our money each week to the government to look after these services. The issue then becomes one of how much tax is enough versus too much. The more money taken from your wages each week, the less you have left to survive on. Lowering tax would give people more money in their hands each week to buy the necessities of life.	Winston001 (3612)
404849	2005-11-17 04:29:00	Can't help thinking that our Terry is of the Luddite persuasion.	Cicero (40)
404850	2005-11-17 04:37:00	Can't help thinking that our Terry is of the Luddite persuasion. What a strange idea :horrified I used to design and build machine tools, not destroy them. :stare:	Terry Porritt (14)
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