Selfish media campaigns against badly needed tax cuts.
The Labour govt and its media comrades claim tax cuts aimed at reclaiming the $4 billion extra collected (due to inflation and bracket creep) are a bad idea. Because they will increase inflation and because Liz Truss has backed down on a similar idea in the UK. The two arguments are completely fallacious, and here’s why-
First, some history. In 1891, NZ’s top rate of individual income tax and company tax (on profits) was 5%. This was roughly 4% of GDP, and averaged out at around $170 per head in current dollar value. Today the top rate is 39%, around 40% of GDP and we pay overall $28000 tax per head.
Tax as a percentage of GDP 1860-2005 Most of NZ’s existing infrastructure, roads, rail, bridges, dams, etc were built when taxes were around 25% of GDP. (Source-Statistics NZ) Click to enlarge
Taxes overall were relatively low up until 1939, when they almost doubled. Ostensibly for the war effort, but actually to stop NZ defaulting on the debt incurred by Labour’s post depression welfare spending. They never returned to previous levels.
Up until 1958 taxes were paid annually in a lump sum and were relatively stable around 25% of GDP. PAYE was then introduced, which meant the money was taken from a workers pay before he/she saw it, and by 2005, the tax take had risen to 38% of GDP.
Public sector workforce numbers at the end of 2017. In 2022 estimated to have increased to 500,000. Source Workforce Report 2018 (Click to enlarge)
Over recent decades, Labour has gradually make changes to tax and welfare that are difficult for any incoming opposition to reverse. National called Labour’s Working For Families “communism by stealth” when first implemented, but in power, they realized reversing the legislation would cost them too many votes. Instead they increased the payments.
Today, around 500,000 govt workers draw down on taxes for their salary and this number continues to grow. A conservative estimate of annual wages and expenses for this army of public servants sits at around $50 billion.
The steadily expanding public workforce 2000 to 2020. (Source Stats NZ)
Figures released this week reveal the government is spending $NZ140 billion overall to keep the current govt operating and the recipients of their largesse satisfied. Yet on almost every core service, education, police, roading, health, the govt is failing to deliver.
We exacerbate this problem by spending billions on a myriad of govt depts and services that add nothing to our ability to produce goods. Leaving aside the billions wasted on a lemming like preoccupation with the myth of man caused climate change.
The steadily rising cost of government
Today, due to inflation’s impact on tax thresholds, individual wage earners are paying $4 billion more in tax than a few years ago. The National Party’s plan to recover $3 billion of this (with $1.7 billion going to lower and middle income brackets) has been scorned by the Ardern govt. Supported of course by her faithful media comrades. Who receive millions in govt subsidies, and no doubt fear for these subsidies if taxes are cut.
Tax cut opponents claim they will lead to inflation, but where is the difference if the govt or those who earned it spend it? Especially when the govt is spending around $140 billion anyway. $3 billion in morally due tax cuts will have virtually zero inflationary effect.
Inflation is the result of the money supply becoming out of synch with production. Too many people are paid too much for producing too little. A problem massively exacerbated by Ardern’s unnecessary Covid19 shutdowns.
We need more goods delivered to the market, and to simultaneously stop handing out fake money to a legion of bludgers, pencil pushers and work for the dole recipients (for example Race Commissioner or Disinformation Project) who will not produce.
As for the “look at the UK” argument, it is a false equivalence. The issue there is not tax reductions, but markets worried by the unstable state of the govt. Like National in NZ, the UK Conservative party has been fully infiltrated by leftists, and the party could not unite on tax cuts. This instability will be their downfall at the next election. If they even make it that far.
The UK also has the same problem with media. Liz Truss could have stuck to her guns, but faced with the unrelenting negative propaganda from the left wing BBC and the instability within her party, she caved. Luxon will probably cave too.
An excess of misplaced faith in govt has led to this situation. Unless we start shrinking govt very soon, a future Tytler style economic collapse in NZ seems inevitable.
NZ badly needs an articulate and especially inspirational leader who can convince citizens of the dangers of the present path and importantly, is not intimidated by a corrupt MSM. From his garrulous and ineffectual attempts so far, it is painfully obvious that green lefty Christopher Luxon is not that leader.
Perhaps the only way we will ever see such a leader is when they arise from the dystopian ruins. So sad. New Zealand was once such a great little country. (link to blog Adventures in Paradise)
THE REDBAITER on Gab 
What about David Seymour for opposition leader.
LikeLiked by 1 person
I know one must play the hand one is dealt, but I refuse to accept that the leader of the opposition to a progressive liberal death cult which
– locked down our country,
– forced an experimental gene therapy into the bodies of a massive proportion of our population,
– destroyed our economy,
– lit a mental health forest fire which will destroy our next generation, and
– wants to turn those fortunate souls who survive the predations of the abortionist on their journey from womb to life only to be told they can choose their gender and have a butcher turn them into a caricature of their preference
should be a progressive liberal who fully endorses all of the above with the possible exception of destroying the economy and with perhaps marginally lower tax rates.
Surely, we deserve better than that?
LikeLike
Whereas there is little doubt the goofy Seymour would be a better PM than Luxon, he’s still a Trump hating liberal whose ability to read the room is hopeless. He destroyed his rising popularity by throwing in with the establishment against the Mandate Protests, has described “cancel culture” as an expression of free choice, doesn’t care about progressive attempts to change the country’s name to Aotearoa, and now he’s doing fund raisers for Zelensky. He also has a screaming progressive as his press secretary (Jenna Lynch’s partner) ACT would do far better if the replaced Seymour with someone who fully understands the fight.
LikeLike
As the great Kurt Schlichter says, someone who “knows what time it is”. And that ain’t Seymour. Or anybody anywhere near the NZ political scene, sadly.
LikeLike
The politicians who voted to punish the unvaccinated are unfit to serve. Which is basically all of them.
LikeLike
It is no wonder so many find good accountants and pay as little as possible towards keeping Labour/Green leeches living lives of Riley in motels, never working or worrying where their next meal is coming from. Having today visited Porirua Mall and seeing the behaviour of some of these animals, it is sickening to witness how Ardern’s New Zealand has declined. Even disabled car parks are now taken as a right by her preferred people who are young and fit with no handicaps. These are the scum our taxes are supporting. God help those working, paying taxes, and expecting a peaceful existence . . . Ardern will never allow this.
LikeLiked by 1 person
Was prompted to write this after seeing Luxon try to defend his tax cut proposal on Newshub, and listening to him do the same on Radio NZ. Each time he was as weak as water, and waffled on for ever and ever without really making any substantial point.
So now the media have implanted the ridiculous idea that tax cuts are inflationary in the minds of their audience, and will use this to hammer National all the way up to the election. Unless they abandon the cuts, which is probably likely. So wrong!
All Luxon needed to say that money is better being spent on increasing productivity rather than being re-distribuited to non-productive no hopers, which is a the real path to inflation. But he did not say this.
As for the point about the handicapped parks- same thing applies with the increasing prevalence of pre-paid petrol purchases. Never saw these ever in even the recent past. Now they’re everywhere.
The police are only able to keep order in a moral society. Its why every socialist country (Venezuela always a good example) is a crime ridden shit hole. Socialists/ communists have to destroy a country’s moral base to attain power.
LikeLiked by 1 person
Well articulated Red
Sent from my iPhone
>
LikeLiked by 1 person
I was thinking the other day:
Remember when it was the Soviet Union who had old bastards on the verge of death their leader?
Remember when it was the Soviet Union with rampant inflation and depreciating currency?
Remember when it was the Soviet Union that believed in implementing price controls as a means of economic distribution?
Remember when it was the govt. of the Soviet Union that was bloated with a mass of bureaucracy where it was difficult to determine what they actually did all day?
Remember when it was the Soviet Union indoctrinating students with marxist ideology?
Remember when it was the citizens of the Soviet Union with near total dependence on the government?
Remember when it was the Soviet Union that carried an increasingly unmanageable debt burden?
What happened?
LikeLike
V- This is the quote I use as part of my profile on Gab.
“The most puzzling development in politics during the last few decades is the apparent determination of the West to re-create the Soviet Union within its own borders.” – Mikhail Gorbachev
LikeLiked by 1 person