The much lower abatement rate would make it much more likely that those on a benefit would take a part time job for a few extra dollars, then push up the hours, before they know it they’re full time. It means we no longer have a need to do all sorts of work testing, and we no longer have to screw around moving people from benefit to benefit.

Those who really like family based subsidies could probably modify it slightly, so that you get $7,500 GMI per adult plus $2,500 per wholly dependent child, or some such. That would make everyone happy (and, given the paper was written in 1999, probably the numbers in it would need revision).

I wonder why ACT don’t pick this one up – it would be much easier to explain and much harder to attack than their current policies.

All – 2.0%
Muldoon – 1.6%
Douglas/Caygill – 2.7%
Richardson/Birch/English – 2.6%
Cullen – 1.1%

So this would confirm

Cullen is the worst finance minister at least since the Great Depression

The real issue is how to raise productivity with a broad range of policies, tax being only one. Others surely have to be raising investment in non Fonterra activities, reduce no-skill immigration, increase workforce skill levels and get more export revenue.

Oh, and did I say slashing the bloated 40% of GDP that the Heleban inefficiently redistribute to the workers via the taxation and welfare machine. We also need to get the stupidly priced NZD/interest rates down, perhaps removing the ridiculous tax dodging loop allowed for investment properties known as LAQC.

All high rates, exchanges and house prices do is divert cash to foreign investors that could have been reinvested in NZ.

And NPOG, growth in productivity is correlated to unemployment historically in NZ because we have had such basket case economic models such as Muldoon the conservatives socialist, Douglas the conservatives fiebrand. And now we have Clark the middle class liberal socialists answer to Muldoon.

All – 2.0%
Muldoon – 1.6%
Douglas/Caygill – 2.7%
Richardson/Birch/English – 2.6%
Cullen – 1.1%
Labour productivity is simply measuring the ratio of output to labour input. In the last March year output growth was 1.4% and labour input growth 0.9% so the difference is the productivity growth of 0.5%.

As one can see the record under Dr Cullen for the last seven years is a miniscule 1.1%. Half the average since 1978, and even less than the final years of Muldoon
”

In practice the Labour productivity is a meaningless figure, the concept is not meaningless but the way it is measured is.

If you look at the underlying figures you quickly see that periods of high labour productivity growth are the same periods as that rising unemployment, while periods of low labour productivity growth are periods of declining unemployment. Hence the highest labour productivity growth under National was in the disastrous years of 1990 and 1991 with record unemployment. Now it might be possible to design a measure that removes employment level from the distorting influence that it has and gives a true indication of how innovation and improved labour practices are increasing output. But the fact is that such a measure does not exist.

So it appears that National has two secret plans
1. The secret plan to reduce Australian wages
2. The secret plan to raise labour productivity to 1990/91 levels (ie 10% plus unemployment)

When I was on the dole briefly in 2000, I remember paying $110 a week for a tiny room in a long-stay hotel in Hamilton. My benefit was around $170. The rent was exempt from GST, so GST was only applicable to the $60 I had spend each week. Hence, I argue as the poor spend a larger proportion of their income or benefit on either rent or mortgage payments, both of which are exempt from GST, it is not true GST generally hits the poorest the hardest.

The example given was in response to the claim by SPC that GST is the only tax that cannot be avoided.

High tax structures encourage taxpayers to break the law.

Reasonable,equitable tax structures by a non-profligate Government will reduce the incidence of this dishonesty.

Oh, I found out the other day what the knowledge wave means. The knowledge wave is when you stand at the airport and wave to all the people with knowledge who are leaving the country.

NZ GOVT NAT 2008 FLAT TAX 15%

You get some repairs made to your house. The builder does it for cash. No GST paid by you, none accounted for by the builder. A cheaper job for you, no paperwork or tax for him.

A panelbeater repairs your vehicle. Cash job, no tax involved.

Happens all the time. The end user, you, avoids paying GST.

Granted, the poorer off in society will inevitably be spending a larger portion of their income on the essentials like food.

Meanwhile the better off are inevitably going to have surplus money after they’ve bought the essentials that they then have discretion to save or spend. But … if they save it then that money will all but certainly be spent eventually (maybe after its been inherited!). I think it’d be very very unusual for money to be saved for ever and ever and never spent – that level of scrooginess is very rare. And if it’s spent, well, have you ever thought how much GST the Government collects on every $200,000 Mercedes?

Realistically, most of the “rich pricks” (TM) that you’re worried about are saving money thinking to themselves “I’m going to buy a boat” or “I’m going to get that BMW” … and the Government collects GST on it all.

GST on imports is not regressive, GST on food and power is regressive. This is why most countries exempt food from GST/VAT.

Given the way power prices are going and the need to move to carbon charging (of only to manage the use of a depleting and polluting resource) we should add that to food as a GST exemption and replace the money with carbon charging and a lower budget surplus.

Then to aid productivity, end subsidy of rental owning (except for new home building for rental) and bring in capital gains taxes which finance a lower tax on interest income (say a maximum of 33% and after deducting the CPI rate off the interest income rate before assessing the tax liability). The current system encourages people to speculate in housing or speculate through investment funds – think an industry sector interest being subsidised beyond need after Kiwi Saver, this when we have this huge amount of international money financing our overvalued housing (which has to be refinanced regularly at high rates). We have to face up to saving to meet this borrowing or otherwise continue with a high OCR and dollar which is undermining our productivity (high borrowing costs to business and an uncompetitive trading position deter people from investment opportunities).

Companies producing such goods lost orders to the point that they were in danger of failing.

The expected job losses in small towns such as Otorohanga, which had such manufacturers, were untenable.

The tax was dumped.

Consumption taxes are well known to be regressive. The worse off in society who by necessity spend all of their money on goods and services subject to tax end up paying a greater porportion of their income in tax than the better off who are in a position to save or invest. Surely you guys know that – I believe Virtualmark does as he refers to “healthy financial incentives”.

As for the massive amount brought into the coffers by consumption tax that is rather my point – it would be more transparent if all tax was income tax (flat rated or otherwise).

Stop taxing workers!