Goff on Q+A
January 31st, 2010 at 2:30 pm by David FarrarSome extracts from an interesting interview:
GUYON You spoke in your speech a lot about tax as well, and again you returned to that equity and fairness argument, and I want to quote from that, you said too many people on good incomes avoid and evade paying taxes. Now I’ve looked through the MP’s Register of Pecuniary Interests, and I see you don’t have a family trust or a trust listed there, so I presume that you personally do and always have paid the top tax rate.
PHIL I’ve the top tax rate, I’ve always paid every dollar in tax that I’ve been required to pay and I’m proud to pay that tax because that’s how we fun our education our health system.
GUYON Is that the case for your caucus, because when you look through that Register of Interests, there are a lot of your own MPs who have trusts, and can structure their finance and their assets so they do not pay the top tax rate, do you include those people in the people who are being unfair by not paying the top tax rate?
PHIL If you have a system that allows people to avoid paying tax, they would avoid paying taxes, what you have to do is get the system right. What I guess offends me is that most people, average working New Zealanders, wage and salary earners they don’t evade, they don’t avoid their tax, they can’t, but when you see the list of the top hundred income earners in this country and half of them are paying less tax as a proportion of their income than the people right at the top, you say there’s something wrong with the system.
GUYON Something wrong, a lot of people would agree with that, but can I return to that, have you asked those MPs, I mean is it fair that they’re not paying the top tax rate, all of them are paid over $140,000 at least yet they’re able to structure their finances in that way. When you gave a speech and said that was unfair had you checked with your own caucus to see whether those people are paying the top tax rate and paying for the roads and hospitals and schools of New Zealand?
PHIL Yeah, I’ve got absolute confidence that every one of my MPs is paying all the tax that they should be paying …
Good to see this question put to Goff. Cactus Kate was the first to raise it – the hypocrisy of railing against wealthy people avoiding the top tax rate, and having a third of your caucus using trusts to minimise their own tax liability.
If you want to reduce tax avoidance in NZ, then the best way to do it is to lower the top tax rate.
If Goff continues to go on about how wealthy people should not avoid the top tax rate, then he should be challenged to ban his caucus members from having family trusts!
GUYON The top 10% of income earners though, they pay 44% of all the tax, is that fair?
PHIL Well they earn probably over 40% of the income, so proportionately yes.
Actually the top 10% of income earners pay 76% of net taxation (taking into account working for families etc). And what people shouold be worried about is not how to tax them even more, but what it will mean if those 10% leave NZ in significant numbers!
GUYON Shane Jones said this week that it was his mission to drive the Maori Party out of parliament. Now how smart is it for the Labour Party under MMP to actually annihilate a potential coalition partner, leaving them only with the Greens and leaving you with almost no chance of forming the next government.
PHIL Well if the electorate will make that decision but Shane was speaking from heart and he was saying this.
GUYON Is he speaking with your authority?
PHIL I’m comfortable with his comments.
GUYON You want the Maori Party out of parliament?
PHIL No no.
Yet Shane Jones does. Goff them tries to have it both ways.
GUYON No no hang on hang on, that’s what he said, sorry Mr Goff, do you want the Maori Party out of parliament?
PHIL Look if there is a question of whether there are seven Maori seats that are Labour Party or Maori Party held I want them all to be Labour Party held.
GUYON So you don’t want to work with the Maori Party potentially?
PHIL No, no, that’s a different question.
GUYON But if you’re trying to extinguish them, there’s no chance at all is there?
PHIL In a democratic competition of course every one of our Labour candidates in the Maori electorates will be seeking to win those seats and I’ll be right behind them, and I’d like 100%. The second question you ask is a slightly different one. Will we work with the Maori Party while they’re in parliament, of course we will, if we think that’s in the interests of the country, as would any other party.
GUYON So let’s get this straight. You want to drive the Maori Party out of parliament, but should they actually remain so you’ll work with them?
Would have been interesting at this point to have asked Goff if he wants Winston back in Parliament, and does he want the Greens there?
GUYON Will you resign on election night should Labour lose as Helen Clark did?
PHIL I don’t have a plan B for election night, and it’s not about losing.
GUYON I think I heard a similar phrase before, but thanks very much for coming and joining us this morning.
A very similar phrase indeed.
To be fair, I don’t think Phil Goff does have a Plan B for election night. He said that Plan B is not about losing. That must mean Plan A is about Labour losing! 
January 31st, 2010 at 2:44 pm
If Jim Bolger and Jenny Shipley had a decent Plan B in the 1990′s Helen’s Labour Government may have been a one term affair. Michelle Boag hit the nail on the head in 2002 when she said if Labour were not dislodged in 2002, they would dig themselves in and be harder to dislodge in 2005 – how right she was.
I suspect Labour’s Plan B in 2011 will be of Helen Clark’s making.
Vote:January 31st, 2010 at 2:50 pm
Either of the main parties must have a single Plan A for an election, to do as well as possible. There is no need to have a backup plan – they all have to wait and see how the seats pan out after the election and work things out from there.
Labour’s plan will be to hang in there through to the election and hope that National stuff up big time, and hope that voters don’t have long memories.
Vote:January 31st, 2010 at 3:00 pm
Guyon wants to watch himself. I doubt he’s had any kind of epiphany, but he’ll be drummed out of the Mainstream Media Progressive club quick and smart if he keeps this up. Its far too much like fair and balanced journalism.
Vote:January 31st, 2010 at 3:02 pm
I’ll just repeat the suggestion that we leave the trust rate where it is, but lower the personal tax rate. If the personal tax rate is below the trust rate, it will encourage people to use their assets more effeciently, instead of sheltering them (inefficiently) to avoid tax. The result should improved productivity and economic growth.
Vote:January 31st, 2010 at 3:05 pm
Not so sure about Bolger/Shipley in the ’90′s…..taking on the firemen was damn stupid,there are some fights just not worth it and that only helped to prove ,if proof was needed how idealogically right wing they were. This is a suspicion that alot of ordinary decent working NZers harbour about National,and which the Left exploit. So alot of folk who dont like social engineering Labour are still scared of National.This is part of what makes Key so popular,he’s a new ,softer, more acceptable face of National,more pragmatic than idealogical.If he can restrain the looney right element in National ,they”ll be able to have a long run.
Vote:January 31st, 2010 at 3:19 pm
That figure of 76% of taxpaid by 10% is very interesting.
So it’s the rich pricks that are carrying the country! Now that’s something that should be more widely bandied about in the MSM ,but unfortunately it doesn’t fit the narrative.
Vote:January 31st, 2010 at 3:23 pm
Guyon is only taking the piss out of Goff because he knows that the invisible man is yesterday’s news.
Vote:Would rather see him getting stuck into Key about why our tax cuts are turning into a fiscally neutral rearrangement.
January 31st, 2010 at 3:35 pm
any idea if the top 10% of earners really take 40% of the income?
Vote:January 31st, 2010 at 3:35 pm
I liked the bit where Far Goff said the Labour caucus represented a cross section of the community and that they are not big income earners (on $140K plus) but worked hard for their (our) money. Whatever.
Speaking of trusts, I am still waiting for my accountant to get back to me on how I can set up a Maori trust and only pay 19.5%. I wonder if that is what Jones, Horomia et al have.
Vote:January 31st, 2010 at 4:49 pm
Seat Warmer Goff’s only answer was “PHIL Yeah, I’ve got absolute confidence that every one of my MPs is paying all the tax that they should be paying …”
He never answered Guyon’s second question there at all other than mention this “average working New Zealander” – I don;t know anyone in NZ who is average however once again he has failed to define just who he means by “good income”
Seat Warmer has this “absolute confidence”, well I have absolute confidence that this apparent top hundred income earners are paying all the tax that they should be paying as well. How do I know? I used to prepare tax returns for a few of them and the general rule of thumb is very simple – be conservative as they will be audited. Tey don’t prepare their own tax returns, professionals do.
Once again to Seat Warmer, when has any of these top 100 earners ever been done by the IRD for avoidance or evasion? Answer – never, given they have final 4 accounting firms prepare their returns. The IRD are over them every year and still – none are done for avoidance or evasion.
Once again also to seat warmer – who does he mean by the “good incomes”.
Vote:January 31st, 2010 at 5:01 pm
PHIL Yeah, I’ve got absolute confidence that every one of my MPs is paying all the tax that they should be paying …
You notice that he didnt answer the question? The tax they SHOULD be paying can mean that they are in fact using trusts and structures to legally minimise tax. That after all is in fact the amount of tax they HAVE to pay. I also pay every cent in tax I am legally obliged to – and yet im about to get hit with a very big sledge hammer because its not enough.
MP’s also get access to Tax Free income in the form of allowances that no other NZers can get.
All animals are equal and all that
Vote:January 31st, 2010 at 5:15 pm
The worm squirmed.
Vote:January 31st, 2010 at 5:21 pm
Nice work but he should’ve hammered the point home with some names.
Vote:January 31st, 2010 at 5:25 pm
Liarbore have to be pretty bereft of new ideas for them to drag this old canard out at this point in the electoral cycle.
It’s a bit like Winston and his race card, only the MSM don’t call Liarbore out when they play theirs.
Vote:January 31st, 2010 at 5:49 pm
both Philin and Hone performed exactly as I expected.
Vote:I must say Fitzsimons caught me out though .. if only she was so decisive towards Labour as Greens Leader as she was today.
Also, If I was silent T and and wanted to stay as Fin ance spokesman, I would be VERY careful around buses.
January 31st, 2010 at 5:49 pm
Wouldn’t it be better to stop the possibilities for tax avoidance rather than lowering the tax rate?
That’s pretty much like saying to stop people from speeding in a50 zone, let’s raise the speed limit to 70
So what is the amount of total tax income is appropriate for the 10% ? Wouldn’t that depend onl how much of the net income do these 10% have? It’s really misleading to just put out this one number. Since these 10% have a disproportionate amount of the net income, even if the top tax rate is lowered, they will still be paying a rather substantial amount.
And where would they go, David? Just out of curiosity , which country would you go to if all the loopholes are closed and you have to pay the top tax rate?
Are tax rates be the one and only motivating factor on where people live? If so, how come they haven’t left yet? And where will they go?
And most of the people leaving to Australia are surely not leaving because of the top tax rate.
Wouldn’t it be more sensible to raise the tax thresholds on levels (something Goff said he would be open to), closing the loopholes for tax avoidance and thereby giving a tx break to everyone in NZ
Vote:January 31st, 2010 at 6:25 pm
This trotted out line about the top 100 actually refers to the top 100 “richest” NZers and a 1/3 of these live overseas so its a rubbish headline. Myers pays in the UK, Fay pays in Switzerland, Gibbs / Watson in the UK and then you can add in the guy in Russia, the others in Switzerland etc. Cactus is correct if you are in the top 100 “income” earners you know the IRD are going to take a close look so you have good beancounters and take it on the chin. Painful to pay but less painful than the audit and headlines. How about an OIA request on how the IRD came about that figure ?
Vote:After Swine (& bird)flu/ Sars/ Dissapearing glaciers/ Millenium Bug you would hope the MSM would get a clue.
January 31st, 2010 at 6:41 pm
Well, certainly not — the top tax rate in Australia is 45%.
Vote:January 31st, 2010 at 6:49 pm
“…you would hope the MSM would get a clue.”
(((blank stare)))
Vote:January 31st, 2010 at 6:57 pm
Keith Ng put some graphs up here: http://publicaddress.net/6414#post6414
If I read the graph right, the top 10% of earners earn 32% of the total income, and pay 42% of the tax.
The bottom 50% of earners earn about the same as the top 3%, but pay only half as much tax. But that’s progressive taxation for you.
[DPF: But that is gross tax, not net tax]
Vote:January 31st, 2010 at 7:42 pm
At what level does the 45% kick in at and what are the various claimable expenses before it kicks in?
Vote:Perhaps you would like to tell us those things as well Repton.
January 31st, 2010 at 8:05 pm
I got to 100 on Bullshit Bingo in 3.26
Vote:January 31st, 2010 at 8:08 pm
Philin should have done himself a favor and stayed in bed, commie tosser.
Vote:January 31st, 2010 at 8:13 pm
“And what people shouold be worried about is not how to tax them even more, but what it will mean if those 10% leave NZ in significant numbers!
And where would they go, David? Just out of curiosity , which country would you go to if all the loopholes are closed and you have to pay the top tax rate?”
Already gone – in Singapore I pay 15.5K on my first 160K and then get hit with 17.5% on every dollar after that…not really interested in paying to educate other peoples kids or pay for their healthcare.
Vote:January 31st, 2010 at 8:29 pm
Yes, Repton, please do enlighten us. Please provide us the different income thresholds for Australia, like Sean has for Singapore.
There’s no doubt in my mind NZ needs income and company rates like Singapore or Hong Kong NOW. It would be a huge boost to wages/salaries, business and the economy. Any deficit blowout would be temporary before the economic boom kicked in and boosted tax revenues. Welfare rolls and spending would drop dramatically as beneficiaries transitioned to employment. There’d be more GST revenue from the increased disposable income and spending as well.
Will such tax cuts happen? Fat chance. Too many Kiwis are brainwashed sheep and vote for leftie, timid or statist politicians. So, like Sean, I voted with my feet. I live and work in Asia and pay much less tax.
Vote:January 31st, 2010 at 8:33 pm
A family trust that owns the family home has no tax advantages because mostly the whanau live in it and so it is not income producing. So simply because Labour MPs have family trusts means nothing. Indeed, Goff could be right – they might not be avoiding income tax.
It is what the trustee ownership is doing that is critical. Maybe some further probing is needed on the Labour MPs interests.
Vote:January 31st, 2010 at 9:30 pm
“If you want to reduce tax avoidance in NZ, then the best way to do it is to lower the top tax rate…”
You’re conflating what TWG actually said. The best way to reduce tax avoidance is to remove exemptions, reduce compliance costs and align different rate to ensure horizontal equity (i.e. People on the same income, regardless of source, pay the same tax). Aligning the rates *up* would be just as effective in reducing avoidance as aligning them down.
It did suggest aligning downwards – and then it looked for ways to recover the revenue. There’s no reason that this revenue recovery exercise will be or should be less progressive than the changes to the income tax. (It probably will be, but this is an entirely arbitary decision, and has nothing to do with the TWG’s rationale for rate alignment.)
“And what people shouold be worried about is not how to tax them even more, but what it will mean if those 10% leave NZ in significant numbers!”
I’ll copy and paste what I wrote four years ago:
‘Australia’s GDP per capita is USD$32,686 (2006). New Zealand’s GDP per capita is USD$24,769 (2005). Why can Kiwis earn more in Australia than in New Zealand? “Lower taxes” is the wrong answer here.’
You can do the same analysis with average wage by qualification/age/job, you’ll get the same result. It’s utterly baseless – and entirely ideological – to equate tax with brain drain.
“Actually the top 10% of income earners pay 76% of net taxation (taking into account working for families etc).”
What does this even mean, David? ‘Net taxation minus wealth redistribution’ is a measure of what, exactly?
You’ve just added a progressive tax curve to a progressive benefit curve, and ended up with a really progressive curve. Yes, we have a progressive tax system. Yes, our benefit system gives more to poor people than to rich people. Yes, our tax and welfare system is used for wealth redistribution.
Under this system, rich people pay, and poor people receive. What else do you expect to happen? That’s the *definition* of wealth distribution.
Vote:January 31st, 2010 at 9:39 pm
” Under this system, rich people pay, and poor people receive. What else do you expect to happen? That’s the *definition* of wealth distribution.”
Also the definition of Communism. “From each according to ability, to each according to need”.
Vote:January 31st, 2010 at 10:37 pm
David I rather suspect the top 10% of New Zealanders are already long gone from our shores and not too many in the top 10% of what is left in New Zealand wouldn’t make the top 30% in the US or UK (myself included).
New Zealanders have half the per capita real income of US citizens. And remember the US figure is substantially reduced by illegal immigration: the true differential for legal US citizens vs New Zealanders is even more.
Vote:January 31st, 2010 at 10:38 pm
I’m sorry. Can you remind me who this Phil Goff character is again?
http://monkeyswithtypewriter.blogspot.com/2010/01/who-is-phil-goff.html
thnx Lee – MWT
Vote:January 31st, 2010 at 10:41 pm
No, money is not the only factor in people’s decisions to leave New Zealand. But is is one of them – of varying importance for different individuals. Having heftier taxes on higher incomes just makes the incentive to cross the ditch greater.
Yes, horizontal equity is the way to go with taxes. Lower rates do reduce the incentive to avoid, but if rearranging your financial affairs so you pay even less is feasible, then most people will do that.
Right now some people pay pay some pretty stiff taxes while others equally well off get off lightly because (for example) they can arrange for their effective income to come to them through gains on property dealing. Ending that enormous (and distorting) gap in the tax system would easily pay for big cuts in the top rates of income tax.
A pity that Mr Goff was not asked how many houses he owns….
Likewise, a rise in GST to 15% would easily pay for a more-than-compensating cut to all levels of income tax, because being broader based it pulls in money from people who don’t pay income tax such as tourists, P-dealers and property speculators. That would leave the great majority of New Zealanders better off.
Vote:January 31st, 2010 at 10:44 pm
“And what people shouold be worried about is not how to tax them even more, but what it will mean if those 10% leave NZ in significant numbers!”
Vote:- not having a land tax is a good start.
- and what’s with the scaremongering about the top 10% leaving NZ in significant numbers? Is there a precedent for this? Maybe living in NZ is not all about money.
February 1st, 2010 at 1:42 am
“The bottom 50% of earners earn about the same as the top 3%”
An absolute disgrace. Shameful.
Too many kids are living in poverty, which could sadly see the prison numbers rise in years to come.
A decent social democratic Labour Party would advocate a cap on incomes (not just a cap on an already excessive $400k for top public servants), and if the greedy rich fat cats (as my history teacher used to say) don’t like it, then they should piss off.
Vote:February 1st, 2010 at 1:57 am
But then you’re left with just history teachers Red, and they aren’t good for much.
Vote:February 1st, 2010 at 2:03 am
” Too many kids are living in poverty, which could sadly see the prison numbers rise in years to come.”
Plenty of people live in much worse poverty all over the globe yet many have societies where crime rates are negligible compared to NZ. In fact many of the most prosperous and ‘socially democratic ‘ countries have high crime rates. Your claim is hollow propaganda.
See-
http://www.nationmaster.com/graph/cri_tot_cri_percap-crime-total-crimes-per-capita
” and if the greedy rich fat cats (as my history teacher used to say) don’t like it, then they should piss off.”
How about they just get sent to gulags? You amoral Communist swine never display the slightest remorse for the hundred million people you have killed in your attempts to implement your unworkable anti-human and always in the end, murderous ideology.
Vote:February 1st, 2010 at 4:20 am
keithng “Aligning the rates *up* would be just as effective in reducing avoidance as aligning them down.”
I know what you’re getting at but you’re wrong. Aligning the rates upward is just going to incentivise *different* types of avoidance even more strongly. Guaranteed. For example: so long as the system remains progressive then those who can will find new ways to split their income around their family and household pets. “tax resident elsewhere” will become more attractive.
But sure, PIEs will die.
And speaking as one who chose the “tax resident elsewhere” scheme nearly a decade ago I can say for sure that lower tax rates *DO* result in less avoidance. The only times I think about tax nowadays is when I’m thinking of returning to NZ. Then I start looking at the various avoidance methods, then I get disheartened and book a holiday instead.
It’s much nicer being a customer of Tourism NZ than of Inland Revenue.
Vote:February 1st, 2010 at 8:59 am
Family trusts are not necessarily for tax avoidance.
For the most part, for a politician, I would suggest it is to safeguard assets from litigation.
Vote:February 1st, 2010 at 9:48 am
I am with Shane Jones, I hope the maori party gets voted out. Ff we had a party called the non-maori party it would be called racist by all the politicians apart from a small minority. John Key should grow some testicles and follow through with his parties policies… get rid of racist maori seats, it would benefit his party shit loads..
Vote:February 1st, 2010 at 9:51 am
Red Sam,
If you cap incomes, be prepared for that 10% to flee the country. You fail to realise that New Zealand is in a competitive market to keep those with job skills here and paying tax, and the same skills that net that 10% their incomes are also in high demand, and those skills give them the ability to leave at any time they want.
Also, as for this figure, it sure seems to change a lot, doesn’t it? I can tell you definitively, DPF, that in 2006, the Deloitte June Tax Alert email newsletter put the figure at 10% of taxpayers paying 51% of income tax. I’ve relied on that as a definitive source, but cannot find an updated Deloitte Tax Alert since then. Sadly, the 2006 June Tax Alert has been removed from their website archives (as has all 2006 material) but I’m sure emailing and asking will get you a copy.
Vote:February 1st, 2010 at 11:58 am
Red Sam,
Thats why we should be creating conditions for the bottom 50% to earn more, and taking from the top 3% isn’t a long term solution and will only make the bottom 50% poorer relatively. You may find that over time the bottom 50% earn closer to the top 10 to 15% but that will be because the top 3% have left and everyone is poorer.
You’r basically saying… “Dare to dream… then we will take it all away from you.
Vote:February 1st, 2010 at 1:12 pm
Ben – Too right. One million people – 20% of New Zealand’s citizens – live outside the country. Only Ireland has a higher percentage. Given that NZ is such a nice place to live, it’s damning.
We need to both generate greater economic opportunities (e.g. I can’t earn as much in NZ for the same job, even in nominal terms) and then take less of it (e.g. my NZ salary would be less than my US one in nominal terms and yet NZ would still be hitting me with its highest tax rate).
We also need to remind that 1 million to vote, and how to vote. Most are essentially economic refugees but don’t think of themselves that way. They actually vote Labour and Green in decent numbers (contrary to the theory that those with the initiative to make a tough move for better opportunities would veer right) because they think they’re keeping NZ green and happy for when they get back. It’s easy to fall for the lies of the left when never exposed to the reality on the ground.
Vote:February 1st, 2010 at 1:26 pm
Isn’t that kind of like saying “if you want to reduce the murder rate in NZ, make it legal”? Both statements are true, but they both miss the point completely.
[DPF: Avoidance is legal. Murder is not. You seem confused about the difference between avoidance and evasion]
Vote:February 1st, 2010 at 6:48 pm
I realise that and perhaps I should have been clearer in what I meant. My point is that when we ask the question of “what is bad about tax evasion/avoidance” the obvious answer to me is “the government gets less revenue”. I would like to see how lowering the top tax rate helps fix that problem.
[DPF: If you reduce the incentive to avoid, then people avoid less. Labour in the 80s showed them when the top tax rate dropped from 66% to 33%]
Vote: