Labour’s Numbers

July 15th, 2011 at 1:39 pm by David Farrar

Labour Tax Costs

My column in the NZ Herald focuses on the numbers in ’s policies. They stuck up masses of data on their site, but the one document they did not stick up was the one above, which shows that it will take seven years for Labour’s package to be fiscally neutral. They’d have to win a third term for it to start to bring in more income than they forego. And they also project $300m a year less avoidance by waving a wand. In reality an 11c difference between the top personal rate and the company rate will lead to much greater levels of avoidance.

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16 Responses to “Labour’s Numbers”

  1. DJP6-25 (1,388 comments) says:

    That might just cause it to sink without trace then.

    cheers

    David Prosser

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  2. Pete George (23,602 comments) says:

    Ok, I guessed somewhere around there when musing along similar lines. And the risks involved of borrowing even more to pay for their tax cuts than what they criticisd National for over that sort of term.

    Something “LABOUR’S FAIRER TAX SYSTEM EXPLAINED…” doesn’t explain

    And their special new tax website is mostly about anti asset sales. Weird.

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  3. PaulL (5,987 comments) says:

    Well, IS is already running with that line. That there is a clear choice:
    – National, balancing the budget by selling the family silver and making cuts that will further depress economic growth
    – Labour, balancing the budget by taxing people who are currently slipping through loopholes in the system, and by the way 98% of people won’t be impacted anyway

    National need to get ahead of this with real facts, and very quickly. Because if they can keep it to those two sound bites above, Labour are back in the game.

    If their numbers are shonky, they’re not balancing the budget at all, and in fact the average Joe will be impacted when he loses his job because the business he works in is no longer profitable, then suddenly it’s not a vote winner. It’ll be yet another Goff screwup. National need to turn it into that, and DPF’s stuff above is the first step in that.

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  4. scrubone (3,099 comments) says:

    – Labour, balancing the budget by taxing people who are currently slipping through loopholes in the system, and by the way 98% of people won’t be impacted anyway

    First problem: National aren’t planning on balancing the books.

    Second problem is that Labour’s plan involves cutting by half the tax people pay right now on these “evil” activities of creating capital gains.

    It’s amusing until you realise that there is actually a fighting chance that this could be implemented. You’d think the’d be more responsible.

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  5. berend (1,711 comments) says:

    It doesn’t really matter what Labour does. National is bankrupting the country right now. Borrowing $380 million a week. Don’t worry about Labour.

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  6. nadir (98 comments) says:

    Why vote for Labour?

    why not just employ the “Expert Panel” to run things and forget the politicians?

    Berend – u sound like a Tea Partier. At the max, NZ debt to GDP will cap out at just under 30%. That doesn’t some a bad result given the scale of the financial crisis we have just been through. As long as the gummint has some discipline in the next growth cycle, debt to gdp will get back down closer to nil.

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  7. davidp (3,581 comments) says:

    So Labour plan to borrow money to fun a new tax? That’s probably a first in human history.

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  8. Nick K (1,244 comments) says:

    Fully implemented it might raise $25b. But Labour has said some of that, 50% I think, is used to pay for the removal of GST on fruit and veges and the tax free threshold. And people earning over $150k will structure their affairs so as not to pay too much. So by 2025 (ish) the net revenue is likely to be a lot less than the current deficit.

    Doesn’t leave much to “pay off debt” does it?

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  9. Pauleastbay (5,035 comments) says:

    Loving the way all todays news bulitins have ” Phil Goff’s Labour government will………………”

    What planet are these people on, Phillip will never have a labour government ever never ever…. ad infinitim

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  10. dime (9,980 comments) says:

    theres no way it would take 7 years.. cause they would change the policy once elected.

    “the books are worse than we thought, heres our mini-budget. we are gonna tax the fuck out of dime! cause 39 cents isnt enough punishment!”

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  11. reid (16,523 comments) says:

    Someone in the media needs to paint these numbers into a simple attractive chart that everyone gets instantly and put it in the Sat or Sun edition.

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  12. James (1,338 comments) says:

    All a tax does is remove money from the productive private sector and transfer it, after devaluing via churn,to the wasteful State sector when then proceeds to spend it on things it believes are better for you to have than what you would have originally spent that money on yourself.

    Less tax,less Government….simple and unavoidably obvious.

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  13. krazykiwi (9,186 comments) says:

    @berend 3:22. DPF seems to have a fixation with the theoretical impact of Labour/Greens/Mana policy, while not being too interested in the $NZ20b we’re borrowing each year. I guess the sphincter-popping interest+principle repayments are price our children and grandchildren will have to pay for a not-rocking-the-boat-so-please-reelect-me strategy. His blog, his rules I guess.

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  14. bchapman (649 comments) says:

    I’d be more worried about the current $16b deficit rather than speculating on hypotheticals.

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  15. niggly (830 comments) says:

    Sheesh Labour, eh, fancy not publishing that “table showing what impact on the deficit (and hence debt) Labour’s tax package would have each year”, eh!

    Also, despite Labour’s “good” publicity, resonnance with its followers and Goof & co trying to stay “on-message”, on this CGT & anti-part asset sales combo, there are the unmistakable tell-tale signs of a train-wreck being hidden away in the background but with parts of the covering sheets are starting to fall off….

    As you say DPF and even the Herald editorial says the same thing this CGT & anti-part sales combo, doesn’t need to be mutually exclusive eg Herald says:

    A similar blind spot blighted Labour’s presentation of its policy. Its polling apparently showed that support for a capital gains tax was strongest when it was contrasted with the National Party’s preference for state asset sales as a means of reducing debt. But, whatever the potential political advantage, it is misguided to suggest the country must opt for either one policy or the other.

    Both would deliver substantial economic benefit. The part-sale of state-owned power companies and suchlike will encourage greater efficiency and transparency and a stronger customer focus. It will also address the present shortage of high-quality investment opportunities, another of the factors that has produced an unhealthy emphasis on property. As such, it should be seen as complementary to, rather than an alternative to, a tax on capital gains.

    Psssst National, wanna fuck Labour over come election time?

    If Labour get some polling traction on this issue, all National has to do is stick with the partial asset sales programme AND introduce some form of CGT! That way Nat’s message is that kiwi’s get both … and investors aren’t penalised by investing in part-SOE’s.

    After all supposedly Labour (and National) want kiwis to invest less in property and more into business etc, eh?

    Not only will National fuck Labour over, but Labour is trapped down the anti-part asset sales track and their train cannot be turned around to better National’s better deal for NZ’ers!

    Now where’s me popcorn? Time to sit back and watch the show :-)

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  16. dog_eat_dog (782 comments) says:

    It’s also missing “Revenue forgone by not selling state assets” because that’s the revenue you ACTUALLY HAVE TO MAKE BACK if you’re going to claim a policy that lets you “avoid selling state assets” is fiscally neutral.

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