Repeating Labour’s lines

April 1st, 2012 at 9:29 am by David Farrar

writes in the HoS:

The charts reveal the results of the cut in the income tax rate from 39 to 33 cents, which was in theory partly paid for by an increase in the GST rate from 12.5 to 15 per cent. They also reveal a massive reversal in a decade-long trend of improvement in New Zealand’s public debt position.

Our tax-to-GDP ratio has crashed from almost 34 per cent in late 2008 to 29 per cent last year, which means yet more borrowing on the horizon.

This is almost directly taken from David Parker’s talking points, as they make the same mistake.

There were three sets of tax changes. on  1 October 2008 with no spending cuts to compensate, on 1 April 2009 (with some spending cuts to compensate) and a tax package on 1 October 2010 which was meant to be broadly fiscally neutral (income tax down, GST up, no tax benefit from depreciation on investment properties).

Bernard, like David Parker, is using the change in tax from 2008 to cast judgement on the 2010 package. It is absolutely misleading to do. I can understand why David Parker does it, but am disappointed Bernard is repeating his tactics.

The 2008 and 2009 tax cuts saw tax rates reduce for everyone. It is again dishonest to suggest that fall from 34% to 28% (tax as % of GDP) was just related to dropping the top tax rate from 38% to 33% in 2010.

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15 Responses to “Repeating Labour’s lines”

  1. Adolf Fiinkensein (2,707 comments) says:

    It’s because he writes for the New Auck Times, (in the tank for Labour.)

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  2. Pongo (374 comments) says:

    Shame about Hickey, he used to be quite good. Lasts weeks nonsense was a whole article on how the over 55s have grabbed a massive increase in the countries wealth without noticing that segment of the population increased by the same amount. His articles are getting more shrill at every turn which I guess suits the HoS political agenda.
    Today’s editorial is clearly an April fools day joke as well.

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  3. Lazybum (259 comments) says:

    Hickey is a mouthpeice for Labour now.
    I reckon the amount of tax the govt thieves from us decreasing should be celebrated.
    Also, Bernard, we have had the GFC, not a minor downturn.
    I think in 2014 when Labour/Greens take over control of NZ and start raising taxes, the economy will tank fast as they screw the productive sector. Greens hate our export earnings as they are dairy related and we will have to keep minerals in the ground.
    Of course the pill popping tosser Nick Smith has laid the seeds for great increases in carbon related taxes, (remember all taxes start off small). The polluter will pay so they increase their prices to us. Economics 101 when you are a monopoly like energy companies.

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  4. Lloyd (125 comments) says:

    One thing to remember is Bernard is NOT an Economist, despite too many of the public (and the occassional TV talking head) lauding him as though he is one. Much of what he has to say on many topics reflects his reading around the net and writing by folk who are qualified. His skill lies with his ability to condense other people’s words into usefully adaptable soundbites. This assumes his sources are correct, which, in this case, they manifestly are not.

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  5. KH (695 comments) says:

    My own view on debt is we should have none. It loads up costs and gives governments permission to spend in sneaky ways that are difficult for us the end payers to control.
    But what the hell use is quoting as this article does a thing called ‘Tax-to-GDP ratio’ in the comment “Our tax-to-GDP ratio has crashed from almost 34 per cent in late 2008 to 29 per cent last year, which means yet more borrowing on the horizon.”
    If debt dropped 50% and Tax dropped 75% at the same time then the ratio would look even worst — according to Hickey. But actually if both those things happened together we would all have reason to be very happy.

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  6. Camryn (481 comments) says:

    @KH… exactly. A declining tax-to-GDP ratio is awesome, at least assuming spending is slashed at the same or greater rate.

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  7. markm (117 comments) says:

    Hes not called Bernard Thickey for nothing

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  8. burt (7,455 comments) says:

    One day in a world a long way from here the people will mature and grow past Dr Cullen’s jihad on rich pricks.

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  9. flipper (4,342 comments) says:

    Can we please remember that all income tax is stolen from individuals and companies. Therer is no God-given % of income nor any similar % of GDP. The greater the percentage (of either) , the more illusiory the economy; the less sustainable (oopps, apols for that word) employment – and the more tax gathered at a lower %. Agree with Markm …..

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  10. Alan Wilkinson (1,944 comments) says:

    Bernard, like Gareth Morgan, self-promotes shamelessly and continuously. So long as his story is headline-grabbing and preferably stirring up resentment he is happy to ignore any contrary evidence.

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  11. Paulus (2,720 comments) says:

    Alan – Quite right, both up themselves, as the media like that.

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  12. burt (7,455 comments) says:

    Ironically I posted this comment ( June 2011) on the standard when the standard had a guest post having a crack at DPF over tax cuts. I shows just how confused Cullen’s supporters were. What they really supported and what they thought they supported are so far apart that it’s laughable.

    DPF’s post was: Tax cuts
    Guest at the standard was: Farrar’s tax cut chicanery

    In the context of only the rich got tax cuts……
    ————————————————-
    Really; Lets do a scenario.

    In 1999 Joe blogs earns $37,000 and pays $7,215.00 (*1) tax. Using the Reserve bank calculator (*2) $37,000 mid 1999 = $47,186.73 mid 2008 attracts $10,441.38 (*3) tax.

    So their marginal tax rate in 1999 was 19.5%. In 2008 it was 22.1%. The stealth tax increase!

    I wouldn’t call a person earning $50,967.01 (*4) today rich, CV might though. I think it’s Labour hear land earner bracket. And that person under static tax thresholds for 9 years had a 2.6% tax hike if all they got was inflation adjusted wage increases.

    Today that same earner would be paying $8,310.10 in tax. That is 16.3%

    A fall of 5.8% from where Labour was gouging them.

    I understand why you don’t want to talk about fiscal drag but to claim only the rich get tax cuts, that’s just ridiculous.

    ——————————————————
    (*1) From IRD website using oldest tax rules rates available [2001] and Helen told us in 1999 that no one earning under $60,000 would pay a cent more income tax so that must be valid.

    (*2) A basket of goods and services that cost $37,000.00 in quarter 2 of 1999 would have cost $47,186.73 in quarter 2 of 2008
    Total percentage change 27.5%
    Number of years difference 9.00
    Compound average annual rate 2.7%
    Decline in purchasing power 21.6%
    Index value for 1999 quarter 2 is 832.0
    Index value for 2008 quarter 2 is 1061.0
    Statement Last Updated: 25/06/2011 12:18:28 a.m.

    (*3) From IRD website using 1April 2007 31 March 2008.

    (*4) A basket of goods and services that cost $37,000.00 in quarter 2 of 1999 would have cost $50,967.01 in quarter 1 of 2011
    Total percentage change 37.7%
    Number of years difference 11.75
    Compound average annual rate 2.8%
    Decline in purchasing power 27.4%
    Index value for 1999 quarter 2 is 832.0
    Index value for 2011 quarter 1 is 1146.0
    Statement Last Updated: 25/06/2011 12:26:09 a.m.

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  13. DJP6-25 (1,392 comments) says:

    The MSM carrying water for their socialist friends. Nothing unusual here.

    cheers

    David Prosser

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  14. Inky_the_Red (764 comments) says:

    If you want to some interesting graphs on how our tax is structured look here

    http://pundit.co.nz/content/low-tax-for-me-high-tax-for-thee

    I found figure 8.2 very educational

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  15. Inky_the_Red (764 comments) says:

    “Lloyd (4) Says:
    April 1st, 2012 at 10:14 am

    One thing to remember is Bernard is NOT an Economist”

    He could be if he chose to call himself one. To become an Accountant or a Lawyer you have to be registered and obtain certain qualifications. Economists do not, there is no formal training required and anyone is perfectly entitled to call themselves an economist.

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