ACT on Honesty for Taxpayers

July 21st, 2014 at 11:00 am by David Farrar

Jamie Whyte has proposed:

On this policy, regulatory impact statements, cabinet submissions and ministers’ introductory speeches for Bills in parliament will need to state clearly that “but for this proposal, your income tax rate would be X percentage points lower”.

When taxpayers visit the website of any government agency or local council and any programme of that agency, they should have a clear idea of the price of that agency in their taxes or rates.

Government departments and agencies should be required to declare on their home webpage “but for this agency, your income tax rate would be X% lower”.

Similar rules should apply to local governments. They should be required to reveal how much lower rates would be if not for a particular new policy proposal or existing service of the Council.

If a minister, department, agency or local council believes that the programmes it administers do indeed offer value for money to taxpayers, they should be proud to say how they are putting taxes to work in the clearest way taxpayers can understand.

For example, the government should be keen to alert taxpayers that, without Working for Families:

·      the 17.5% income tax rate would be 12.5% OR

·      the 10.5% income tax rate would be 3.5%.

The Minister for Tertiary Education should be keen to remind everyone that, if not for interest-free student loans

·      the 17.5% income tax rate be would 16% OR

·      the 28% company tax would be 25% OR

·      the 33% top income tax rate would be 30%.

That’s a great idea. The public will be able to judge the worth of programmes more effectively, if they know the opportunity cost of the – the reduced taxes they won’t be getting.

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31 Responses to “ACT on Honesty for Taxpayers”

  1. redqueen (582 comments) says:

    You’d have to be reasonably specific here, otherwise this would be subject to significant manipulation by whoever is preparing it. If you said you have to give people an idea on the impact on the income tax rates, the company rate, and GST (or rates, if councils), it might work. Otherwise, you’ll get something like a ‘0.2% reduction in the overall rate of income tax’, compared with significant rate reductions.

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  2. s.russell (1,646 comments) says:

    I have often thought it would be a great idea if every taxpayer were to receive annually an invoice recording exactly how much tax they owe the Government for the year and how much they have paid. “Dear Sir, Thank you for the $18,438 you have paid us in taxes this year….” It would then go on to summarise what the Government has spent it on. The problem with PAYE is that it is largely invisible. Out of sight, out of mind, so people just do not think about what they are paying, or the value of what they are getting in return (sometimes good, sometimes dubious).

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  3. Captain Pugwash (98 comments) says:

    Fantactic idea! If not for universal free education, healthcare, and armed forces and everything else a civilized first world country provides, your would be 33% tax would be 10%

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  4. SPC (5,770 comments) says:

    Some New Zealand figures comparable to this work in the UK would be good.

    http://www.theguardian.com/money/2014/jun/16/british-public-wrong-rich-poor-tax-research

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  5. Pete George (23,680 comments) says:

    The problem with PAYE is that it is largely invisible.

    Yes. Most people have no idea how much PAYE they pay, they have no idea how a progressive tax system works, all they do is see a number on their bank statement if they bother to look.

    And with the reduced necessity to put in a tax return and even if you do it’s done online it’s easy to have no real idea how much of your income is taken by the Government.

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  6. Huevon (223 comments) says:

    A similar idea floated by ACT a few years ago was to get ride of PAYE and make people pay their tax in a one-off amount once a year in cash.

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  7. RightNow (6,995 comments) says:

    “Most people have no idea how much PAYE they pay…”

    FFS, it’s on every payslip. “Most people” should stop bitching about inequality if they don’t even read their payslips. “Most people” get what their hearts’ desire, which is in many cases simply to sit down and watch the telly.

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  8. mikenmild (11,662 comments) says:

    The Ministry of Women’s Affairs could proudly proclaim on its website that without it, government expenditure could drop by 0.007 percent or that income tax could be reduced by about 0.01 percent (sorry, I can’t work out how many thousandths of a percentage point that would mean of the top tax rate).
    Simplistic nonsense.

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  9. SPC (5,770 comments) says:

    One thing about WFF, most families receive more in tax credits – money they get than they would benefit from lower tax rates instead.

    ACT is just re-visiting the 2005 election the Brash’s tax cuts vs WFF choice.

    WFF is what makes families owning a home affordable – take away that and it becomes DINK home ownership or families in a rental (collapsing home ownership rates by families)

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  10. thor42 (971 comments) says:

    This is an excellent idea!

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  11. Fentex (1,014 comments) says:

    It’s a nonsense idea. Elections are when we debate the cost/benefit of policies and then we debate the cost and benefit.

    It serves only one part of an argument to present costs without the rationale for them, and the daily affairs of a civil service is no place to present one sided and partial arguments about their business. It makes no more sense than only presenting the benefits without cost would, and is exactly as politically one eyed.

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  12. Grendel (1,003 comments) says:

    >
    WFF is what makes families owning a home affordable – take away that and it becomes DINK home ownership or families in a rental (collapsing home ownership rates by families)
    >

    really? you got any proof of that? i can tell you from doing hundreds of loans that working for families is not what is allowing people to buy a home. hell if it only works because of the WFF, the lender is not so inclined to say yes, as its a temporary income.

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  13. Grendel (1,003 comments) says:

    So what you are saying fentex (and milkthin) that you dont want any transparency on the high spending rubbish you support.

    since the rationale of all this spending is usually nonsense, like fairness, its not going to be hard to show the comparison. if there really is a benefit to the government spending, then the tradeoff against lower taxes will be worth it.

    you afraid of some light being shed on your high spending policies and pointless government agencies?

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  14. flash2846 (289 comments) says:

    Wow! Cleaver. Too cleaver for the blinkered fools on the left to allow knowledge of this within their constituents. Don’t expect it to get much air time.

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  15. SPC (5,770 comments) says:

    Grendal, without the tax credits to afford the cost of the kids there is not the spare income to pay the mortgage (and child care costs or one income periods etc).

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  16. mikenmild (11,662 comments) says:

    No Grendel. I’m all in favour of more information for taxpayers. Useful information though.

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  17. NK (1,253 comments) says:

    WFF is what makes families owning a home affordable – take away that and it becomes DINK home ownership or families in a rental (collapsing home ownership rates by families).

    What drivel. On that basis, how could families ever afford a home pre-WWF?

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  18. SPC (5,770 comments) says:

    NK, guess you have yet to compare income to house price pre 2005 and now.

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  19. RRM (10,001 comments) says:

    I like his style, but would this actually achieve anything?

    The only people who would pay any attention are politically-minded folk who will never be happy until there is anarchy and a tax rate of 0.00%

    Preaching to the choir won’t convert any heathens.

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  20. spanish_tudor (84 comments) says:

    mikenmild: You’re absolutely right, joke ministries like the MWA shouldn’t have to follow ACT’s proposal at all.

    They should just put a picture of a swine’s trough on the front page of their website, as that’s all they contribute to the NZ taxpayer.

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  21. Fentex (1,014 comments) says:

    So what you are saying fentex (and milkthin) that you dont want any transparency on the high spending rubbish you support.

    I’m all for transparency. I think all government accounts should be available for inspection online at all times in easily comprehended and exported formats. I also think it’s wise to connect those accounts with documentation about the laws, regulations and policies regarding the departments they are for.

    I don’t think it’s appropriate to present costs to the exclusion of discussion of benefits or policies in places where people seek the services of government departments when that is part of a debate we have at elections.

    If one wants to encourage people informing themselves about the matter then a standardised “About This Department” link that leads to a collation of laws, regulations, costs and policies governing a department is sensible – I would expect any online presence of a government department to provide easy access to such.

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  22. MT_Tinman (3,250 comments) says:

    You can tell the non-workers.

    I doubt any taxpayer (not just PAYE payers) does not know and understand just how much income-bloody-tax they pay.

    What they don’t necessarily know/understand is how much is wasted by bureaucracy.

    I think this is a great idea that will go to change that – which is of course why it will never be adopted..

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  23. SPC (5,770 comments) says:

    How will the tax receipts from company tax and GST etc be factored in?

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  24. DJP6-25 (1,389 comments) says:

    I can’t see National doing it, too much like hard work. The first incoming Labour/Green led government would repeal it by lunch time.

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  25. thedavincimode (6,869 comments) says:

    Useful information though.

    I think knowing the opportunity cost of student loans and WFF in straight forward terms is pretty useful information actually milky. The fact that this information might be gleaned from the interweb doesn’t make it “accessible” in the sense of being readily available.

    Everything is at the margin. And at the margin, ditching WFF or charging interest on student loans would reduce the required tax take or alternatively, level of borrowing. In a democracy that involves policy choices, the more information voters have the better. But I appreciate that your political agenda would prefer to not have even that relatively minor level of transparency as it would undermine the political message that increased taxation and splashing money about will magically make us a better society. Which of course is complete crap, but crap that approx. 40% of the population buy into.

    And as for Women’s Affairs – you know what they say: “save the pennies and the pounds will look after themselves!”

    cunners’ whinge about his holiday, and moroney’s comment about cooking classes brings into sharp contrast the difference between socialists and non-socialists over taxation and state spending. cunners isn’t prepared personally to make the type of sacrifice that evil capitalists do routinely; but he is quite happy (“you betcha”) to take more tax off them that accrues by virtue of sacrifices they make. Similarly, moroney is quite happy to tax them to pay for her cooking classes. What sort of an arseholes does that make them? Happy to take money off people for effort they aren’t prepared to put in themselves. A pretty disgusting outlook IMO, but then that is what we expect from them.

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  26. Manolo (14,030 comments) says:

    Working For Families = “Socialism by stealth“, in the now unforgettable words of John Key, Labour Lite leader.

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  27. ross411 (865 comments) says:

    SPC (5,310 comments) says:
    July 21st, 2014 at 11:24 am
    WFF is what makes families owning a home affordable – take away that and it becomes DINK home ownership or families in a rental (collapsing home ownership rates by families)

    The WFF money comes from somewhere – other people! They can’t save as well as they could for a house or to have a family, because they are being penalised so that you may pay for yours. How can it not be legalised theft?

    The modern-day parent is a parasite, if they benefit from WFF. And they’re a parasite if they benefit from paid parental leave. It’s pure benefit to a range of the population, at the expense of the rest. And it’s not an essential one but for which, the parent could not manage. Most people raised children successfully before both WFF and paid parental leave. Apparently not your parents, because you seem to have developed an overbearing sense of entitlement.

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  28. SPC (5,770 comments) says:

    ross411, don’t presume things about those who support political policies. I don’t get WFF etc.

    In the past families received FB (capitalised for a home deposit) and mortgage tax rebates. And the value of property was much lower to their income.

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  29. mikenmild (11,662 comments) says:

    DVM
    ‘And at the margin, ditching WFF or charging interest on student loans would reduce the required tax take or alternatively, level of borrowing.’
    I don’t really have a problem with this sort of information for such huge items of expenditure, even though it would tend to ask question that probably aren’t ever going to be political either/ors. I do question the usefulness of asking every government agency to place on their website a statement to the effect that “if we didn’t exist you would save 19 cents per year”.

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  30. CharlieBrown (1,027 comments) says:

    I like the idea. Personally I think it would be far more effective for the IRD to mailemail every single tax payer a receipt of what the tax they paid is with a detailed breakdown of where each dollar and cent went. Perhaps they should do both.

    Update: I just noticed s.russell has the same idea.

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  31. CharlieBrown (1,027 comments) says:

    In addition to detailing the amount paid on a particular program, they should separate the operating cost of that program vs any transfer payments that go out. Eg, $500 of your income was paid in tax for WFF, an $200 of your income was paid in tax to administer WFF.

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