Guest Post: Roger’s Policy Recommendations

Following on from the earlier guest post, these are the policy recommendations for New Zealand’s situation from Sir Roger Douglas:

  • A tax-free income of $52,000 for single taxpayers or $65,000 for one-income families (cost $15 billion)
  • A tax of 24 cents in the dollar on income above $52,000. (cost $5 billion)
  • A corporate tax rate of 20 cents in the dollar. (cost $ 4- 41/2 billion)
  • Yearly savings of $18,200 per year on incomes above $52,000, slightly less for those on incomes below $52,000 (Super $6,240, Health and Risk $11,960).
  • Savings paid for by personal tax reductions 50% (9,100), employer 35.7% (6,500)(In lieu of lower company taxes, no super or ACC contributions) individual 14.3% (2,600). (In lieu of ACC and kiwi saver contributions)
  • Savings and contributions indexed to an appropriate index.
  • A guaranteed minimum income for low-income families (replacing working for families).
  • Healthcare – Savings
  • $8,660 each year (inflation adjusted to go into individual’s Health Fund.
  • $12,480 each year to go into one-income families’ Health Fund. NZ wide savings of $15 billion a year)
  • Healthcare – Expenditure – A chronically ill fund to be established with contributions from savers and government.
  • – A catastrophic insurance policy to be taken out each year by every New Zealander for events costing $20,000 or more.
  • Healthcare – A government underwrite.
  • Healthcare during retirement – objective to retire with a fund of at least $80,000 (real) after 25 years, $150,000 after 40 years of contributions. Any balance at death goes to surviving spouse or estate.
  • Superannuation
  •      $6,240 savings per year (indexed to wages).
  •      Savings (earning a real 4%) likely to have a fund size of $750,000 after tax on retirement, given 40-50 years of employment.
  • NZ wide savings of $10.2 billion a year
  • Risk Cover (unemployment, sickness and accident compensation)
  •      $3,300 savings a year.
  •      A catastrophic insurance policy to be taken out each year.
  •      A government underwrite.
  •      No variance in rate of payout if out of work (e.g. ACC same as sickness).
  •      Any balance in account on retirement goes into individual’s Health Account.
  • Education – an education tax credit for every child whose family wants it.
  • Housing and Infrastructure
  •      Use 10% of gross yearly savings equal to three billion dollars for housing and infrastructure.
  •      Policies to ensure sufficient land is zoned for section development.
  • Out of Work Beneficiaries
  •      Special training for those who need it (compulsory).
  •      Reformed management structure for out of work area.
  • Retirement  
  • Age of retirement to move from 65-70 over 20 years                                                                                              –     
  • Opportunity to retire before 70 if individual is prepared to use own savings to do so.
  • Existing government pension to continue at age 70 as it is today.                                                             
  • Privileges
  • Middle class privileges withdrawn.
  • Corporate welfare privileges withdrawn.                                                                                                                
  • GST rate of tax increased by 2½%.                                             
  • Taxation of Superannuation
  •      No tax on income earned by the fund on investments while individual is working and contributing.     
  •      A 25% tax applies on retirement to the balance held in the fund.

A great prescription for NZ.

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