Tuesday, July 19, 2011

NEVER MIND THE QUALITY, FEEL THE WIDTH

Absent from all the discussion about Labour's Capital Gain Tax is the reality that there is nothing to suggest that 'New' Labour is any different from 'Old' Labour. Both are committed to spending more than we can afford and neither recognise that 'Old' Labour's legacy was a country living beyond its means and close to becoming the South Pacific's version of Greece.

Sound bites by Cunliffe based on increasingly discredited figures are no substitute for hard analysis. To believe that under Labour NZ will be back in surplus by 2015 and you have to believe in the tooth fairy. Take one example. Labour's figures are predicated on the cost of carbon under the ETS being set at $50 per tonne c/w the current $25 set by National. That presumes additional revenue of $4.8b over 12 years. I guess Labour can rationalise this by saying that they owe the farming community nothing but it totally ignores the effect of the 100% increase on business profit and spending and the consequential reduction in tax revenue.

Coupled with this there is nothing but nothing to suggest that Labour has either the wish nor ability to rein in Government spending. Every utterance from them suggest the opposite.

But in one sense the CGT makes political sense. It is an envy based tax that does not impact on Labour's core constituency ....

Who in Labour's core constituency aspires to earn over $150k per annum?

Who in Labour's core constituency owns farms?

Who in Labour's core constituency owns an investment property?

Who in Labour's core constituency owns shares?

Who in Labour's core constituency owns a 'big' business (their definition, not mine)?

Answer ... not many. So, insofar as Labour's core constituency is concerned this tax will have no impact whatsoever. Someone else is going to have to pay and that makes it a winner.

And the payoff is that you turn GST from a 'clean tax into a dirty one. And the payoff is that lotsa Accountants are suddenly VERY happy. And the payoff is that the Greens are VERY, VERY happy (and they should be picking up 3 percentage points off Labour)




2 comments:

Anonymous said...

Who in Labour's core constituency aspires to earn over $150k per annum?
Sky City patrons,TAB patrons,Lotto buyers


Who in Labour's core constituency owns farms?
Phil Goff


Who in Labour's core constituency owns an investment property?
Helen Clark


Who in Labour's core constituency owns shares?
Tainui

Who in Labour's core constituency owns a 'big' business (their definition, not mine)?
Fletchers

And they will all be better off under a Labour Government.

The Realist said...

The CGT is only the start. Under Socialist ideals, Labour would prefer to tax everyone at 100% of their earnings. A Labour govt could then give back to the taxpayer "each according to their needs" We can see the nascence of this ideal with the working for families initiative.(National retained the initiative rather than to scrap it immediately as a matter of utility)