Getting The Prickles Out For New Taxes

Let me preface tomorrow's posts by introducing you to some ideology of mine.

All tax is evil. All tax is theft. And I will never be a part of introducing new taxes because the taxes you have right now are evil and thieving enough. I believe in under promising and over delivering in terms of policy but given my background I will never be a part of any political movement or coalition that taxes you more.

I am not one of those namby pamby faux right wing females who say they believe in lower taxes but then change their mind with "but we need to perhaps raise taxes just a wee bit to give more money to (insert their latest cause such as education, health or welfare)".

In terms of political ideology I am not that interested in arguing about "maorification" or Maori radicals because it is an argument that has no ending but constant trades of "racist" every time dialogue commences. I don't care if we have to wait a few more minutes at meetings while Maori say a prayer or hum a song. Or if Maori want a representative at a meeting at the Supercity to nod off every time Len Brown speaks so they feel important in the process of governance. Or if there is an "h" in Wanganui, because I will keep spelling it as I damn well please.

I am far more interested in arguing taxation and revenue policies. In other words, limiting the amount of money available to fund election time bribes to Maori fringe parties, welfare beneficiaries and special interest guilt-trip sectors of society that Labour are now directly targeting with their latest envy politics.

In other words I don't want to try and stop the water that comes through the tap. I want to turn the tap to a very low flow so it all becomes irrelevant.

I left New Zealand in 2003 with two goals. First naturally as any twenty-something does on an OE, to line my own pockets working in the lowest tax jurisdictions possible and second, to bring lower taxes and reform back to New Zealand.

I was blessed having spent four years in New Zealand learning all about how taxes are applied under the tutelage of some of the best taxation Partners and with it most fabulously aggressive clients in the country at PricewaterhouseCoopers. I hated the often dull as dishwater work environment but it was excellent for me. It was good because I met clients who all believed the best rate of tax on their return was zero. I left the country disillusioned at having to tell clients the bad news that their effective tax rate was for example 12% and wished to see how the other half lived. For eight years now I have had an equally fabulous education in how taxes and policy is applied in pure tax havens and low-tax offshore jurisdictions.

I live in a jurisdiction now, Hong Kong that has no capital gains tax, no sales tax or GST, a top 15% flat rate of personal tax, a 16.5% companies rate of tax, a small transactional stamp duty on stock and property transactions and no resident withholding tax on either interest or dividends. Since arriving here I have also received a tax cut almost every year.

Labour will not use Hong Kong or Singapore as examples of taxation systems. If they did, they would be embarrassed.

This is as close to a perfect tax system I can find in the first world. We don't grow anything here. We don't milk cows. GDP is dominated by service industries. Property prices are astronomical and people get rich buying and selling property to each other in cycles yet there is no capital gains tax. I read Labour's capital gains and tax policies that have been leaked and I wish to puke into a large bucket. I read National's opposition to capital gains tax and it gives me some hope even though their arguments are all over the pitch. ACT seems to be dithering around the edges, but any capital gains tax would have to be implemented with large cuts in personal and company rates to offset it. ACT's 2008 tax policy for example is for lower flatter taxes.

Politicians are like alcoholics left overnight in a brewery when they see new taxes. Introduce a new one and it is very hard to get rid of it. They dither around seeing advantage in revenue raising for themselves to buy votes. GST for example started at 10% when introduced in 1986 and now it is 15%. Adjustments to PAYE and other taxes aside are irrelevant because they tinker at the margins and are very easy to adjust up. National failed at capturing hearts and minds in their recent GST hike because their tax cuts were not large enough. Everyone saw it as an opportune time to hike prices, some more than the GST effect.

The only solution to their tax addiction is to just say "no" at the outset. No new taxes. Politicians cannot be trusted not to raise taxes. And yes that includes Sir Roger Douglas who has a manic ideological weakness at the knees as a career politician in terms of taxation. There isn't a known tax that he hasn't at one time or other advocated and there are quite a few unknown taxes I am sure in his head right now waiting to be divulged even at the ripe old age of 73 for one last spin around the Beehive.

Sir Roger slammed National for increasing GST to 15% yet forgetting he was the very enabler who brought the damn tax in.

ACT New Zealand Finance Spokesman Sir Roger Douglas today slammed the Government’s decision to increase GST to 15 percent, labelling it as totally unnecessary and calling it a reckless revenue grab.“Rather than cut wasteful spending – of which I identified over $3.1 billion – the Government has instead taken the easy option by increasing GST and adding to the significant cost burden already borne by Kiwi families,” Sir Roger said.

I don't have the same issues with respect to taxation and tomorrow I will lead you hand in hand through Labour's proposed reforms as they become evident with details. Most of it has already been released, so it will not take long for me once the formal release to whip through the main issues in separate posts highlighting just how namby pamby exempting and ideologically unsound Labour's tax policy is.

It is election year and their entire policy is driven to divide by class envy. A bit of "rich bashing" for a Thursday then it will be.