As our country emerges from a long period of enforced lock down and confronts the even bigger issue of how to repair the damage done to our economy at a time when our borders might be closed for an extended period, you’d want to think that those who can influence change are burning the midnight oil developing smart practical strategies to get us back on our feet.
But is that actually happening?
Not that you’d notice. Labours solution seems to be to continue to pursue discredited ideology while randomly throwing billions of borrowed dollars at things in the hope that some of it might stick. National have opted to throw out 12 months of carefully developed policy in favour of a change of leader and faux outrage. And New Zealand First are …. well actually who cares what New Zealand First are doing because they’re pretty much irrelevant given the poll numbers. Which leaves just the Greens.
And what innovative solutions are the greatest minds within the Green Party proposing at a time when many parts of the economy are on their knees and we need our entrepreneurs and risk takers to step up more than ever? You guessed it – more tax with an increase in welfare payments.
Start your property search
Seriously, you couldn’t make this stuff up.
The Greens proposal is to fix the economy by reforming the tax system and doling out cash to potential Green voters. This would include paying a guaranteed minimum wage of $325 per week to everyone not in full employment (including students), increased payments to single parents, a universal benefit for each child, and plans to turn ACC into an agency for universal sick leave. The Greens estimate that this would all cost $6.6 billion in year one and around $12 billion per year from 2023 – figures which I suspect are seriously underestimated.
And how would this be paid for?
By a wealth tax of course! Those of you with assets of more than $1 million (including a house) would pay a levy of 1 per cent per year on your equity (which means an additional tax bill of at least $10,000 per year, every year). In addition to this there would also be two new tax brackets just in case you hadn’t been gouged enough in the first assault.
This sort of money-for-free policy might play well to the young and the self-declared ‘woke’, but it’s the same tired old nonsense that damages growth and innovation and punishes the very people who already pay most of the tax.
Consider this:
We live in a nation where almost 50 per cent of all personal tax is already paid by just 11 per cent of taxpayers (those earning over $90,000) and hitting these people even harder is just regressive and fiscally insane.
The Greens claim that this policy would only hit 6 per cent of taxpayers. Apart from the fact that justifying tax by claiming that only a few will be hurt is morally outrageous, it’s also untrue. Median house values will push many middle New Zealand Kiwis into this new tax grab bracket – and those that aren’t in it now will move there, over time, as house prices and equity increase.
Neither increasing tax, nor increasing benefits, constitute a reform of the tax system. True reform will come about as a result of a fundamental review of the philosophy behind taxation and an entirely different framework by which to fund our nations needs. That’s a far cry from the populist tinkering being proposed here.
Ignore the name and look at what this tax actually proposes to do. It’s a tax on wealth derived from specified assets. There’s another name for that – it’s called a Capital Gains Tax. Someone may wish to point this inconvenient fact out to the Labour Party, which promised never to introduce such a thing during the term of leadership of their current leader.
Incidentally, there is a legitimate debate to be had around the idea of a Universal Wage as we confront the implications of Artificial Intelligence and a society which may have significantly more free time in the future. But that transition will take at least twenty five years and will require structural social change and careful planning.
Using it as an excuse for a tax grab in 2020 is morally reprehensible.
