Cactus Kate highlights the problem pay the bill has as MoF.
“Bill English has absolutely no right to talk about Trusts with any authority ever again. He set the Endeavour Trust up with the purpose of using it as a vehicle for not only home ownership but rorting the taxpayer of their subsidy on housing. This is beyond what English says he is now targetting – the age old fair practice of using companies or trust to lower the top personal tax rate from the high thirties to the low thirties. Still too bloody high.”
The last bit confirms that Kate hasn’t joined the enlightened side of politics and shows that pay the bill is being written off as a credible figure by the right as well as the left.
I do however want to warn against the idea that government can just hike up the tax rate in order to cover the budget. It doesn’t work.
When I was first an MP the Nats left us a legacy of a 66% top tax rate. Anyone with brains could work out that money invested with an accountant or tax lawyer resulted in a better return than investing it in productive activity.
And when GST was introduced and all rates dropped – including the top rate coming down to 33% – income tax revenue increased. Partly because a pile of exemptions and legal rorts were removed, partly because some people who had never had a relationship with the tax system became registered for GST and therefore paid income tax as well and partly because it was better to get on with earning money and cop the tax rather than spending valuable time energy and money trying to avoid it.