Interesting piece in the Dom front page today about the tax avoidance around trusts – but mostly interesting for what it does not say.
The National government has spent much of the last year cutting “low quality” services like home help for frail elderly because of the supposed fiscal crunch.
Tomorrow they will announce billion dollar plus tax cuts, overwhelmingly benefitting the wealthy few, while the many just tread water in the face of rising GST, rent, power and food costs.
They lamely justify the top end tax cut as either a growth stimulant (which is nonsense – much more stimulus results from good investments or tax cuts at lower income bands)…
…or a way or retaining talent (branding Kiwis as “envious” is rubbish, as not all talented people are wealthy and NZ already has the third lowest taxes in the OECD! Our real need is to lift wages and sustainably grow the economy)….
….or a way of stopping the $300 m tax fiddle arising from the abuse of Trusts. Ironically the way they plan to do that is by giving all top rate earners the same rate as if they too werre fiddling. (Of course, without sin there would be no sinners)….
But here’s the real rub: even that trust tax avoidance is puny compared with the writeoffs around loss attributing companies (LAQCs) – $2.3 billion in 2008 alone. Plus a $500m writeoff around rental property losses. Plus more around the abuse of savings vehicle (portfolio investment entities – PIEs).
Not to mention the wider issue of the income/capital boundary and the incentives created to hock off small companies too soon, taking the tax free proceeds to buy the bach and the BMW rather than to grow the business.
Does this government have the nerve to address these issues, which have spiralled out of control since the election? Or will it just continue to take home help off oldies and special ed services off crippled kids? Will it penny pinch on night classes while boosting private schools?
Will it stop the rorts? Is it capable of governing for the many not the few?
Increasingly, Kiwis are coming around to the view that it cannot, but Labour can and will.