Red Alert

Taxpayers and electricity users to subsidise the rich…..

Posted by on December 16th, 2011

So John Key has decided hat there will be a loyalty bonus for Kiwis who hold their privatised SoE shares for a period of time.

I’ve been around politics for a while and capital markets for even longer. And I know a subsidy when I see one.

The loyalty bonus will be paid for through a discounting of the market value of the shares. So the people with the wealth to buy shares (not a high percentage) get them cheaper than they would otherwise be worth. So who pays for that. Either power users if it is an internal company arrangement or more likely taxpayers who end up getting less for the shares than they would otherwise be worth.

Bit like Keys tax cuts really. Wealth transfer from most kiwis to the rich. But then that is why Key is in politics.

61 Responses to “Taxpayers and electricity users to subsidise the rich…..”

  1. Waterboy says:

    QTR The people of NZ dont own the food production, we do own the power companys about to be sold.

    Currently we own our own water, lord help us if that gets sold to corporations.

  2. Quoth the Raven says:

    Waterboy – “We” do not own the power companies. The state owns the power companies. We are not the state.

  3. Waterboy says:

    The people of NZ are the state, not corporates, not companys.
    The state controls it on our behalf.

    We get to chose who is in control every three years.

    We do not get to choose who is in control of the food production in NZ every three years.

  4. Quoth the Raven says:

    The people of NZ are the state, not corporates, not companys.

    To simply identify the people with the state is absurd. The state is an organization within society it is not society in and of itself. The state is made of a group of people, but not all people nor does it represent all people and it is not even possible for it to do so. The state is an ideologically legitimated monopoly on the use of force within a given territory. It is an institution of mass coercion. It is not simply the people of a nation and to identify it as such leads to obvious logical absurdities. I’ll allow Murray Rothbard to demonstrate that point:

    With the rise of democracy, the identification of the State with society has been redoubled, until it is common to hear sentiments expressed which violate virtually every tenet of reason and common sense such as, “we are the government.” The useful collective term “we” has enabled an ideological camouflage to be thrown over the reality of political life. If “we are the government,” then anything a government does to an individual is not only just and untyrannical but also “voluntary” on the part of the individual concerned. If the government has incurred a huge public debt which must be paid by taxing one group for the benefit of another, this reality of burden is obscured by saying that “we owe it to ourselves”; if the government conscripts a man, or throws him into jail for dissident opinion, then he is “doing it to himself” and, therefore, nothing untoward has occurred. Under this reasoning, any Jews murdered by the Nazi government were not murdered; instead, they must have “committed suicide,” since they were the government (which was democratically chosen), and, therefore, anything the government did to them was voluntary on their part. One would not think it necessary to belabor this point, and yet the overwhelming bulk of the people hold this fallacy to a greater or lesser degree.

    We must, therefore, emphasize that “we” are not the government; the government is not “us.” The government does not in any accurate sense “represent” the majority of the people.[1] But, even if it did, even if 70 percent of the people decided to murder the remaining 30 percent, this would still be murder and would not be voluntary suicide on the part of the slaughtered minority.[2] No organicist metaphor, no irrelevant bromide that “we are all part of one another,” must be permitted to obscure this basic fact.

    If, then, the State is not “us,” if it is not “the human family” getting together to decide mutual problems, if it is not a lodge meeting or country club, what is it? Briefly, the State is that organization in society which attempts to maintain a monopoly of the use of force and violence in a given territorial area…

  5. Waterboy says:

    QTR – You have real difficulty in making simply easy topics overly complicated.

    NZ is the people, the state works for us based upon who we elect, The people own the assets and the state manages it on our behalf.

    If the state was a seperate entity that owned everything and the people have no say how do you explain having an election?

    And personaly, as someone with left leaning beleifs, National won the election, they said if they were elected they would sell assets(or partially), they won, they got colectively the most seats in the house, they have a mandate to sell assets, i dont like it, but more people in NZ have chosen that that is OK, so i have to live with it. (And yes those who chose not to vote did make a choice and now they have no right to get upset).

    QTR- a piece of advice, you are obviously well read, and have an indepth understanding of politicaly and economic topics, dont waste so much time putting in huge posts, most of us only read the first paragraph. Most of what you say is worth reading, but who has the time?

  6. Bea says:

    @ghostwhowalksnz – if its the sale of small amounts, then Vivienne’s notion is irrelevant.

    Re substituting shares for property – you might be talking about pre-2006 – they changed the legislation around then to “look through” substitutions.

    GST came in in 1986 and is a dead simple tax that is on almost everything, yet they are still tweaking it to close loopholes. As you have noted, when there are exemptions, people find a way to substitute the exemption for a taxable transaction. You might imagine how long they would be tweaking a CGT, particularly if there were as many exemptions as suggested in Labour’s campaign – and given that the valuation of a business is not a concrete scientific thing. Ok if you’re selling it at arm’s length and actual money changes hands, but not at the initial valuation and nor where someone passes it into the hands of an associated person/entity. Having said that, I’m not against the broadest base of tax possible, but the CGT that Labour had in mind would have been a costly minefield for businesses and a fascinating challenge to be beaten for lawyers, accountants and valuers.

    There wouldn’t have just been efforts to make sure the sale of capital items fell into exempt categories, but also efforts to make sure that the sale of items fell into the category of Capital rather than Income, since income tax was to be a lot higher than CGT.

  7. Tracey says:

    “Quick note to Sica and Tracey – buying stocks does not “remove” money from an economy. By that logic, every house that’s bought or dollar that is put into a bank account removes money from the wider economy. That’s not the case.”

    I was referring to the payment of dividends which currently go 100% to NZ Government, but, according to Treasury within ten years up to 49% will be going offshore if foreign owned.

  8. WaihekeMark says:

    Interesting comments on how these assets were built by the people. Did everyone volunteer this labour or were they paid?
    Does anyone have the figures on power price rises over the last 12 years? – I know by shopping around and using powershop I am paying less than I have for years – and by paying a bit more I can buy greener energy.. which is subsidized by.. wait for it.. Business. You want to save power.. after you have had a hot shower, dress warm. Hang your washing out somewhere.. it costs $10 for some line and pegs, try it. Take the boiling water off the vegies, use it to do the dishes, or whatever. Turn off the idiot box, read a free book from the library, or go for a walk..How hard is all this stuff instead of bitching and moaning.. if you don’t have a job, find someone who needs some childcare and help out so they can pay tax. Comercially sound decisions about paying down national debt is not the issue, it is about reducing apathy and a gimme culture.

  9. WaihekeMark says:

    QTR.. another way to explain this is that the Govt (some more than others)takes by force the proceeds of our labour, and distributes it via people or organisations (society?) in a highly noneffective way creating a welfare dependency, poverty and an underclass. In his they are aided by socialism to foster resentment and misguided envy.. tell us how it should all work

  10. Waterboy says:

    @Wiheke Mark
    Are you for real?
    Where i live 4 years ago our ave power bill was $150, now is way over $200. So much for competition.
    How does dressing warm after a shower save power????
    Dont most people in nz where possible use a line, if time and weather permits?
    Have you ever done the dishes in your life? why would you use dirty water to clean dishes?
    And finally the rubbish about day care, why would parents put there kids (the most precious thing parens have)into the care of someone because they cant get a job??.

    Instead of coming up with dumb ass ideas, remove foot from mouth first.

    It would be intersting to see the actual costs of supplying electricity to the consumer and see if the charges are too high, or if the prices we pay are fair. For our power bill to go up by 25% over the last few years there must have been huge cost increases on the system, or they are creaming it.

  11. Tracey says:

    In 1993 my average power bill was $45 per month. Two adults, no children. Still two adults and no children, now in an insulated house (wasn’t before) and we now pay on average $175pm (perhaps with inflation adjustment it’s the same as 1993 – I don’t know). But my salary and wages have probably not gone up the same amount.

    Example in 1993 my law firm was charging me out at $180 ph. They would not now be charging me out at $500ph