blogging it real

The NZH continues to offer "analysis lite" on this issue, which is actually critically important to every New Zealander's standard of living. Further importance stems from the forthcoming GST rise, about which New Zealanders seem entirely nonchalant - unlike Canadians, who tend to go apoplectic at any increase in consumption taxes.

The Auckland cafe-proprietor quoted in the NZH article claims "Milk had gone up 50 per cent, labour costs had also increased and the price of coffee beans had reached a 12-year high on the New York Futures Exchange."

Two days ago I bought 4L of milk at Safeway here in Canada for $3.99 (and it's GST exempt). That's the same price I paid six years ago. Petrol ("gas") is $0.85/L (again, much the same as it was six years ago). And I can buy a kilogram of acceptable coffee beans for $11 (although higher quality, or fair trade, beans are considerably more expensive).

Labels: milk, taxes

Meddler Key and Aggrandizement Sharples are now proposing a joint TVNZ, MTS and TV3 bid for Forceback 2011. Quoth Te Herald: "The final, semifinals, bronze medal game and the quarterfinals will be live on all three channels."

Right, and what about the 3 million New Zealanders who don't want to watch rugby union, judging by the fact that only 1 million bothered to tune in to watch the All Blacks' (generally unexpected) quarter-final loss to France last time, broadcast free-to-air by TV3 at a reasonable hour on a Sunday morning?

I guess they could always go outside for a walk, or whatever. Christ, isn't it bad enough these poor bastards will be underwriting 2/3rds of the event's losses, currently optimistically estimated at $39 million.

Labels: forceback, john key, Parti Maori, pita sharples, rugby world cup, taxes

I caught CSI for the first time in ages the other night, and bugger me if Morpheus didn't show up to solve the case. I'd heard William Petersen, who plays Gil Grisham (one of my favourite characters on the show), was leaving, but had no idea his replacement would be an actor as cool and engaging as Lawrence "Larry" Fishburne. Petersen is only 56, so quite why he decided to bow out so young is curious; Fishburne is only 47 but is made to appear much older in the show (perhaps through addition of more grey to his hair?) He's certainly a bit bigger than he was in Apocalypse Now. ;-)

In other news, some Cantabrians were "terrorised all weekend" - not by al-Qaeda, but by, um, traffic. Apparently boy racers going no where fast are now "the acceptable face of 'terror'". Methinks the editor at the Christchurch Press needs to exercise a little control over such sensationalist shit. And perhaps buy his 'journalists' a fucking thesaurus or two.

National is following through on its election promise to play favourites with certain University graduates by paying down a bit of their student loan if they stay in the country. It's a shame the scheme doesn't apply to journalists, the country could sure use some right now.

Tough times mean Bill English is signalling severe restraint (and possibly fair enough) ... in every area except tax cuts which only benefit those above the average wage, or thereabouts. Maybe National could disinter such nasty 90s legends as Simon Upton and Max Bradford to slash a few budgets, hike a few fees, and ensure National returns to form.

And there was a very sad death on the otherwise unexceptional Candia Rd. I've always enjoyed driving it, but apparently it's a known blackspot.

Labels: boy racers, morpheus, national, playing favourites, taxes, terrorism, TV

The company that used to pay John Key's salary, before you and I started picking up the bill, is all but bust.

I haven't quite been able to find the right words to characterize the crisis, and the ongoing absurdity of National doing the old "massive tax cuts for all, and more social spending in your favourite areas", but luckily others have done so for me.

First, Blake on PA_system offers some insight into the US situation:

The USA has been borrowing to consume [ed- and wage an entirely 'voluntary' war]. Nobody has loaned the USA money to build factories, to build infrastructure. They have nothing to show for the trillions of dollars the world has loaned them except empty houses, plasma TVs, SUVS.They have blown the money on consumption and this is the problem. Ultimately the solution for the rest of the world is to stop lending them money, let the dollar collapse, let the US economy implode, and the rest of the world just try and go about its business.

There is relevance to the NZ election campaign, as Steve, also on PA_System points out:

National is promising tax cuts even though they are predicated on the formerly prosperous environment applying PRIOR to the implosion of the property bubble, the consequent finance company crashes and the recession now underway.

And a private correspondent offered this measured but nevertheless incisive analysis:

The credit crisis is quite similar to many other financial crises in that it was caused by greed and speculation, and that it was perpetrated by professionals and corporations who knew better but were blinded by the prospect of enrichment. The fact that Wall St's great investment houses have fallen is due process as far as I'm concerned.

I hope we can now say that John Key's "real world experience" casts him firmly as part of the problem rather than as a solution to our problems.

Labels: idiots, john key, national, taxes

Three years and three days ago, when Michael Cullen last delivered a pre-election budget, I wrote a blog post entitled "Opportunity Lost", criticizing the promise of modest tax bracket adjustments in three years time (i.e., April 2008). I asked:

What kind of election pledge is "vote for us and receive a very modest tax break in 35 months time"??

I still think those adjustments should have been implemented, but that's by-the-by for now. Cullen is considerably shrewder this year, even when he doesn't have a lot of room for maneuver. A rate cut that benefits everyone who earns a dollar, and relatively substantial bracket adjustments on top of that, beginning to take effect at the earliest (pre-election) opportunity.

As Vernon Small has observed:

...if anyone can think of a way to deliver significantly more to those on low pay AND deliver to the struggling households in the middle AND give relief to the $60,000 plus income earners that have been the crux of complaints about Cullen-the-reluctant-tax cutter … oh yes, and not blow the Budget even more … then I’m all ears.

However, the hard-to-please NRT has changed his tune. Compare his 2005 budget comments with his moan this afternoon.

2005: The tax change (adjusting tax brackets for inflation every three years from 2008) represents a lost opportunity - not to cripple the budget with huge tax cuts, but to undermine tax as an election issue. Bracket changes are relatively cheap compared to cuts in tax rates and are widely (and correctly, IMHO) seen as being fair; implementing them ASAP would have been a cheap and easy way of robbing National and ACT of a talking point without significantly undermining Labour's key contention that large-scale tax cuts are unaffordable without cuts in services. Instead, by delaying them, the government has provided yet another rod for their own back.

2008: So the centrepiece of Cullen's budget left me cold. ... All we get is a tax cut which at first glance at least favours the poor over the rich, but still buys into right-wing agenda that the solution to every problem is a tax cut. And this is supposed to inspire people to vote for them?

Needless to say, I agreed with him in 2005, and disagree today. Hopefully that means I'm the consistent one.

Labels: budget, taxes

For a party sitting pretty on over 50% popular support, National is sure making an ass of itself in announcing its quasi-policy.

On tax: "Labour won't be offering you much this week. We'll offer $50 a week for the average person! Have we costed that out? Err, no, not really, how about $40 then? That has to be affordable, right? Now, where were we, that's right, tax relief for those in the top tax bracket are our number one priority. What's that? The average person doesn't actually earn that much? Well, bugger me."

On the emissions trading scheme: "We support this, and need to move urgently on it. Definitely the way forward. Wait a minute, we don't support this anymore. It really sucks."

How much duplicity can 53% of voters put up with from this slippery mob?

I don't have a lot of faith in John Boy to write or maintain policy. If National gets in, methinks some familiar faces with ominous "policy experience" will actually be making the play. Such delights as Ryall, Smith, Williamson, and McCully ... joined by Bill "Successor to Bill Birch" English, and Judith "The New Shipley" Collins.

Labels: john key, national, taxes

First, on the topic of the latest verbal diarrhea from the Peters Party - what Yamis said. Anyone who can talk of an "open door" immigration policy in NZ clearly has no experience of it. None. Zilch. Nada. Maybe it was easier when Peter Brown immigrated back in 1921, but it's fucking difficult now.

Now, for the substantive topic of today's talk, children, I give you the latest offering from the august Mr Darth George.

Today, Darth opines on tax. And he doesn't even throw in trite Bible quotes about tax collectors, or rendering unto Caesar that which is Caesar's! Well, actually, that last bit would probably undercut his argument somewhat, since Darth doesn't like tax.

First, Darth has a go at GST, "which is a double-dipping tax on our taxed income and deprives us of 12.5 per cent of our spending power." There are actually strong arguments for reducing income tax before consumption tax (in order to promote savings), but I'm inclined to agree with Darth about the ubiquitous nature of GST in NZ. While it is simple, it does mean that the price of essentials (in which our friend in the four-litre Ford includes fuel, of course) are more expensive than would otherwise be the case. Quoth Darth:

I can think of no better contribution to the well-being of New Zealanders, particularly those on low incomes, than to make food, water, electricity, motor fuel, rates and medical expenses exempt from GST.

Well, my list might be slightly different - I'd include University fees, and argue for a different system for taxing fuel altogether - but basically I think he's on the right track.

Darth then has a gripe about the way the official inflation figure is (under) calculated, when he knows damn well that "Butter has risen 91 per cent in the past 12 months, cheese 60 per cent and milk 21 per cent. Meat and fish have become so expensive that many families have to do without both." Not sure where that last part came from, but I do wonder whether diets lacking in butter and cheese might actually be health-promoting. And I say this as someone who likes cheese in particular.

Darth then serves up a useful reminder that he is a Muldoon/Peters style populist conservative, rather than a Shipley/Brash neoliberal attack dog:

The result is that while the Government, the producers, the suppliers, retailers and businesses in general keep on doing very well thank you, the public, as usual, is getting screwed harder and harder.

Darth then returns to the topic of GST, making some useful observations around petrol- "Motor fuel is already heavily taxed, so the GST (which goes up every time the tax goes up) is, on the Government's part, triple-dipping" - and the much more agreeable and equitable GST system in Australia, where food and medical expenses are spared.

However, Darth's public goodwill only goes so far ... it's only fair that a man with his column can be self-serving from time to time, and argue for GST exempt private health insurance and, get this, income-tax free pensions: "Another example of double-dipping is income tax charged on pensions and benefits. These, since they are paid from out of taxation, should be tax-free."

Listen, old timer, when the government uses its revenue to give you an income, it's - err - and income, and therefore subject to taxation like any other. Still, teachers, nurses, and doctors in the public systems might like to try that logic: "We're paid out of tax revenue, so why tax our incomes again?!"

Good luck with that.

Labels: darth george, nz first, taxes

This post is prompted by a similar question posed by Yamis (well, identical really) two posts down, and the comments that ensued. I thought I'd bump them up here 'cos I kind of like where it's going. In an intellectual sense, not a financial one, obviously.

It was all prompted by this observation from Yamis:

PPTA members received a 750 dollar bonus as part of the agreement. However that was before tax of course. After tax it came out at about 480 dollars. I then called up the IRD to tell them about it and our family assistance payments are going to be cut by 17 dollars a week until the end of the tax year so in essence the 750 dollar bonus is going to wind up being about 180 dollars in my pocket. I dare not call Work and Income or else our Accommodation Supplement will get slashed and the bonus will end up costing us god damn money.

We then got to talking about how much pay increases of 4% and 6% meant for individuals in our chosen professions.

The thing is that when I get my 4% pay increase soon it will mean a couple of thousand extra, but once allowances are cut accordingly (and they will take a big hit) the actual amount that I am better off will be about 1%. And compare that to inflation ... and we will actually be worse off.

There's the kick in the gonads, folks: Pay increase - tax & ACC levy - inflation is often pretty marginal in terms of a net improvement in your financial situation. Pay increase - tax & ACC levy - inflation - cut to WFF entitlements - cut to Accommodation Supplement = sweet fuck all, and only a marginal improvement on no pay increase at all.

Or, as Yamis put it:

A 4% pay increase minus over 1% in tax equals about a 2.8% pay increase. So chances are a 4% pay increase will even mean that Joe Blogs with no allowances whatsoever is still going to be slightly worse off. And for Joe Family Assistance and Accommodation Supplement Blogs like myself you are actually clearly worse off.

People seem to welcome pay increases with enthusiasm, but things like marginal tax rates aren't discussed often enough.

I then mapped out two scenarios, with some help from the IRD tax calculator. One for Joe Blogs (no allowances) on $50,000 getting a 4% increase. And another for Joe Blogs (no allowances) on $60,000 getting a 6% increases.

=========================

If you are in the top tax bracket you lose 40% of any increase (39% tax + 1% ACC)

So basically a 6% increase becomes a 3.8% increase (i.e., someone on $60k would net about another $2,200 a year).

Although this percentage figure assumes you're keeping all of your existing pay - which you ain't.

Someone on $60k nets about $45k (excl. any rebates, supplements). So the extra $2,200 represents a 4.9% increase in net income.

Official inflation last year was 3.2%, so you're do slightly better than that. Again, this is assuming you have no rebates, WFF entitlements, or supplements to be cut, etc.

=========================

If you are in the middle tax bracket you lose 34% of any increase (33% tax + 1% ACC)

So basically a 4% increase becomes a 2.7% increase (i.e., someone on $50k would net about another $1,350 a year).

Although this percentage figure assumes you're keeping all of your existing pay - which you ain't.

Someone on $50k nets about $38k (excl. any extra rebates, supplements). So the extra $1,350 represents a 3.5% increase in net income.

Official inflation last year was 3.2%, so you are idling in neutral. Any cuts to allowances or whatever and you Mr Blogs are in the red.

Labels: death, taxes