A Taxing Time
There's a joke doing the rounds at the moment. It goes something like this: Labour's latest tax policy It always gets a laugh.
Mind you, National has had some funny one-liners too. Remember Muldoon's 66% tax rates? Muldoon got himself out of his taxation hole by drinking a bottle of whisky and calling an early election. It raised a laugh too but it probably wouldn't work again.
So this time around, again, we sit on the sidelines and watch politicians, who would dearly love their turn in chauffeured BMWs, attack politicians who currently hold the key to those BMWs The only ones smiling are us tax accountants. It's a cat and mouse game, played for decades, probably centuries. Tax, you see, is the gift that keeps on giving, if you're an accountant.
Remember just 2 elections ago when tax cuts were the rage. The incumbent , Cullen, offered us all the equivalent of the price of a packet of chewing gum, and when we laughed, changed his mind. National, who wanted its turn in the BMWs, offered to slash tax hither and thither, or something like that.
The difference between Labour, which wanted to take our money and give it away to poor people, and National, which wanted to take our money and give some of it back to us, leaving us free to decide for ourselves whether we wanted to give some of it to poor people. The joke that time around was that Labour wanted to take our money and give it away, classing families earning way over $100,000 a year as in need of tax welfare.
These days, tax cuts are so last week. We're above that. It has something to do with a global financial crisis, Christchurch earthquakes and a realisation that a small country such as ours can't afford to hand out tax cuts willy nilly and still afford BMWs.
So, this time around, the guys who lust after those BMWs, Labour, are once again tempting us with our own money. They want to impose a capital gains tax, overlooking that a tax base of only 4.4 million people doesn't leave a lot of room for windfall amounts to be raised. With eyes fixed firmly on the Beamers, they want to impose what observers call the "envy" tax on those who earn more than $150,000 a year. Sydney is just a 3-hour flight away. I suppose Labour considered that and decided they could do without people earning large salaries. At least it will make us all more equally poor.
Labour's biggie was to remove GST from fresh fruit and vegetables. Here's where accountants chuckle and wink knowingly. Lawyers get the joke too. Imagine how much work there'll be deciding what's fresh and what's not and how to win exemptions. To underline the joke, fresh fruit and vegetables fell more than 8% in the latest official price survey, the biggest fall in more than 5 years. Politicians trying to manipulate prices by edict often get undermined by markets that follow common sense. When the weather improves, vegie prices can look after themselves.
So the guys who currently have the BMWs want to stay there. They've stopped obsessing about tax cuts. This time around, at least in the budgets they've delivered, they did the old switcheroo - took when they raised GST and gave back in tax cuts. I guess it makes sense if you sit in the back seat of a BMW and watch the rest of us scurrying about earning a living. The one good thing - from the point of view of someone like me who casts his beady eyes over balance sheets all day, is that they reduced company tax. Nothing like letting companies hold on to a little more of what they earn to keep an economy chugging along.
Some of my clients who hold properties as investments lost depreciation claims on their buildings, softened by the recent fall in the market. When Alice Cooper welcomed people to his nightmare he might have been describing National's changes to loss attributing qualifying companies. It was once a beautiful piece of tax law that allowed property owners to transfer tax losses to their other earnings. Now? A thing of beauty and simplicity has become Alice's bad dream.
One of these two groups gets the cars this time around, but others, who might swap the Beamers for pushbikes are hovering too. The party that names itself after the colour of drainage ditch mould wants to extract money from us too. The Greens want to tax anyone who is rich, who pollutes or who makes things that use resources. I guess that means people who pay for their own BMWs Actually, it does. They plan an envy tax too.
The tax jokes and some successes roll around every 3 years. And you know, for the past sixty years the Stokes Valley Times has been reporting our lives in this wonderful valley. Well done. It's a cause for congratulations. Somehow we survive the politicians' battle to win over our minds and wallets. It's the constant good things like the Stokes Valley Times that remind us of our true values.
Posted on Tue, 1 November 2011
by Shawn O'Grady