Submission to - Tax Working Group
This is only the introduction and the conclusion. Read the full submission here (pdf)
Tax Working Group 2018
The submissions background paper contains the following statements:-
1. The primary objective of tax policy is to provide revenue for the government to fund the provision of public goods and services, and redistribution. Oliver Wendell Holmes put it more succinctly: “Taxes are what we pay for civilized society”.
2. A good tax system is one where the tax due is actually collected.
New Zealanders should not be able to avoid paying tax through evasion or avoidance arrangements.
3. Taxpayers’ costs of complying with the tax system and the government’s costs of administering the tax system should be kept to a minimum.
4. ‘Nāu te rourou, Nāku te rourou, ka ora ai te iwi’
‘With your contribution and mine, the people will prosper’.
5. GST is regressive in that lower-income households tend to pay a larger proportion of their income in GST.
6. Changes in technology, particularly with digital communications, are changing business practices and the way people earn income.
We would like to address each of these statements in turn and in the course of doing so, address some alternatives.
1. If, as Oliver Wendell Holmes put it: “Taxes are what we pay for civilized society”, why is it that a significant portion of the taxes people pay are not directed to that goal. For example, approximately $4,500,000,000 every year (about what is spent on Police & Law and order) goes directly by way of interest payments into the profits of banks and financial institutions that the government borrows money from.
Government borrowing could instead be accessed direct from the Reserve Bank at no interest (and possibly without the need for repayment) as is increasingly being done in Japan. That $4.5 billion could then actually be used “to fund the provision of public goods and services” – supposedly the primary objective of tax policy.
In a modern economic system (we currently have an outmoded one) the aim should be to reduce tax as much as possible to leave greater spending power in the hands of individuals.
With that aim in mind the Tax Working Group should recommend:-
- Progressive removal of as many taxes as possible, especially GST.
- Introduction of a transactions tax on all bank account withdrawals.
- Funding of increasing amounts of government expenditure through the Reserve Bank.
- Reduction in the amount of credit creation undertaken by the private banks.
Leader - Finance Spokesperson