Dear Mr English, I don't want a tax cut

[davereid]

Unfortunately: The Declaration on Crimes of Communism is a declaration signed on 25 February 2010 by several prominent European politicians, former political prisoners, human rights advocates and historians, which calls for the condemnation of communism. It concluded the international conference Crimes of the Communist Regimes, that took place at the Czech Senate and the Office of the Government of the Czech Republic from 24 to 26 February 2010.

so I can only assume if you try to implement a communistic state in NZ, the world and his dog would come to stop it... never heard that on the news...

I think its a basic mistake to assume that because "ists" of any flavour have done bad shit, that their particular "ism" must do bad bad shit.

That's the issue for me in a way. I cant see how communists and socialists can get revenue without using a gun. But I cant see how a capitalist or libertarian country can guarantee the protection of the vulnerable.

[mashman]

I think its a basic mistake to assume that because "ists" of any flavour have done bad shit, that their particular "ism" must do bad bad shit.

That's the issue for me in a way. I cant see how communists and socialists can get revenue without using a gun. But I cant see how a capitalist or libertarian country can guarantee the protection of the vulnerable.

looks like mashism is out of the window then lol ... amazing what THEY can get away with these days...

[shrub]

There is plenty of evidence that lower taxes produce growth.

I'm no economist so I'd be interested to see some evidence of this.

[Argyle]

Singapore got a very good financial and tax system!! They were the first to introduce the "not generation after" pay for your pension system...

I think New Zealand can take advantage of the service sector more then what it does, make Auckland the new financial Mecca... Make New Zealand attractive to businesses who want to build their HQ here and live a nice lifestyle...
This will create heaps of jobs and make the welfare spring up...But NZ need to cut down on the taxes, make it a business welfare state where everything is put into that businesses run the country, how it should be.

The government only provides an overview over whats going on, look after roads, healthcare and make sure NZ keep up to the standards... I think with competition people sort them selves out because everything they do actually inflicts on them selves...

There is no greater feeling then to own your own business or work together in a business, see it grow and prosper...

Singapore is a state we all can learn from!!

[davereid]

Singapore got a very good financial and tax system!! They were the first to introduce the "not generation after" pay for your pension system... Singapore is a state we all can learn from!!

Yes, NZ had an army base there from the end of the second world war, right through the Malaysian conflict. The NZ dollar was worth several Singaporean dollars. Many Singaporeans lived in shanties, and us kiwis laughed at them. I went there again a few years ago. Now I needed several of my dollars to buy one of theirs. They had better incomes than us, all achieved by lowering tax rates, encouraging foreign investment and creating wealth everywhere.

Low taxation attracts overseas investment and creates wealth. Multinationals often only pay tax in low tax economies, bypassing our tax man all together.

Next time you buy a pack of oil, look to see where it was "officially" refined.

The Oil man may have drilled for the oil in Nigeria.

But it was easy to make a loss in Nigeria, and pay no tax.

The oil got sent to Malaysia where it was refined, by a Singaporean owned company. No profit was made in Malaysia either, as it was sold to the parent company at cost.

Final refining and packaging was done in Singapore. That's where all the profit was made, as the corporate pays only 7% tax.

Then the oil was sent to NZ where it was sold through NZ petrol outlets, who once again barely make a profit.

Only local businesses ever pay "real" income tax. Its completely voluntary for multinationals.

[Argyle]

Yes, NZ had an army base there from the end of the second world war, right through the Malaysian conflict. The NZ dollar was worth several Singaporean dollars. Many Singaporeans lived in shanties, and us kiwis laughed at them. I went there again a few years ago. Now I needed several of my dollars to buy one of theirs. They had better incomes than us, all achieved by lowering tax rates, encouraging foreign investment and creating wealth everywhere.

Low taxation attracts overseas investment and creates wealth. Multinationals often only pay tax in low tax economies, bypassing our tax man all together.

Next time you buy a pack of oil, look to see where it was "officially" refined.

The Oil man may have drilled for the oil in Nigeria.

But it was easy to make a loss in Nigeria, and pay no tax.

The oil got sent to Malaysia where it was refined, by a Singaporean owned company. No profit was made in Malaysia either, as it was sold to the parent company at cost.

Final refining and packaging was done in Singapore. That's where all the profit was made, as the corporate pays only 7% tax.

Then the oil was sent to NZ where it was sold through NZ petrol outlets, who once again barely make a profit.

Only local businesses ever pay "real" income tax. Its completely voluntary for multinationals.

I like Singapore, English is the main language or Singlish as they've named it...Never been there but would really like to visit the country!

[mashman]

Singapore is something entirely different to NZ... it's gotta be the biggest shipping port in the world... when you have that kind of money and trade rolling in through the harbour it's hardly surprising that you can keep the tax low... as mentioned you can't do that here, mainly because of our proximity to the rest of the world... you're comparing apples to oranges... our lazy lords aren't doing the leg work in regards to making life better here... they seem to think that money is the answer to everything, tinkering with taxation here, little tweak of services there... and on the whole they get it wrong and have been for decades/centuries...

I thought we were meant to be working smarter...

[Ocean1]

Singapore is something entirely different to NZ... it's gotta be the biggest shipping port in the world... when you have that kind of money and trade rolling in through the harbour it's hardly surprising that you can keep the tax low...

Cart. Horse.

I thought we were meant to be working smarter...

We'd like to.

Now if you'd kindly remove yourself from the workforce we'll be getting on with it.

[mashman]

Cart. Horse.

We'd like to.

Now if you'd kindly remove yourself from the workforce we'll be getting on with it.

Cart. Horse? What, you need the lower taxes to encourage business to come here... lol, you're at the wrong end of the world and have next to nothing to offer the rest of that world... nothing that they don't already own...

I've already said I'd rather not become a politician thanks irrespective of my dumbness...

[shrub]

Cart. Horse? What, you need the lower taxes to encourage business to come here... lol, you're at the wrong end of the world and have next to nothing to offer the rest of that world... nothing that they don't already own...

I've already said I'd rather not become a politician thanks irrespective of my dumbness...

I think that's a failing that New Zealanders are prone to, and one that is going to be exacerbated by our timid and unimaginative government - we look at other countries and want to be them without realising that we're very, very different. The current crop of pollies are obsessed with catching up with Australia, but don't seem to realise that Aussie is richer because they have a hiuge and easily accessible resource base, and most importantly they don't belong to anyone else and the mining companies in Australia are generally Australian owned. On the other hand, we have sold all our strategic commercial assets to overseas buyers, so in effect we are employees of foreign corporations (frequently Australian).

You're absolutely right about us and Singapore - Singapore has done well mostly because of their location and if we introduced a 7% tax rate we would become a tax haven for every dodgy dealer in town and would be a third world country in no time. Paying bugger all in tax is of little benefit when you're earning next to nothing.

[davereid]

I think that's a failing that New Zealanders are prone to, and one that is going to be exacerbated by our timid and unimaginative government - we look at other countries and want to be them without realising that we're very, very different. The current crop of pollies are obsessed with catching up with Australia, but don't seem to realise that Aussie is richer because they have a hiuge and easily accessible resource base, and most importantly they don't belong to anyone else and the mining companies in Australia are generally Australian owned. On the other hand, we have sold all our strategic commercial assets to overseas buyers, so in effect we are employees of foreign corporations (frequently Australian).

You're absolutely right about us and Singapore - Singapore has done well mostly because of their location and if we introduced a 7% tax rate we would become a tax haven for every dodgy dealer in town and would be a third world country in no time. Paying bugger all in tax is of little benefit when you're earning next to nothing.

Where does money come from ?

The answer is, it actually grows on trees. Your Mum was wrong. At least wealth does, the creation of "money" and "credit" is a little different.

So, by way of explanation, lets think of wealth and poverty, to avoid the trap of talking about money.

If we were super-intelligent squirrels, we might have a basic economy. There would be some squirrels that built nests, some squirrels that collected nuts, some that stored them and guarded from the rats. There would be some who stole nuts rather than collect their own, and would be some squirrels who became dominant or "king" squirrels.

But as an economy we can see one thing clearly. If a squirrel has more nuts than he can eat he is wealthy. If he has less nuts than he needs he is poor.

Rule 1 - A community's wealth comes from production.

Lets imagine our squirrel government notices that some squirrels have plenty of nuts and some are hungry. It sends soldier squirrels and takes nuts from the squirrels with extra and gives them to the other squirrels. It takes some to fund its own activities as well, and it plans for a hard year next year by getting builder squirrels to build a store house.

For a community to have wealth, it can be achieved only by production. There is NO alternative.



Rule 2 - Government spending increases economic activity, but not wealth.

The builder squirrels report a bumper year as do the transport squirrels, the Guard Squirrels and the squirrels that got a handout are not starving.
But the Government spending has not created a single nut more.

Government spending does not increase production. It actually removes productive capital from the economy.


Rule 3 - Capital is mobile

The squirrels now have a comfortable world, where there is just enough for every squirrel to eat. But some hard working, and productive squirrels notice that they live little better than the squirrels who don't do anything. The productive squirrels also notice that they earn much less than the government squirrels in charge of the nut store. Across the river they see some other squirrels. Its looks a bit more sunny over there, and the nuts are hanging lower in the trees, so they take less effort to get. Some of the productive squirrels take the nuts they have left, and cross the river.

Excessive taxation will result in capital flight.

[shrub]

Oh that life were that simple. Sadly too many people base their ideology on simplistic, and inevitably flawed, models like yours, so we end up with a system that doesn't work. But using your analogy, a number of rabbits saw the squirrels munching away on nuts, and decided to start collecting nuts in expectation of a long, cold winter. The winter was long and cold, and when they went to eat their nuts they found they couldn't, so were forceto sell their nuts to the squirrels to buy grass, but they got very little grass and many starved.

And in the field on the other side, a number of squirrels had a really good system going where everyone had plenty of nuts. The first group of squirrels rocked up and said "Hi guys, we've just got a whole heap of nuts off the rabbits which we don't need - how about we buy some of your trees off you for 1 bushel of nuts? You can still live in them and eat the nuts, but we'll just take a few every year. Not all of them, just a few. The second group figured that was a good deal, so they grabbed it with both hands, handed them out and for a while all was good. Then they noticed that the first group of squirrels had tons of nuts, and they had less than they used to (they used to have more nuts than the first group). "Why don't we have as many nuts as them?" they asked, and the wise king of the squirrels said "It's easy, we must give less nuts to the sick and elderly squirrels, and then I can give the nuts they were getting to you. And then I'll borrow some nuts from the squirrels next door and share them around".

So the king borrowed some nuts, and all was good until the first group of squirrels wanted their nuts back (plus interest), so the king had another brain wave - if he sold the last few trees they owned, he could pay them back and even have a few extra nuts to give to the fattest squirrels because if they were fat they must be the most important and productive squirrels. So he sold the last few trees and everyone was happy, especially the first group of squirrels. Then the nuts ran out, and the king realised that he had nothing left to sell, so he borrowed some more from the first group who were happy to lend them because they were good like that, and the interest rate was a cracker.

Rule 1: He who owns the means of production has the power and the wealth.

[shrub]

Bob the builder sold his business to pay his Placemakers bill and spent the balance on a holiday and a new ute, but it was OK because the new owner gave him a job. Then he wondered why he wasn't getting paid as much as he used to.

[Winston001]

Good discussion guys and I find myself agreeing with both sides. NZ is remote and we do not have much that is unique to offer to the rest of the world. What we do have is lifestyle - but you can't sell that without compromising it. Tourism is the next level down and it is finite - imagine 10 million visitors and the crowded degraded experience they would have. We currently receive 2.4 million tourists and could comfortably double that, but no more if we are to retain our clean fresh uncluttered environment.

We also have high quality food which could be increased by more intensive land use. Market gardens on a grand scale. We have fish but that resource is not infinite and is under pressure from other nations vessels.

We have forestry but that is not even slightly unique - Siberia could swamp us with a few days production. The one positive is our trees grow very quickly.

NZ is a long way from any market. We do not have zillions of acres of mineral resources. On the other hand we are protected from international conflicts and disease with the oceans making NZ possibly the most secure country in the world. Plenty of water. Its not all bad, in fact we are very lucky. We simply need to appreciate this as a whole nation.

[MikeL]

Rule 1: He who owns the means of production has the power and the wealth.

Rule 2: He who has power and wealth makes the rules.

And that is it in a nutshell!