A good government does that by managing employment and skill flows. Trade colleges, paid apprenticeship etc, all go a long way to reducing downstream costs.
Politics 🗳️ NZ Politics
- Thread starter wizard of Tauranga
- Start date
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Did you read Liam response in the Herald to questions raised about the article you posted. While he thinks a Capital Gains Tax could provide a difference, he says he would rather see more savings through KiwiSaver being made compulsory. He then provided a comparison of NZ's savings to Singapore's.
I made that point in my Sunday column last week, which looked at Kiwis departing for Australia in near-record numbers. After post-pandemic border closures and with the pull of higher wages our wealthier neighbour is proving more alluring to young Kiwis than it has at any time since at least the 1970s.
I riled a few people by raising the spectre of capital gains tax again. Australia has one and we don’t. But I think the bigger difference is the lack of a compulsory superannuation scheme.
In response to my last column, economic analyst Leonard Hong touched base with some research he has done comparing New Zealand’s savings record with Singapore. Hong is a New Zealand Prime Minister’s Scholar for Asia, studying for a Master’s degree in International Political Economy at Nanyang Technological University, Singapore.
He’s not a fan of Capital Gains Tax but he does see huge advantages in saving and investing more generally. His research puts New Zealand’s disadvantage in the productivity race into stark perspective.
He looks at sovereign wealth funds such as our New Zealand Super Fund (sometimes called the Cullen Fund) and Singapores Temasek and Global Investment Corporation. And he looks at state-sponsored superannuation savings schemes - our KiwiSaver and Singapore’s Central Provident Fund.
“Singapore’s sovereign wealth funds together comprise around 227 per cent of Singapore’s GDP and the CPF is 91 per cent of GDP,” he writes. By comparison despite the relative success of both NZ Super Funds and KiwiSaver, they represent just 18 per cent and 25 per cent of GDP.
Liam Dann's Inside Economics: NZ’s productivity ranking, how we compare with Singapore
Liam Dann answers reader questions and digs through the week's economic news.
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Perhaps one should also be doubting Luxon’s ability to select his cabinet team as it is only 6 months since he thought these two were capable of doing the job.
Don’t know much about Simmonds but Lee was out of her depth as media spokesperson when they were in opposition (imo).
Voters dont reward truth + Luxon is a empty suit. Devoid of anything apart from vapid corporate speak.
Can we name names? This sort of corruption just pisses me off. The problem in nz is the squeeze and supply of land. Since it’s inception. It’s too expensive and controlled by too few.
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You are not reading what I posted - I was quoting the number of both state and affordable dwellings.
The chair of Waka Kotahi who pushed for Penlink was also the chair of the major land owning land developer who's land would be freed up by the project - you can work out who he is (one of the favourite Tory lackeys.)
Mary Holm is a financial advisor who answers questions on personal finance in Saturday’s Herald. Here’s her response on why she thinks tax brackets should be adjusted annually.
In the US federal tax system, which has seven brackets as opposed to our five, the brackets are adjusted for inflation annually. For example in 2023, a rate of 12 per cent applied to income between $11,001 and $44,725. For 2024 this has been adjusted for inflation of 5.4 per cent, to $11,601 to $47,150.
I see no good reason to adjust the figures to the nearest thousand dollars, except perhaps to satisfy the strong instinct some of us seem to have to round figures up or down.
A: You’re referring to a paragraph in the April 13 column, in which I said, “By the way, tax rates on wages and salaries are not adjusted for inflation either. The cutoff points between the rates — for example, the $48,000 of annual taxable income, above which the tax rate changes from 17.5 per cent to 30 per cent — should be regularly inflation-adjusted.”
New Zealand’s tax rates were last set in 2010 – apart from some more recent changes to just the top bracket. And since 2010, wages have risen 64 per cent, averaging 3.7 per cent a year, according to the Reserve Bank’s inflation calculator.
As people’s wages have risen, they have moved into higher tax brackets. But a big component of their pay rises has just helped them keep pace with inflation. This is sometimes called bracket creep.
Our tax brackets will change on July 1. In our example above, the $48,000 cutoff point will rise to $53,500. With the changes, taxes for everyone with taxable income over $14,000 – not just from wages but also interest, rent and so on – will decrease. But not enough to make up for bracket creep since 2010.
And at this stage, there are no plans for annual inflation adjustments, as happens in the US as well as in 11 out of 27 European OECD countries, according to Tax Foundation Europe. Also, Germany adjusts at least every two years. And in some countries there’s no need, as they tax all income at the same flat rate.
In a recent New Zealand poll on NZ tax rates, “67 per cent of respondents supported inflation adjustments, while just 13 per cent were opposed. The remainder were unsure,” says the Taxpayers’ Union, which commissioned the poll. “There was majority support across every demographic (gender, age, area, economic status, and preferred political party) with the exception of Te Pāti Māori voters, where there was still a plurality of support.”
It would be great if the Government introduced annual adjustments. The trouble is, more money for us means less in government coffers. Still, it seems only fair. Surprise us, Government!
Your last sentence refers to my comment two weeks ago that inflation adjustment should not be to “some amount like $51,342.78! The nearest $1000 would be good.”
In your US example, it seems they round to the nearest $25. But even that makes it harder to follow. We want our tax system to be as easy to grasp as possible, not just for the likes of you and me but for people who just don’t like numbers.
The new tax rates from July are 10.5 per cent up to $15,600, 17.5 per cent from there to $53,500, 30 per cent from there to $78,100, 33 per cent from there to $180,000, and 39 per cent after that.
While our current brackets are rounded to the nearest $1000, the new ones are rounded to the nearest $100. Please let’s not go any further than that. People who lose a smidgeon from rounding one year will gain from it the next year.
P.S. In this column, you will often see that I suffer from your “strong instinct some of us seem to have to round figures up or down.” Research shows rounded numbers are much easier to absorb over your Saturday morning coffee. In situations where precise numbers are important, I use them. Otherwise, clear communication wins!
www.nzherald.co.nz
Creepy tax brackets
Q: Your advocacy of regular adjustment of tax brackets for inflation is spot on. This would remove the Government’s temptation to let inflation increase income tax revenue without being accused of “putting up taxes”.In the US federal tax system, which has seven brackets as opposed to our five, the brackets are adjusted for inflation annually. For example in 2023, a rate of 12 per cent applied to income between $11,001 and $44,725. For 2024 this has been adjusted for inflation of 5.4 per cent, to $11,601 to $47,150.
I see no good reason to adjust the figures to the nearest thousand dollars, except perhaps to satisfy the strong instinct some of us seem to have to round figures up or down.
A: You’re referring to a paragraph in the April 13 column, in which I said, “By the way, tax rates on wages and salaries are not adjusted for inflation either. The cutoff points between the rates — for example, the $48,000 of annual taxable income, above which the tax rate changes from 17.5 per cent to 30 per cent — should be regularly inflation-adjusted.”
New Zealand’s tax rates were last set in 2010 – apart from some more recent changes to just the top bracket. And since 2010, wages have risen 64 per cent, averaging 3.7 per cent a year, according to the Reserve Bank’s inflation calculator.
As people’s wages have risen, they have moved into higher tax brackets. But a big component of their pay rises has just helped them keep pace with inflation. This is sometimes called bracket creep.
Our tax brackets will change on July 1. In our example above, the $48,000 cutoff point will rise to $53,500. With the changes, taxes for everyone with taxable income over $14,000 – not just from wages but also interest, rent and so on – will decrease. But not enough to make up for bracket creep since 2010.
And at this stage, there are no plans for annual inflation adjustments, as happens in the US as well as in 11 out of 27 European OECD countries, according to Tax Foundation Europe. Also, Germany adjusts at least every two years. And in some countries there’s no need, as they tax all income at the same flat rate.
In a recent New Zealand poll on NZ tax rates, “67 per cent of respondents supported inflation adjustments, while just 13 per cent were opposed. The remainder were unsure,” says the Taxpayers’ Union, which commissioned the poll. “There was majority support across every demographic (gender, age, area, economic status, and preferred political party) with the exception of Te Pāti Māori voters, where there was still a plurality of support.”
It would be great if the Government introduced annual adjustments. The trouble is, more money for us means less in government coffers. Still, it seems only fair. Surprise us, Government!
Your last sentence refers to my comment two weeks ago that inflation adjustment should not be to “some amount like $51,342.78! The nearest $1000 would be good.”
In your US example, it seems they round to the nearest $25. But even that makes it harder to follow. We want our tax system to be as easy to grasp as possible, not just for the likes of you and me but for people who just don’t like numbers.
The new tax rates from July are 10.5 per cent up to $15,600, 17.5 per cent from there to $53,500, 30 per cent from there to $78,100, 33 per cent from there to $180,000, and 39 per cent after that.
While our current brackets are rounded to the nearest $1000, the new ones are rounded to the nearest $100. Please let’s not go any further than that. People who lose a smidgeon from rounding one year will gain from it the next year.
P.S. In this column, you will often see that I suffer from your “strong instinct some of us seem to have to round figures up or down.” Research shows rounded numbers are much easier to absorb over your Saturday morning coffee. In situations where precise numbers are important, I use them. Otherwise, clear communication wins!
How to kill debt without selling that classic car or treasured artwork - Mary Holm
OPINION: How to balance debt repayment and investment growth in NZ.
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NZF and ACT below the 5% threshold, the silent majority's voted them off the island.
Getting nothing but Luxon criticism over here. Did he make another faux pas last week?
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He sacked two incompetent ministers from their portfolios, got a bit of flack for appointing them in the first place, they were a disaster.
Appointment of Paula Bennett to head Pharmac won't have helped
Firing people, the one thing hes probably good at. I did see a bunch of public servants sooking over the cuts to govt. That's probably for the best too
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Paula Benefit returns, and this time she's coming to cut your meds.
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There's some angst about what they're cutting, Internal Affairs, Cyber defence, diabetes monitors, disabled carers etc. More at 11.
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You don't say, well what a surprise.
Classic National! They never change! Surprised they ain't sold everything to private business to run?
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Nobody is reading this thread right now.
