Look what I found amongst my aussie coinage.
So I wonder if when the Reserve Bank of NZ downsized and replaced the NZ coinage a few years back that they shipped all the similar sized coins over to aussie. :-p
From David Farrar at Kiwiblog:
The best system would be that no one pays any tax until they are earning what one regards as the minimum amount needed for a family of their size. Churning money from tax to welfare to inefficient.
And after that make it a one rate flat system.
It would be simple, fair and effective. No more wasted money on tax agents to creatively balance the books to pay the minimum amount.
Bernard Hickey has a column in the herald this morning calling for changes to New Zealand’s financial system. (http://blogs.nzherald.co.nz/blog/show-me-money/2009/11/1/steps-ease-squeeze/?c_id=3) This is not the first time he has called for changes, (I think it is the third), but is anyone actually listening?
The changes suggested are:
1 Introduce a capital gains tax to ensure the property-owning classes think twice before making losses to reduce their tax bills, comfortable they can make it back with tax-free capital gains.
John Key saying he would resign if this happened was probably a very dumb political move in the long run. All it is doing is allowing the rich to get richer through a giant hole in our tax system. We need to fix that hole now.
2 Introduce a land tax to broaden the tax system to include those who made $300 billion of tax-free capital gains from 2002 to 2007. Those without property face the biggest tax burden in the years to come. Without some change to tax the rich, the perceived unfairness will drive away our youngest and most productive generations.
Same as point 1 really, we need tax on land and property.
3 Introduce a single, flat tax rate at 25 per cent for the income, corporate and trust rate. Set a high tax-free income threshold to ensure the poorest taxpayers retain plenty.
The current progressive tax system is simply unfair and does nothing to encourage people to get ahead in life. A single tax system would be fair and balanced to all.
4 Shut down Working for Families and the Student Loan scheme to remove the ruinous marginal tax rates and debts that are building up.
Getting rid of WFF makes sense. The student loan scheme on the other hand is a whole lot harder. You either have to make the courses free (like they used to be pre 1990) or have someone else lend the money at interest. The current system works because anyone can qualify and it allows anyone the chance to get ahead.
5 Increase GST to 16.6 per cent to help rebalance the economy away from consumption and towards saving. Ensure the poorest who spend most of their income are compensated using extra revenue from the capital gains and land taxes.
As painful as this sounds it makes sense and we need to do it in time.
6 Reduce government spending growth over the next decade to return core government spending from the current 36 per cent of GDP to the 29 per cent that it was in 2004.
Yes. But what do you cut?
7 Intervene in local district and city councils to consolidate duplication, reduce their combined size, reduce their rates growth and focus them on freeing land for home building.
Home building can lead to problems in the long run. We can’t just turn all our land to houses we need the land for production and other industries.
8 Increase the Reserve Bank’s prudential liquidity target for banks so they are forced to raise more funds locally and rely less on cheap foreign funds. This will continue to reduce their profit margins, increase deposit rates, encourage local savings and reduce New Zealand’s vulnerability to market freezes.
Yup. Focus on New Zealand first.
9 Increase the amount of capital that banks must put aside when lending against land and property to discourage the heavy lending to property investors that powered the 2002-2007 property boom.
Again a great idea, but why would the banks do this when they make money from people doing this too?
10 Raise the retirement age progressively to account for longer life spans and reduce the pension progressively to 62 per cent of the average wage from the current 66 per cent.
I read yesteday that the pension age was introduced at 65 around 1900 when life expectancy was only 62, now we live 20 years longer, and the age needs to go up, otherwise we cannot afford it.
As fast as I ask will National have the guts to move to a flat tax system they rule it out.
http://www.stuff.co.nz/business/industries/2958390/No-flat-tax-PM
The Government will not introduce a flat tax system despite Treasury advice in support of one, Prime Minister John Key says.
The working group and Treasury were working on similar ides and the Government would consider a wide range of issues, he said.
Cabinet will discuss all those issues but “there’s not going to be a flat tax system”.
So what is the point in getting Treasury to consider all options and issues but ruling out one of the best ideas before cabinet has discussed it? A flat tax system is not some big scary monster, it is a simple system that just makes sense.
“We also need to make sure we put together a system that isn’t regressive and that is fair,” he said.
Finance Minister Bill English said the tax working group and Treasury were looking at “all sorts of models” but the Government was “certainly not considering a flat tax”.
Those looking at the tax system were told to “rule nothing out” and “by the looks of it they’re doing a pretty thorough job”, Mr English said.
So Treasury is not to rule anything out, but National can before even discussing it. And they want a fair system, but the most fair system of them all a flat tax system is rule out. Is National doing some double speak here?
Labour deputy leader Annette King said her party was opposed to a flat tax because it raised questions about what other taxes would have to be raised to cover expenses.
“But I have to ask every time Treasury puts out a suggestion they are working on, it is knocked back either by Mr English or by Mr Key.
“Why are they wasting taxpayers’ money with Treasury officers working away on policies they don’t intend to implement and they rule out every time they are announced?”
Labour have hit the issue on the head here. They may not support it, but at least they have the sense to wait and see what the all the issued considered are. This is a very bad move by National, they are trying to stop debate on a potentially controversial topic, but by doing so they are opening a can of worms and will piss off their more right-wing supporters (and probably Act as well).
The Herald reports that Treasury is considering a flat tax rate to close the income gap between Australia and New Zealand (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10602938)
Finance Minister Bill English had a unique opportunity to reform the tax system, Treasury said.
Two options were a flat tax rate or cuts to taxes on dividends, interest and profit, papers obtained by Radio New Zealand under the Official Information Act showed.
GST, land tax and capital gains tax would be increased to fund the changes.
A flat income tax system just makes sense. The current system does not encourage people to earn more because the more you earn the more you will lose through tax. A flat tax system is fair to all, and is simple, this will cut out a huge amount of compliant costs and IR3 returns and other useless bureaucracy.
Secondly, the sooner a capital gains tax is introduced the better. This system would be simple and just make sense.
Whale Oil is trying to expose the huge sums of money spent on travel by Labour MP Chris Carter: http://whaleoil.gotcha.co.nz/2009/10/07/show-us-the-diary-carter-show-us-the-diary/
Watching the 3News clip you just have to wonder how that much money can be spent on travel, it is beyond reckless spending it is just completely milking the system, why does anyone ever need to travel to Aussie in Business Class?
http://newstalkzb.co.nz/newsdetail1.asp?storyID=163700
The ‘h’ debate is spreading to Auckland.
Western Bay community board chairman Bruce Kilmister is keen to change the spelling Wanganui Ave in Herne Bay. He says a poll of residents would be a good start.
Mr Kilmister says if the street has been incorrectly named for the last one hundred years, now is the time to put it right.
Auckland City mayor John Banks says he has not considered a change of spelling for Wanganui Ave but supports the poll idea.
2 thoughts on this:
a) The council which campaigned on cutting ridiculous spending is spending ridiculously.
b) Surely there are much more pressing things in the city then the spelling of a street name, that may or may not be spelt correctly.
Just leave it as it is, and stop trying to create an issue where there isn’t one.
The herald reports that it is likely that the current taskforce on getting NZ economy back up to speed with the Australian economy will recommend replacing the Kiwi Dollar with the Aussie.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10598348
The Government’s transtasman taskforce is to investigate scrapping the Kiwi dollar and adopting an Aussie one.
Don Brash, chairman of the 2025 Taskforce and former governor of the Reserve Bank, confirmed he would report back in November on whether a common currency would help raise New Zealand living standards to Australian levels.
Brash said New Zealand would be more likely to cancel the Kiwi currency, replacing it with cash stamped “Reserve Bank of Australia”.
The notes would probably retain images like those of Sir Edmund Hillary and Sir Apirana Ngata, so they would look Kiwi – apart from that vital difference in the fine print.
A major benefit would be a fall in interest rates to Australian levels, making business more productive. But economic authorities would be concerned this cheap money would spark a property boom. Currency union would mean New Zealand could no longer adjust interest rates to control booms.
The sooner we do it the better. And while we are at it can we just hurry up and become another state of Australia, and make both countries (or the one) a completely independent republic at the same time. Or are my dreams just too good to possibly come true?
Last night TV3 reported on Don Brash leading a new taskforce to decrease the income gap between New Zealand and Australia. http://www.3news.co.nz/News/NationalNews/Don-Brashs-new-taskforce-to-tackle-the-trans-Tasman-income-gap/tabid/423/articleID/113412/cat/64/Default.aspx
Now I knew the gap was large, but not this large:
Last year the average Kiwi wage after tax was $32,000 a year, while in Australia, the average wage was NZ$49,000 – around 38 percent higher.
$17k per year in NZ Dollars difference, or $326.92 per week more, or $46.70 per day more. That is not a gap that is a gulf. How did it ever get that far apart in the first place?
Last year, over 48,000 Kiwis left New Zealand for Australia to experience its brighter beaches and bigger pay packets.
And I can’t blame them, the cost of living may be more (I may do a post investigating this if I can find the data) but increase in pay surely justifies it.
This is an interesting video becuase the stats for beneficiaries include pensioners and Working for Families. Now I have no issue with the pension it is nice to be guaranteed some of your hard earned tax back when you retire. But Working for Families is crippling the rest of New Zealand. It as John Key put middle class welfare and the sooner a more fairer system that treats everyone as equals is introduced the better.
Okay, this is one of those rants that I have been planning for a while but have only now decided to piece it all together and type it out.
Firstly, check out this nonsense that appeared in the Sunday Star Times a week ago: http://www.stuff.co.nz/business/2585853/Tax-windfall-awaits-thousands
It is blatant advertising for a tax agency not a real news story.
The tax refund season has begun and thousands of Kiwi workers could find themselves with a nice big present.
Now workers can check to see if they are owed any of the estimated $100 million in overpaid tax for the 2009 tax year. And it could be more likely than you’d think.
At this point the story is reading like a nice ad for ird.govt.nz, okay good.
TaxRefunds.co.nz, a business that helps people file refund applications online, has calculated the chance of getting money back from Inland Revenue (IRD). For example, the table shows a worker on the average wage of $48,000 has a 20 percent chance of getting a payout with the average payment close to $245.
What! Advertising some dodgy company… hmm…
The probability climbs or falls depending on how much was earned. TaxRefund director Geoff Matthews said those hovering around the different tax brackets scored highly with those on $38,000 having a 55 percent chance of getting money back from IRD.
This is probably true.
“It’s like having a lottery ticket at the bottom of your drawer of course you’re going to check it,” he said.
Since when did filing a tax return turn into playing lotto? Unless you spend all your refund on lotto tickets.
… (5 more paragraphs of dribble, go read it on the link above if you have to)
If someone decides to go ahead and file the claim with the IRD, the company charges 12.5 percent of the rebate amount, up to a maximum of $500. The minimum fee is $12.50 per return.
Is there any news at all in this story? I don’t see any. All I see is advertising for some dodgy company and lotto. And lets make one thing very clear. Go to www.ird.govt.nz and do your own tax return there. You will get it all back and not give up 12.5% to some dodgy internet site.
Speaking of dodgy sites taxrefunds.co.nz seems to be getting dozens of complaints as highlighted here: http://tvnz.co.nz/business-news/ird-warns-online-tax-return-services-2706304
The Inland Revenue Department is warning people to be wary of online companies offering free tax return services.
This follows a number of complaints from people who say they didn’t realise what they were getting themselves into.
It’s ads like the current tax refund ones that Donna DeCleene thinking she was in for a windfall.
“I thought I may as well register and see if I have any money owed,” DeCleene says.
She went to taxrefunds.co.nz and typed in her IRD number to find out more about claiming back taxes.
But she was surprised when she received a letter from the Inland Revenue informing her that taxrefunds.co.nz would act on her behalf on all future returns.
“They were telling you to apply for old refunds not saying that they would then act for you in future years for any tax refunds,” she says.
The IRD says its received dozens of similar complaints about tax refund companies
“Read the fine print so you know what you are committing to before you do it. Or alternatively come to our website directly and you can do it for yourself anyway,” says Charles Ronaldson, Inland revenue.
When logging onto taxrefunds.co.nz you can see in the fine print that the company takes 12.5% on any refund, a commission that is also paid on things like family assistance credits and they will continue acting as your tax agent until you tell the IRD otherwise.
“It tells you on the site and you have to tick a box that accepts the conditions that we will be your tax agent like any chartered accountancy,” says Geoff Matthews, taxrefunds.co.nz.
Taxrefunds.co.nz was set up seven months ago and has already processed $62 million worth of returns
“I know I get a tax return through family assistance si i know i didn’t need them helping me because it’s all automated through IRD,” says DeCleene.
However Matthews says, “if we weren’t in the market nobody would know that they were due tax refunds”.
Mr Matthews people have been getting tax returns for much longer than the nine months you have been in the market. All it appears is that you are a very cunning scam artist giving people a service that they already had access to for free. It isn’t very impressive.
Finally be aware that IRD do seem to be on a go slow at the moment as highlighted here: http://www.nbr.co.nz/article/ird-go-slow-tax-refunds-angers-firms-102459 and http://www.gpforums.co.nz/showthread.php?s=&postid=6194020
I filed my tax return for 08/09 on May 12 and it took 9 weeks for them to process it, however, eventually I did get a refund and a nice big one too. So go and do your own. You will get more money and not get into bed with a dodgy company trying to take your money for doing nothing.
This story was published in the herald a few days ago (again a victim of the sever move)
http://www.nzherald.co.nz/surviving-the-recession/news/article.cfm?c_id=1502812&objectid=10584518
Almost half of working New Zealanders would only last a month on their savings if they lost their job, a new survey shows.
More than a quarter say they will need to use their credit cards to pay bills in the coming quarter.
People in the 18 to 34 age bracket were particularly vulnerable, according to Dun and Bradstreet’s survey of consumer credit expectations released yesterday, with 55 per cent only able to survive for four weeks if they weren’t working.
It would be interesting to break out the people who are still living at home and see this figure without them, I think it would be even higher.
This compares to 46 per cent for Kiwis aged 35 to 49 and 32 per cent of those aged 50 and over.
Well this actually makes a lot of sense because of course as you move through life you earn more, and can save more, and pay off that student loan and other debts that you start you adult life with.
The survey, which interviewed 905 New Zealanders online, focused on expectations for savings, credit usage and spending between July and September.
The younger age groups were also more likely to spend money they didn’t have, with 34 per cent using credit for purchases.
This is a concern because if people are using credit they don’t have when they don’t need to when the tough times hit and you do need it you won’t have it to use. However credit for younger people is often offered because you can offset it against your future earnings so it can work well to get you though tough times.
Of those over the age of 50, 19 per cent said they would use credit.
Again this comes down to the stage of life at your at.
The younger age brackets were also more likely to apply for new credit or a credit limit increase.
BNZ spokesman Tony Alexander said New Zealanders’ household saving rate was one of the worst in the OECD.
“We are definitely a nation of household borrowers rather than savers.
“We don’t save much so if we get made unemployed we don’t have much to live on for very long. If we get sick we have to rely on the state rather than funding our own healthcare.”
The unemployed statement makes sense. The healthcare statement does not. We have universal healthcare in NZ and that is a good thing, and if you don’t believe that go and watch the movie Sicko.
He said saving should not just be about preparing for retirement.
“There’s more than just whacking your money into Kiwisaver. We should, all of us in some way, have these precautionary savings that are built up in case we get unhealthy or become unemployed.”
And this is a flaw with Kiwisaver, the fact that no matter what it is impossible to get your money out until you reach 65. And is yet another reason why I have not opted in.
Now I know if I lost my job I could last longer than a month… Just. If I lost all my sources of income (one off jobs and the like) I would be in a reasonably dire situation pretty quickly. However, this is the life of a student.
Okay being offline for the last two days has been a pain as there has been some good news. And this probably the best and funniest piece of news out. However, because of the delay now lots of other blogs are covering this story so I will keep my blog on this short and let the links do the talking. In summary the head of the National Business Review (NBR) has decided to change their news site to a pay per view model rather than free with ads supporting the costs. So far big deal, who cares, I can get my news from other sites.
What has annoyed me and many others though is in announcing the decision he had this to say about bloggers:
And to add to the madness it has been the aggregators that have profited the most from the supply of that free news copy. Worse still the model has spawned a huge band of amateur, untrained, unqualified bloggers who have swarmed over the internet pouring out columns of unsubstantiated “facts” and hysterical opinion.
Most of these “citizen journalists” don’t have access to decision makers and are infamous for their biased and inaccurate reporting on almost any subject under the sun (while invariably criticising professional news coverage whose original material they depend on to base their diatribes).
Say what? David Farrar at Kiwiblog has the best to say about this:
Of course there are many many blogs that are rubbish. But they accordingly have littler readership and little influence.
And that is exactly the point.
This blog has been running for four years and in terms of its global reach it is very small. And I would actually agree that most of the stuff I post on here is probably rubbish, and has little influence. But that is no reason for me to stop posting it. This is my soap box not yours.
And as far as being upset about people linking back and commenting on stories, well that is interesting because by linking back and commenting you are in fact increasing readership not decreasing it. I actually believe that the move to pay is to keep profits up not keep the bloggers out. Anyway rant over, here are some more good comments (interesting enough all from blog sites, at least two of which are more popular than the NBR website):
Around a week ago I blogged about the good article in the herald by Bernard Hickey on why Generation X and Y should leave NZ. (http://www.brad.net.nz/blog/2009/06/bernard-hickey-tells-young-people-to-get-out-of-nz/)
Hickey followed this up earlier this week with a second blog on how to turn the tide and get people to stay: http://blogs.nzherald.co.nz/blog/show-me-money/2009/6/30/ten-ways-baby-boomers-redeem-themselves/?c_id=3
A summary of the key points:
I got quite a few comments from baby boomers (and younger readers) throwing their hands in the air and wondering what could possibly be done to solve the problem. They also pointed out it was no different anywhere else so what was the point of leaving. House prices have collapsed 20-30 per cent in America and Britain, effectively reducing the scale of the problem, while prices here have only fallen around 9 per cent here. Australian prices are more affordable in many cities because incomes are higher, although inner Sydney and Melbourne are pretty unaffordable.
But there is much our baby boomer leaders and their voter-enablers could do to fix the problem if they wanted. We all need to agree on a variety of things to lift our productivity and therefore our real per capita incomes at the same time as reducing house prices. Here’s 10 ideas:
1. Impose a land tax. It works in Hong Kong and is much cleaner, fairer and more efficient way to take some of the air of the land price bubble than a capital gains tax.
Agreed, but as pointed out last week would it ever be voted through?
2. Introduce a flatter, simpler system for income tax to encourage productive work rather than tax avoiding rental property investing and consumption. Here’s more detail here.
Hickey’s ideas for a flat tax system make a lot of sense, and is one thing I agree with, as far as income tax goes there should be a flat rate, why should someone who earns more be taxed at a greater proportion of their income, their tax take is greater than someone who earns less anyway because tax is based on a percentage of income not a fixed amount, and it is also likely that they will pay more in GST because they probably spend more as well.
3. Remove middle class welfare payments such as Working for Families and non-means tested interest free student loans. They create work for bureaucrats and create ruinously high marginal tax rates.
Working for Families is something that I do not agree with, and then introduce an independent workers allowance to counter it is just as dumb, reduce the bureaucracy, reduce the costs, overall everyone pays less tax and therefore has more in their back pocket.
Interest Free Student Loans is interesting. I believe they should have interest at CPI on them, this way the government does not lose out on any money that it loans out, and in return having a small interest rate would encourage people to pay it back faster as with zero interest there is zero incentive to pay it back. But using this as a means for the government to make money is not a good idea.
4. Extend the retirement age to 70 from 65 by 2020. Reduce the universal superannuation payment to 60 per cent of average wages from 66 per cent. We just can’t afford it and it will give us time to restructure our economy.
Meh, I am at a minimum 45 years away from retirement so by then I don’t think there will be any hand outs for me.
5. Open up monopolistic industries to competition wherever possible and regulate hard to restrain inflation wherever competition is not possible. The electricity and telecommunications industries come to mind. I’d love to see the power generators forced to sell their retailing operations and I’d love to see the Commerce Commission force mobile termination fees much lower to encourage a third mobile competitor.
Yup, and how about selling Kiwibank and Air NZ while we are at it, it makes no sense to be in a competitive market with State Owned Enterprises competing against others. There is a need for SOE in areas where they are the only providers but where they are not what is the need for them?
6. Crack down on handouts for politically neat but economically dumb ideas such as sports stadiums, NZ$40 million wharves and railway operators. Be ruthless on public sector spending.
Yup. The White Elephant on the waterfront comes to mind. We are in the worst recession in 80 years or whatever and spending is being slashed left right and centre but we can suddenly have a whole lot of money to buy a wharf and place a giant rugby ball on it for a two week period in 2011.
7. Open up the immigration taps. Population growth, particularly of young skilled migrants, will do an awful lot to kick-start our economy and skew the population imbalance to something more sustainable. Welcome everyone in, regardless of whether they are from China, India, Brazil or Timbuktu. As long as they have some English and are bright, we should open the door.
The last line of this is vital. They must be able to communicate effectively otherwise this policy does to achieve its aims.
8. Convert the NZ Superannuation Fund into individualised accounts that could be transferred to KiwiSaver accounts with other fund managers. This would effectively make KiwiSaver almost compulsory and encourage many New Zealanders to become more financially literate.
Yes. This is one of the things that has kept me out of Kiwisaver, the fact that I will still get superannuation regardless of if I save or not, and also the fact that once you are in you cannot get out. Make everyone in or everyone the ability to come or leave as they can.
9. Set a target size for the government sector (both local and central) in some sort of taxpayers’ rights bill as a proportion of GDP and manage the sector down to that level, which could be, say, 30 per cent of GDP.
I don’t necessarily agree with this, the government needs to spend on what it is committed to and targets for the sake of targets is actually quite a dumb idea, but cut the spending on things that they don’t need to makes a lot of sense.
10. Allocate every adult New Zealander a certain pot of ‘free’ money to spend on fees for tertiary education, particularly for retraining.
Yes. This is better than losing money on interest free loans. Reduce the cost of the course and you reduce the amount of money that needs to be borrowed.
I have been planning to blog on this all week but have not had the time…
Simply read this: http://blogs.nzherald.co.nz/blog/show-me-money/2009/6/23/dear-generations-x-and-y-leave-asap/?c_id=3
Or if your even too lazy for that, check out the TV interview on the subject.
