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Marc my Words: Tax - a state sponsored mugging

24 March 2006
Political comment
By
Marc Alexander

Tax - a state sponsored weekly mugging


Trying to justify the amount of taxes we pay, other than avoiding trouble from the IRD, is like searching for a gas leak in a dark room with a lighted candle. There can be no reasoning that will satisfy everyone because what constitutes a reasonable rate will vary according to the expectations we hold of government's role. And, to a certain extent, on just our relationship to the tax take - are we a taker or a giver? Everyone has an opinion about what they should pay (generally lower for themselves and higher for those on bigger pay packets) but rarely do we question the necessity of taxes in the first place. Maybe we should.

We can begin with one salient truth: governments can only spend (or go into a level of debt) up to the amount of wealth (or debt repayment) it accumulates as revenue from the creative endeavors of private enterprise. The more 'services' it provides, the more aggregate wealth is needed to pay for it. The problem - in a nutshell - is that other than the freely accessed gifts of nature everything else must be paid for. Some government spending is necessary to provide those common goods that industry alone cannot; public works and core services beyond the scope of private interests such as roading, fire departments, justice system etc. The litmus test here is if its provision is more necessary to taxpayers collectively than could be provided individually had it not been taxed from them. The problem is when governments try to justify their expenditures (and therefore a higher tax take) by identifying those necessities that are in the governments' interests rather than the publics. In other words vote buying.

Think of the example of Labour's Working for Families package: is it tax relief or an extension of the drift-net of welfare?

Some have tried to argue that Working for Families is a tax reduction package aimed at 350,000 families because it returns a sliding proportion of tax paid back to the families that paid them. A kind of refund if you like. But those that argue such things are deluding themselves and fooling no-one. They pretend to be the friend of business because they hate to hear themselves sounding like a socialist apologist. Any power that the state chooses to exercise in doling out tax dollars on the basis of its own criteria is by definition plying a form of welfare. By contrast tax relief is money you do not have to hand over to the government in the first place.

The increasing economic intrusion into our lives by the government, comes at a heavy price. More of the wealth we create is removed from us to pay for more income related social deficits. This government has justified its collection of mammoth surpluses in recent years (up to $54 billion over the last five years) by the very problems it helps to create! It's like standing there trying to fill a bucket of water with the government poking more holes into the bottom to siphon off more water to help you fill it up.

Over the years successive governments have 'creatively identified' an ever increasing multitude of small social ills which it then resolves to 'fix'. These solutions are generally worse than the problems they identify. The ensuing studies, policies, commission of inquiries invariably result in the spewing of a legislative tide which act in as fertilizer on the problems they attempt to remedy, growing them into full scale problems. Meanwhile what started out as a minor idea in the head of some pompous socialist minister, drunk on his own importance to secure his historical significance, ends up creating parasitic institutions (kindly referred to as bureaucracies) concerned only with justifying their ravenous need for more public funds!

Why is it that when this Labour government talks of modest indirect tax increases it ends up costing a few hundred dollars but when it tries to buy an election with bribes of 'massive' tax cuts, its only worth a stick of gum?

Governments shouldn't be elected simply to redistribute wealth. Not only does such an ideological aspiration drive our most enterprising offshore (currently at over 650 per week dampening our wealth creating potential), but more importantly, gives a perverse incentive to lie and cheat our way out of our obligation to contribute. Ultimately the very people who need help the most are buried under an avalanche of recipients who have no incentive to do otherwise!

Frankly I'm ashamed to live in a country that can pay $45,000 for 'hurt feelings' to a criminal yet forces our sick to go on waiting lists that compromise their health; or never-ending legal aid to delinquent parents who continue to assault their endless supply of children making no demands that they should be brought to account and sterilized, while our elderly remain marginalized; or that while millions of dollars get swallowed up in Labour party advertising passed off as legitimate informational expenditures, we have children who can't read and write and go to school without a decent belly full of food. And yet…the tax take gets bigger and bigger.

Instead of demanding increased resources to service our problems, we should ask why it is that in spite of massive increases in welfare payments, our problems just get bigger. I suggest that at least one reason is that we are working harder to pay off an ever increasing tax burden. Increasingly our tax obligations and consequential governmental meddling have relegated us to have much in common with slavery. No wonder our families are struggling! They spend more and more time trying to pay off the needs of families other than their own!

We become slaves when we are rendered so incapable of self reliance and belief that we look to government to save us from ourselves; when we demand from government those things we can and should do for ourselves but prefer instead act like petulant children demanding they be done for us. We are slaves when our shortcomings become the fault of others and we eschew self determination and responsibility. We are slaves when we become so dead to the feeling of liberty that we willingly or unwittingly surrender the duties and rights implied by as members of civil society.

We can ill afford to lose the equilibrium between our individual assertion of liberty and social obligation. That means that instead of giving up our values we should be rediscovering them. It means understanding the difference between the need for providing genuine compassionate welfare to those who require it rather than simply rewarding laziness. It means being capable of discernment between discipline of ourselves and our children rather than descending into the chaotic wooliness of self-indulgence.

We have allowed political power to intrude into our daily lives beyond all reasonable need and abandoned the bedrock values of our forefathers - the civic foundations of our nationhood - and mistakenly we have called it enlightenment. The best thing we can do to help ourselves is to tell this government to back off and get out of our lives; to allow us to make the decisions that affect us most; and stop deciding for us what we should eat, how much we should earn and how we should live. From time to time we should ask what we expect our taxes to do for us; and do we benefit in a way that the alternative, leaving wealth in the hands of those who created it, would not?

The greatest service any government can give its people is to empower them to live free - not to crush their spirit and diminish their dreams. We are a resilient people and some of us still have aspirations - and hell yes we're prepared to defend them.

ENDS

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