Muriel Newman: Tax Bill is Hard Labour
Tax Bill is Hard Labour
Weekly Column by Dr Muriel Newman
This week will see the first Parliamentary reading of the 2,000 page Income Tax Bill.
Unfortunately - mostly for working families - this Bill does not reverse Labour's debilitating 1999 income tax increase. Nor does it repeal the plethora of additional taxes, fees, charges and levies that Labour has stealthily inflicted upon an unsuspecting New Zealand public.
Instead, the Bill claims to 'simplify' the tax system and, in doing so, sets in place the mechanism to introduce a capital gains tax.
In 1999, a newly re-elected Labour promised tax increases only for people earning $60,000 a year or over. Yet their parliamentary record tells a different story.
Not only was the top rate of tax increased to 39 cents, but fringe benefit tax, trust income tax for minors and witholding tax were also increased.
Excise taxes were raised by 23 percent on cigarettes and 4 cents a litre on petrol. Both were passed into law under extraordinary urgency, without select committee scrutiny. At the same time, a 30 percent increase in road user charges for light vehicles was passed.
Earlier this year ACC levies across all classes of contribution were raised. Since then ACC has proposed an additional 22 percent increase in levies, and there is a proposal to further increase petrol tax.
A new import fee was passed in October, drivers' licence renewal fees were increased, as were court fees and the cost of obtaining birth, death and marriage certificates. Fire Service and cattle slaughtering levies have been raised and fishing licences increased.
Costs associated with the introduction of the Employment Relations Act have been estimated at many thousands of dollars for small business. Undoubtedly these will be passed on to consumers through higher priced goods and services. One scandalous example of a direct ERA cost is the Government's use of more than $5 million of taxpayers' money to bribe public servants to join the union. This could be just the tip of the iceberg.
Throughout the country, industries are reeling from the effects of the storm of regulations that Labour has inflicted upon them. Costs associated with the introduction of inspectors, regulators and administrators will all ultimately fall on the shoulders of consumers.
Regulators now have control of the telecommunications industry and tertiary education sector. Clubs, sports bodies and other organisations with gaming machines will need to pay new costs associated with centralised surveillance and administration. Businesses involved in export education, winemaking and car sales have all been targeted for new layers of levies, and the Environment Minister is even proposing a new levy on the dumping of rubbish.
The Local Government Bill, to be passed before Christmas, gives local authorities the power of general competence. As a result, they will be free to run businesses, provide social services, build houses - virtually anything that takes their fancy. While the Bill will be vigorously opposed, the opposition does not have the numbers to stop it. That means a significant potential rates burden will be delivered onto unwitting ratepayers.
Private property investors - including the hundreds and thousands of New Zealanders who have invested in rental property to fund their retirement - will not only face new charges once the Residential Tenancies Amendment Bill is passed into law, but they could be the target of a capital gains tax as well.
Clause CB1 of the new Income Tax Bill states, "an amount that a person derives from a business is income of the person". Since there are no exclusions for capital, this bill will enable central government to impose a capital gains tax on the public.
In drafting the Income Tax Bill, the Government sadly failed to heed the advice given in last year's $1 million McLeod Tax Review which recommended lower income tax rates and the need to reduce company tax rates in the future.
Labour's tax increases and stealth charges have put a greater financial stress on working families. With average wage growth not keeping up with inflation, living standards have fallen. It has been estimated that the real take-home pay of taxpayers has declined by 3.3 percent since Labour was elected.
To have orchestrated a situation where net incomes are shrinking at a time when the economy is growing, exposes the government's lack of concern for the wellbeing of working families. As absurd as it may seem, New Zealand could one day be a first world country whose working families live in Third World conditions.
Dr Muriel Newman, MP for ACT New Zealand, writes a weekly opinion piece on topical issues for a number of community newspapers. You are welcome to forward this column to anyone you think may be interested.
View the archive of columns at http://www.act.org.nz/action/murielnewman.html