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New Worthy: Taxing times

4 April 2008 - No. 242

Taxing times

From a political commentator against the background of planned (and it is said significant) tax changes to be announced at the time of the Budget on 22 May comes the following.

When tax rates are seen to be “reasonable”, they encourage work, savings investment and entrepreneurial activity. But when they are seen to be “unreasonable”, they discourage productive behaviour and motivate the “black” economy. That’s why punitive progressive taxes targeting the “wealthy” are so damaging to an economy. Such “political” taxes discourage and penalise wealth creation, in spite of successful economies being built on wealth creation.

When Labour became the government in 1999, one of the first laws they passed (under urgency) was an increase in the top tax rate from 33 to 39 cents in the dollar. They promised that this tax hike would only affect the 5 percent of taxpayers who earned over $60,000. Today 14 percent of taxpayers now pay the top rate of tax because Dr Cullen has conveniently omitted to adjust the tax thresholds for wage inflation.

The effect on families is significant. While the average wage has risen 29.9 percent since 2001, the amount of tax paid on the average wage has increased by 43.7 percent. On top of that there has been a 20 percent increase in the Consumer Price Index. It’s no wonder that household budgets are being squeezed by higher prices and higher taxation.


The dynamic nature of language

Whilst the Maori Language Commission may lead the way in the creation of new Maori words that is not to say that a raft of slang constantly enters or refreshes the English language.

So “404” is an adjective meaning “stupid”. Derived from the internet message “404:file not found” it is used in the context - “he has got the 404” meaning “he has got no idea”.

Other words – “butters” meaning “extremely ugly” from “butt ugly” and as one commentator noted “where Granny was pretty” today’s good-lookers are “peng” or “tonk”.


The demise of the finance companies

The collapse of Blue Chip owing investors millions of dollars and the continuing collapse of finance companies where some 15 finance companies have either failed or got into significant difficulties in the past 15 months highlight the need for careful decision making in an asset class akin to junk bonds.

Collectively about $2 billion of investors’ money has been affected.

The current passage of legislation encouraging local authorities to issue debt on the retail market is surely to be supported.


Scams abound daily. A recent extract from one such proposal reads:

The President of the Ganga Ivoire Farms invited me to his Presence and I confirmed my word to him, and he promised me his confidence and to deal only with me if I can do this.HOWEVER I TOLD HIM THAT THE MANUFACTURERS RECEIVE 70%ADVANCE PAYMENT BEFORE THEY WILL SELL THE VACCINE.I know where my boss buy this vaccine in Europe. The Price of the vaccine is US$2000. per carton.

I will need you to contact Alhaji Ganga Kofam and Inform him that you are the manufacturer of the vaccine and that you will sell to him at the price of US$4,400 per carton. You will inform him to make 70% advance payment as is the Procedure. He will not hesitate to send the money immediately.If your organization is interested to be my partners in this transaction, please contact me immediately so that we can discuss on how to execute this lucrative deal.

The Consumer Affairs web site identifies a raft of ponzi possibilities under the following headings:

• Banking Fraud and Phishing

• Charity Scams

• Dating and Romance Scams

• Door-to-Door and Home Maintenance Scams

• Get-Rich-Quick Investment Scams

• Job and Employment Scams

• Health and Medical Scams

• Internet Scams

• Lottery and Competition Scams

• Mobile Phone Scams

• Money Mule/Money Laundering

• Psychic and Clairvoyant Scams

• Publication Scams or Vanity Press

• Pyramid Schemes and Chain Letters

• Small Business Scams

• Upfront Money Transfer Scams

The website is http://www.consumeraffairs.govt.nz/scamwatch/index.html


Political Quote of the Week

"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing had happened." Winston Churchill


ENDS

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