Abolishing income tax?

No Minister has posted about how the UK Libertarian Party has proposed abolishing income tax, by simply cutting government spending to where it was 5 years ago, given how high VAT is (17.5%).

He asked in relation to New Zealand "How much scope is there for a radical overhaul of our tax structure? Perhaps this is a task for Peter Cresswell and others to consider. How detailed are the NZ Libz with their policy prescriptions? Or is abolishing income tax 'pie in the sky' here too? Does ACT offer anything here?"

Well the Libertarianz (NZ) DOES have detailed policy on tax, on the party website here. It actually proposes the OPPOSITE tax reform, with all OTHER taxes being abolished other than income tax, which would be set at a flat rate of 15% with a $10,000 tax free threshold. This would be a transitional measure which itself would be phased down.

Why leave income tax and abolish others? Well it is a matter of two things.

Firstly, other taxes are largely invisible to the general public. GST, residents' withholding tax and various duties are paid, and the public treats these as part of the cost of goods or earning interest at the bank. It would be far preferable to notice that the cost of government is transparent and you pay that, rather than it hidden in multiple other taxes.

Secondly, abolishing all of the other taxes will lower compliance costs for businesses, end the "black economy" nonsense about paying under the counter for goods and services, and dramatically simplify tax arrangements overall.

How would this be paid for? Well by dramatically shrinking the state. Libertarianz has proposed alternative budgets for some years.

Now I remember Sir Roger Douglas proposed abolishing income tax in his book Unfinished Business, and it was originally ACT policy (he replaced income tax with compulsory health insurance, superannuation and education). ACT policy has been flat tax and more recently two step income tax. I'd be interested to see if ACT revives flat tax for 2008, but for now Libertarianz is the low flat tax party.

Don't want to buy a railway?

Tough - Dr Cullen is going to make you, if he can get away with it.

Not satisfied with spending $81 million for the Auckland rail network, when Treasury valued it at best at $20 million, not satisfied with spending $1 for the rest of the national network.

Not satisfied with spending from general taxation:

- At least $450 million to upgrade the Auckland rail network (track, signals and platforms) from 2005;
- $100 million per year for six years from 2007 to upgrade Auckland and Wellington rail networks;
- $25 million in 2008/09 and again in 2009/10 to upgrade the national rail network;
- $100 million upfront in upgrading the national network from 2003, and $25 million annually from 2004 to 2007.

Noting than absolutely none of that spending will boost the net financial value of the rail network at all (it is unlikely to be able to be sold for the amount being spent on it), now he wants to spend $500 million buying the whole lot according to Stuff. Toll wants $700 million, but presumably Dr Cullen will threaten "the state is sovereign" to force a compulsory nationalisation.

Toll is already paying the government $9 million per annum less than Ontrack (the Crown company which owns the rail network) is charging for its use. You might think Ontrack could simply tell Toll to stop trespassing, or to tell Toll that it will invoke the rail access agreement which means other companies can provide rail services on the network if they drop below a certain level. Yes, in case you didn't know, the "ownership" the Crown has of the track also gives Toll a monopoly on the use of the track, as long as it maintains a minimal level of service on the track.

Now a business minded government would take Toll to court to pay what is owed, or start confiscating rolling stock for part payment of the track access charges. After all, if a trucking firm doesn't pay road user charges to use the government's state highways, it faces being fined and the unpaid charges recovered, likewise airlines using airport.

No, after pledging to spend over $1 billion on its OWN assets, it wants to spend over $500 million buying the company that uses them which doesn't even pay what the government charges.

What this will mean is we will be back to the days before privatisation, when the railways lost money - and either were subsidised heavily (1982-1988) or getting bailed out regularly (1982, 1988, 1990).

Maybe the truth just hurts too much, maybe the government needs to give Toll the rail network back and say - make a go of it, and if you can't, then sell it to whoever wants it. While it's at it, it could sell the state highways as well, now that WOULD be worth a fair bit.

but what would John Key do?

How bad is it to get infrastructure built in Britain?

One post on an aviation message board says this about how quickly this writer thinks Heathrow Terminal 2 will be replaced (this isn't serious, but has a few elements of truth):

This is Britain we are talking about.

My predicted timeframe:

Oct 2008 - stop using T2.

June 2009 - Submit public tenders for various designs for its replacement.

July 2009 - All designs rejected by local residents.

August 2009 - A rare and previously thought to be extinct breed of dust mite is discovered in T2.

Late-August 2009 - A charity single entitled "Save the Mites = Save our future (and our Children's future)" is released by two ex-Pop Idol nobodies. It goes straight in at number one.

September 2009 - Local residents set up an action group called T.W.A.T.S - (Team Worried and Against Terminal Success) which pickets Parliament to demand that the area is left for animals to graze on, as anything other than this course of action represents what basically amounts to Planetary Homicide. They lodge their formal complaints to the planning commission, which rules that in light of the new complaints against the massive expansion of Heathrow airport and the obvious and irrefutable damage replacing the terminal building will do to London’s green belt, that all previous planning permissions and tenders are null and void. A new planning process is started.

October 2009 – T.W.A.T.S chain themselves to a chainlink fence on the airport perimeter and are forcibly removed by police.

November 2009 – T.W.A.T.S climb in the roof of T5 and splash red paint all over the place to illustrate the murder of the green belt. One tries to break a window and falls to his death. “Stinky” as he is known, of no fixed address, is immediately Martyred. The local Government releases a statement expressing their sincere sorrow at his death. His wife/partner “Crusty” also of no fixed address, sues BAA for having lax enough security to let them in in the first place, and is awarded three million quid in damages. She cuts her hair, has a bath, moves to Kensington, sets up an advertising firm and buys a Range Rover.

December 2009 – Local residents not affiliated to T.W.A.T.S pre-emptively sue the Government for millions because of the emotional hardship so brutally inflicted on their lives by the grim edifice of the new terminal, in whatever form it may take. A Government investigation board is appointed to appoint a committee to do a study of the plans.

June 2010 – Committee appointed.

October 2010 – Committee convened for half an hour.

April 2011 - Committee convened for an hour and ten mins.

November 2011 - Committee convened for a seventeen minutes.

December 2011 – Preliminary findings are released. They say – “It is the opinion of this Committee that a public enquiry should be convened to assess the lawsuit brought by local residents. Once this is complete planning process may begin on the new terminal”

June 2012 – New committee convened which meets for three mins in a bar in Whitehall before taking a treasury credit card to Spearmint Rhino. Signs are put up all round the now derelict and crumbling T2 site that say that BAA is ‘Caring for your future’

November 2012 – T2 blows down in a moderately strong wind. A national day of mourning is held for the dust mites which it is presumed all perished. A charity single rework of Elton John’s ‘Candle in the Wind’ is released, sung by Jason Donovan and a class of primary school kids from Bromsgrove, entitled “You weren’t just a dust mite to me (Give peace a chance)” – its rockets straight to number one.

December 2012 – Work begins on clearing the site. Local residents complain about the noise of the drills and diggers (over the noise of the planes) which are causing emotional problems and successfully get an injunction to prevent the contractors from using any mechanical tools at all. The rubble is moved by hand. Local residents win more millions in compensation, because BAA should never have allowed the building to collapse in the first place.

December 2013 – the site is cleared. The fourth appeal of the planning permission is in the process of being dealt with in the High Courts.

April 2014 – The local residents take their case to the European Court of Human Rights in The Hague.

June 2014 – Final design, an award winning masterpiece of modern design and technical genius from Sir Norman Foster is dismissed on costs grounds. A rival bid from Botchitt & Scarper Ltd is accepted. The commission expresses ‘concerns’ that the design does not have any gates, and that the water feature and timber decking in and around the hard stands are unnecessary.

November 2015 – Work begins.

December 2016 – Work finishes. BAA make a massive glitzy launch and much is made of the fact that it came in with no work overruns and actually early. Rather less is made of the fact that the work is 395% over budget.

March 2017 – Structural engineers state that the building is unsafe. It transpires that the contractors had just poured tar over the ground and stuck beams into the tar. The site foreman, a Paddy O’Murphy, went on record as stating that “It was fine mate, its fine for people’s drives, and its fine for de terminal tingy dat we’re doing for ya’s. Do ya like Dags?”

April 2017 – Botchitt & Scarper Ltd is found to be a fake company. Nobody at the planning commission bothered to do any due diligence because they all had their drives done as a bonus. The new T2 falls down in a light breeze. An Al-Qaida carbomb is blamed.


May 2017 – Local residents sue again for emotional distress caused by the length of the planning process.

July 2021 – A new terminal design is approved.

May 2027 – The new T2 is opened. It was fifteen years late and cost more than nine-billion pounds all told, or 30% more than an entire brand new airport in the Thames Estuary.

(btw, the truth is that Heathrow Terminal 2 is to close within the next year or so, to make way for the new Heathrow East terminal. All the airlines using Terminal 2 are being relocated to Terminals 1, 3 and 4 after BA is relocated out of Terminals 1 and 4 and into Terminal 5 next month)

Bill English says "Like Labour, National...."

That's right, the Greens set the agenda, Labour follows and National? It just nods.

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Well why should I be surprised? After Sue Kedgley’s rant, Michael Cullen listens and what does the Opposition spokesman on Finance do? Bill English basically agrees there is a problem with foreigners (shock horror) owning a majority of shares in Auckland airport (and undefined “strategic assets”), the only difference is he doesn’t think the facts are the way Cullen says.

His criticism is NOT that it is ok to interfere with private property rights, no. He happily cheerleads on the Overseas Investment Commission and its pointlessness. His criticism is that there is no evidence that the Canadian Pension Fund wanted control of the airport (presumably if they did, well it would be a different story wouldn’t it?). Which of course means that we “shouldn’t be afraid”. As if there is anything to be afraid of, except for the paranoid delusional conspiracy theorists who usually reside at NZ First, the Alliance and the Greens.

English’s first press release said “National believes that local control of taxpayer-owned strategic assets is important”. A bizarre tautology if ever there was one. How the hell would it not be locally controlled if it was taxpayer owned?

Then his second press release said "Like Labour, National believes retaining the control of strategic assets is important”. Who retaining control Bill? What are strategic assets? Most importantly, why?

What the hell was going to happen? The entire Wellington city bus fleet was foreign owned for over a decade, along with the major Auckland bus fleet. One of the two major cellphone networks is entirely foreign owned, as is the second major telecommunications company, and the second and third airlines. The second and third major television companies are predominantly foreign owned, as is the dominant pay TV operator, and the majority of commercial radio stations. New Zealand is entirely dependent upon foreign owned motor vehicle manufacturers. Almost all sugar and oil comes from foreigners too, as do pharmaceuticals.

So when the election comes, and you are tempted to tick National for your party vote remember Bill English saying “Like Labour”. Ask yourself if you want National to govern alone when it picks up its political philosophy from the Greens, and tick a party that doesn’t.

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UPDATE: Stuff says National wont block the airport sale - but well, that is only if it is on a minority shareholding basis. It reports John Key saying "If it's a majority ownership it's a very different situation". So in other words John Key agrees with Sue Kedgley - simple as that. If you want Green party policy on foreign investment, vote National!

Obama the protectionist or the opportunist?

Barack Obama has, disturbingly, made a lot of noise about NAFTA – the North American Free Trade Agreement – which opened up free trade in most goods and services between the USA, Canada and Mexico. Obama, seeking votes from protectionist oriented businesses and trade unions, has called for NAFTA to be renegotiated, essentially to force US environmental and labour regulatory standards upon Mexico. Apparently that sort of imperialism is ok by the left.

However, CNN reports a memo by a Canadian consul official in Chicago, about a meeting with Obama’s economic advisor – Austan Goolsbee – suggests differently. According to the Daily Telegraph , it says “the primary campaign has been necessarily domestically focused, particularly in the Midwest, and that much of the rhetoric that may be perceived to be protectionist is more reflective of political manoeuvring than policy”

Which is positive of course for those of us who aren’t Marxists or nationalists, but doesn’t paint Mr Obama all that well from an integrity point of view.

According to the Daily Telegraph, Mr Goolsbee denies it of course “This thing about 'it's more about political positioning than a clear articulation of policy', that's this guy's language. He's not quoting me." The Canadian Embassy, to be fair, is embarrassed that a document from one of its officials is being used for political purposes saying "There was no intention to convey, in any way, that Sen. Obama and his campaign team were taking a different position in public from views expressed in private, including about NAFTA." Though I am sure the Canadians will be relieved if he will!

Hillary Clinton is making hay of it of course. NAFTA has been highly positive both for US consumers (as it has reduced costs for goods and services) and US producers (sourcing cheaper inputs and the rapidly growing market of Mexico) as well as Mexico. A stable growing Mexico will not only reduce poverty there (which apparently Mr Obama doesn't give a damn about), but also provide a wealthier market for US made goods AND reduce incidents of illegal emigration to the US - because there are jobs in Mexico.

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US leftwing imperialism to disallow Mexico from competing on the basis of what it largely can offer - lower cost unskilled and semi skilled labour - would impoverish both Mexico and the US. Mexicans without jobs can hardly fight for higher wages and working conditions can they now?