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A Taxing Time

Tax seems to be the latest political hot topic here in New Zealand. Various groups are dreaming up recommendations for changes to our tax system and some are a lot more reasonable and practical than others.

The government was committed through an agreement with one coalition partner, Act, to produce a review although there was no requirement to take its findings seriously. That is just as well because the group seem to have been mainly composed of raving lunatics from the political extremes of the new right (actually I suppose “new right” is hardly relevant any more but what I’m talking about are proponents of extreme libertarian, laissez-faire economics).

Even the moderately right wing National Party has run a mile for the report produced by Don Brash and his bunch of nutters. Its not as if the report contains anything new or relevant. They could have just pulled out the same old stuff from the 80s and recycled that. The fact that we know it doesn’t work is irrelevant to these people because they are motivated by ideology rather than practicality.

The idea of catching up with Australia economically is a silly one because Australia does have some advantages we don’t enjoy here, such as its mineral wealth and just the economy of scale a larger country has.

Labour has claimed we actually gained on Australia during the relatively left-oriented policies of the last nine years but the extreme right (Roger Douglas, no less) claims the opposite. Who’s right I don’t know, but what I do know is that the low tax, small government, private and foreign ownership model has no outstanding benefits which outweigh its obvious problems.

No one will deny that we should have a fair tax system and one that will encourage an efficient economy but fairness is a difficult attribute to understand fully and I’ve seen a lot of policies aimed at fairness achieve the exact opposite. So if we can’t get a fair and balanced review of the tax system we should just leave it the way it is, despite its faults.

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