John McDermott in the Dominion Post
John McDermott has written an excellent considered article in the Dominion Post.
The key points in my opinion are:
… Three issues stand out as problematic: the differential between the company tax rate and the top marginal tax rate on income is too wide; we have too much fiscal drag; and we have unequal tax treatment of returns on financial assets compared to housing assets.
The marginal tax brackets have been frozen since 1999, while the cost of living has increased by more than 20 per cent. If the top tax bracket had been indexed to inflation, it would now be $72,000.
This process is seen as unfair and, when citizens believe a tax system is unfair, the level of avoidance and evasion tends to increase, to the detriment of the economy as a whole.
Claims that we cannot address the fiscal drag problem because tax cuts would be inflationary are intellectually dishonest.
There are very few balanced articles written about the tax debate out there which are considered and address the key issues of the NZ tax problem. Solutions to the current problems aren’t suggested in the article.
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August 10th, 2006 at 7:42 am
Out of the 3 points the one I feel most passionately about is the:
“we have unequal tax treatment of returns on financial assets compared to housing assets.”
Especially after the latest b*tch slap of Vector which makes it highly likely people will be investing even less in the local sharemarket now.