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Money

Entry 328, on 2006-05-16 at 14:42:27 (Rating 3, News)

Australia recently reduced its tax rates and now the pressure for a similar change has appeared again here in New Zealand. Tax was a big issue at the last election: the National opposition wanted to reduce taxes, but Labour, who didn't want any change, still won the election. Why would people vote for more (or at, least not less) tax?

The fact is that most tax reductions actually disadvantage the average person. Tax tends to be used to pay for services that either everyone uses roughly equally (roads, etc) or for services used by the relatively poor (welfare). Since the rich pay more tax than most (or should unless they have discovered a good tax evasion scheme) tax is a good redistribution scheme.

Many people say the rich deserve more money because they work so hard. This is nonsense, of course. I know many rich people do work hard, but so do many poor people. And even if a rich person does twice the work of an average person, should he be paid ten times as much? Another argument is the "trickle down effect" - make the rich richer and that will somehow improve the economy to the benefit of everyone. Yeah right, I think that old idea is well and truly dead now, or should be. We've seen nothing but the gap between rich and poor increasing under that sort of policy.

One use for the government's tax revenue is extra police. They are funding 1000 extra officers. I suppose that isn't a bad idea, if they are used responsibly. Simply putting more people in prison is not the right answer. The strange thing is that often a certain group of people simultaneously demand more police and less tax. Can't they see that there is a link between the two?

New Zealand has some major issues with infrastructure at the moment. Auckland's roads are a disaster, and extra power generation is a priority. The problem is that we have a disproportionate percentage of our population living in our biggest city. Until the population is more balanced between the major centers the problems will continue. By making Aucklanders pay for their own roads which makes Auckland a less desirable destination we might be able to do that. So the finance ministers comments that Auckland should pay for more themselves is quite sensible. Again, many business people (yes some of those who want lower tax) are demanding the government pay instead.

So my thought is that tax isn't necessarily a bad thing. If the tax is used in a sensible way it is really a good thing. And if anyone wants to leave New Zealand for Australia just because they can pay $10 per week less tax, I say good luck to them.

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