by frog
We have choices this Budget day.
We can choose to use the deficit crisis as a reason to cut and sell and leave the economy no different from the place we were in when things went wrong. Or we can use the crisis to begin the transition to a more sustainable, prosperous, and fair economy.
Severe cuts risk recession. More borrowing risks a credit downgrade. We can instead raise more revenue and, in the process, help shift the economy onto a more steady footing.
Instead of selling off the last of our best state assets to raise one-off revenue, we could instead introduce a range of eco-taxes to put a fair price on carbon, water, and waste, using market signals to switch the economy to a more sustainable future.
We can introduce a comprehensive tax on capital gains (excluding the family home) which would raise revenue to help balance the books while benefiting the productive sector and making homes more affordable.
Meanwhile, a clear majority of New Zealanders have indicated that they’re prepared to pay a small temporary levy on their income to pay for the rebuilding of Christchurch. So why are we adding $5 billion more to a record deficit instead?
A smart government would balance their books by considering some revenue options like these while revisiting some of the ways its spending money poorly — like the $7 billion it’s pouring into motorways when oil prices are high.
We do have choices this Budget day. This paper sets out some of these choices we can make to take us down this smart economic path.
What do you think of it? Let us know in the comments below!
Published in Economy, Work, & Welfare | Environment & Resource Management | Featured by frog on Tue, May 17th, 2011
Tags: Budget 2011, Budget Week, capital gains, earthquake levy, state assets
on the trolls and those who are unable to keep on topic
Predictably, the Minister of Insufficient Revenue doesn’t.
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Meanwhile DPF continues to try and discredit the Mana Party, Whale is shooting feral cats, Catcus Kate is still harping on about the dear Don Letter and most of the other right wing bloggers are lost in their own little irrelevant lives.
Dunne the dunny brush needs to stop talking shit! Corporate welfare, Ministerial abuse of position, continued lies, disinformation, stupidity, taxing the poor, huge increases in the cost of living, an increase in GST, 59% of houses not properly maintained, Rents overpriced by 43% and our 100% pure NZ campaign in tatters thanks to Shonkey. Where does it end?
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Good onya Russel & the Greens for trying to drag Aotearoa/NZ into the 21st century.. not back to the 19th !! Kia-ora
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Any idea how much water pricing would increase food prices? Or are you that economically naive that you dont think if the costs of production for farmers goes up then that arent going to increase the costs of food to offset those increases? Or is there something I am missing?
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Funny for a budget document there is nothing on welfare, education and health (I only read one of the docs though). Seems like You’ve missed some pretty big elephants in the room.
Was it only ever intended to look at the environmental issues?
@rjs
Food prices to some extent are driven by commodity prices which may not take into account local production costs.
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I don’t think it purports to be a comprehensive “Alternative Budget”
Russel Norman’s intro states:
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Why exempt the family home?
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Stuff all. What we pay for New Zealand produced food is driven by what our export markets will pay for it, not by the cost of production.
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I think the family home should be exempt up to $500 000. Or just above the average house price in Auckland. Whichever is the lower. For political as well as practical reasons. Many people are much more likely to support a CGT if the family home is exempt.
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Taxin capital gain on the family home is an admin nightmore and is a sure way to kill off sweat equity improvements in the housing stock.
How do you separate out legitimate value increase from maintenance (and home insulation) from inflation and how do you factor in varying interest rates.
The improvement in one’s home through alterations and additions and mtce is one of the most effective forms of saving. People gain capital value and live in a more comfortable and healthier home.
Incentives do matter.
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True, but no reason why we should pay the same price as export markets.
Especially as the food, timber and other products sold in NZ are not export grade. Any one who has bought computers in Japan, shoes in South Korea, or Australian beef in NZ, knows that not all countries charge the export price in domestic markets.
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A CGT on the family home payable on realisation is likely to result in owners who want to move but don’t have to move holding out for a better price from which to pay their CGT, thereby reducing supply and inflating prices.
That is the exact opposite of what I as a Green want to see, which is as many people who want to own their own homes being able to do so.
Home ownership is a social good that assists family stability and the continuity of educational opportunities for children. Owner-occupancy generates positive externalities such as safer and more stable neighbourhoods and improved educational outcomes for children.
A CGT on the family home would detract from that (although it would come close to doubling the CGT revenue raised from that with the family home exempt). But, despite the severity deficit issue created by National’s “do nothing and leave it to market forces” plan, it is not all about raising government revenue.
I think including the family home in a CGT would be a step too far for many people.
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@Kerry Thomas 5:09 PM
But if we don’t we likely end up getting dorked by the WTO, thanks to the stupidity of past governments that entered into trade agreements which undermine our economic sovereignty.
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You are right about free trade agreements though. South Africa was so totally fucked over by international agreements before the majority rule Government took power that they still have very little room to manouvre economically.
One of the reasons I will no longer vote Labour.
NACT will try and do the same to us.
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National’s approach is to reduce revenue, reduce government spending on many essential services and borrow (while deliberately protecting the already rich).
The Greens will actively increase revenue in areas that will also result in shifting investment to the productive sector. The Greens will also ensure there is an equitable sharing of the the costs to repair the damage done by earthquakes or the unsustainable exploitation of our resources.
No choice, really.
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“we could instead introduce a range of eco-taxes to put a fair price on carbon, water, and waste, using market signals to switch the economy to a more sustainable future.”
Isn’t this hopelessly simplistic? The Greens seem to have decided the market is perfect so long as ‘true costs and benefits’ are figured in:
“Markets fail when price signals do not reflect the true costs and benefits of production and consumption.”
To dub these proposals ‘neutral’ in ‘fairness’ makes me wonder what you are talking about. How can a market solution, which inherently favours those with money over those who don’t, be fair?
To claim that ‘the market’ will respond by inventing gadgets to, for example, reduce water consumption is just wishful thinking.
Suppose ‘the market’ responds by raising the prices of its products? The fact that what we pay is unrelated to the cost of production is irrelevent. Those with power in the market can set the profit level they choose. Those without (us) have no say in the matter, except to stop buying products (which in this case means stop eating, or switch to cheaper food).
Perhaps ‘the market’ will respond to water costs by producing higher profit items, luxuries for the rich? Or by abandoning production and cashing in the capital (more lifestyle blocks, more holiday homes, fewer jobs and goods)?
Whenever I hear politicians talk of ‘smart, innovative solutions, fresh thinking, new ideas, technological developments, etc.’ I presume they are blathering to cover up their complete lack of real answers.
Why is the Green Party so keen to throw us to the mercy of ‘the market’? Because they don’t want to appear too socialist or just because they are bereft of any other ideas?
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Yes I am all for a TOBIN and Capital Gains Tax, the UK Guardian had a good article on how much wealth would be produced when 0.01% extra would be taxed on the 1% of the wealthiest in the US!!!!
It was absolutely staggering!!
The prophet Baha’u'llah said that the solutions to our economic problems of the world are not economic, they are spiritual!!!!!
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It’s OK as far as it goes
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Sam, there are already water saving devices on the market (the world already has water shortage areas), if water was charged people would be more likely to invest in them (or develop better products) here.
Price setting builds up industry development in the eco-efficiency area – creates “green business”. The Green Party has to function within a political and economic plurality and develop ideas that fit within that and yet are transforming.
The revenue from charging can be used for public investment in water storage systems etc.
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The Minister of Insufficent Revenue states:
The question is, is Dunne’s statement true?
In my opinion, we are already excessively taxed for our populace of low wage poor people. The Greens propose to put more taxes on those in the vunerable < $100K sector. Few with less than $100K income have money waiting to be used as tax.
There are few good solutions that work that involve raising more tax on he current populace, and what is suggested does not qualify as "good". There are no good solutions to massive cuts to government spending that wont have a deleterious effect on society. The only solutions that work involve greater productivity of the country, so we all have more income, and a reduction in effective taxation rates, so that with a smaller take of a bigger economy there is a bigger revenue pool.
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@Sam Buchanan 5:58 PM
The water pricing policy relates to agricultural and industrial use of water, not household use. Other Green policies on water state:
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You (and Peter Dunne) are forgetting that the Greens also propose to make the first $10K of income tax free. That policy is set out in the Greens’ earlier Mind the Gap package and provides $3.2 billion of income tax cuts, that would be offset against the revenue raising measures contained in this package and which proportionately benefit the very people you are talking about, those on low and middle incomes, the most.
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So it is tha fault of Dunne and I (well there is a pair of unusual bedfellows!) that your (as you call it above) “alternative budget” is actually only half an alternative budget?
There is a lesson here; if you are going to put out an (again, your term) “alternative budget”, put all the relevant policy measures in there, so the reader gets the full (if not necessarily fully detailed) picture.
Take gun, aim at foot, pull trigger.
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“Price setting builds up industry development in the eco-efficiency area – creates “green business”.”
Is there evidence for that?
“The Green Party has to function within a political and economic plurality and develop ideas that fit within that and yet are transforming.”
“fit within” and “transforming” seem to be in direct contradiction, particularly in the realm of ideas, which is where we are working here. I’d recommend you take a look at this report, which points to the danger of proposals that conflict with deeper values: http://www.oxfam.org.uk/resources/policy/climate_change/common-cause-working-with-cultural-values.html
“The water pricing policy relates to agricultural and industrial use of water, not household use.”
I know. I never mentioned household use.
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Water is a public good?
You mean the government should replace my tanks, pumps, pipes and filters with a reticulated water supply.
The policy does say “everyone” – which must include me.
My water supply costs me a lot of money – so I use it with care.
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We all pay for water already. Most of what we pay is for cleaning up polluted water and reticulation. The privatised model for water supply has been an expensive failure, where it has been tried. Like most privatisations of general infrastructure.
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The Greens are talking about reversing the change in tax policy, in the 80′s, which increased the tax take from the lower paid and cut taxes for the high paid and wealthy.
A fairer tax system which rewards environmentally and socially sustainable production rather than speculation.
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“A fairer tax system which rewards environmentally and socially sustainable production”
Nope – these taxes are on production, regardless of its ultimate social or environmental impacts. Market systems select for profit, not for impact.
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Should not producers meet the costs of production rather than be subsidised … – this is mainstream opinion
Price is an allocation measure … this is also mainstream opinion
A tax on such resources as water used by the productive sector of the economy is a move to a restraint on the exploitation of resources and a way to raise revenue.
As it does not require the rest of the society to renounce their positions just apply them to resource use, it’s the fabian method to transformation of the way we allocate and use scarce resources.
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I am all for sustainability and I think that the Greens’ views are pretty good in many ways.
I encourage everyone to look at the CASSE site at http://steadystate.org and consider signing the position statement there. And tell friends!
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