Friday, February 26, 2010

The Nats Tax

Most of us probably realize that taxation is necessary to maintain our society, but I have noticed that very few of us seem to be very willing to pay any more than we need to. Tax is such a grim little word. Perhaps we should call it something like “Social Assurance Payments”. It might ease the pain if you believe that too much of your hard earned income is being sucked into the Government’s coffers and frittered away.

The collecting of taxes in New Zealand is a lot simpler these days than it used to be. When I first started working, taxation was a key part of economic and social management. It was very complex and weighted towards providing incentives and penalties in almost every part of our economy.

A good example comes to mind when I recall taking part in a campaign to remove a punitive tax on handmade pottery. Robert Muldoon saw the hundreds of potters setting up around the country and decided we must be prosperous enough to pay our share of tax to keep his listing ship of state above water. He could see that some of us were more ‘arty’ than others and demanded more sales tax from artist potters than the makers of functional ware who had studios resembling small factories.

This really upset the more militant potters and they held (well publicized) events such as the smashing of pots on the steps of Parliament Buildings. I could not afford to do that, however I did send out protest cartoons and wrote long angry letters to MPs. I also pestered local politicians at social gatherings and annoyed them at public meetings.

I stopped making “decorative ware” such as vases and switched over to making “functional ware”. They were actually my usual vases and I simply added new names like spoon holders, pickle jars and storage cylinders etc. to avoid tax. The absurdity of it all eventually persuaded the Government to withdraw all sales taxes on handmade pottery. They realized that the cost of compliance (and non-compliance) was going to be far more than the revenue it brought in.

When the Lange led Labour Government came to power in the nineteen eighties, they did away with the labyrinth of sales taxes and set up the Goods and Services Tax (GST). It was a consumption tax that few could avoid. Various lobby groups fought hard to be excluded, but the Minister of Finance, Roger Douglas, stuck to his guns and pushed it rapidly through Parliament. He made GST cover almost everything - apart from personally owned houses.

The shift from pay as you earn (PAYE) taxes to a higher consumption tax is again on the agenda it seems. In spite of pre-election pledges not to do so, John Key appears to be signaling a likely rise in GST to 15% and compensating payments to beneficiaries in the next budget. He is well aware that GST hits poor people the hardest.

Roger Douglas is not very impressed with the Prime Minister’s suggestions. He described them as “moving the furniture around on the Titanic”. As an unashamed monetarist, he is still promoting something like a 20% flat income tax and shrinking government services to bare essentials.

I doubt if John Key will take that sort of advice. He must have seen the widespread condemnation of Don Brash’s similar monetarist solutions for the economy and knows the electorate would not wear it. Instead, he is wetting his finger and feeling which way the wind is blowing.

I would like to see him stop playing around with tax reductions. It would surely make more sense to invest in education, research and development and new business incentives. I have seen other countries, like the USA, mess around with taxes and take their eye off the ball long enough to lose the game. We do not need to join them.

Keepin' On Truckin'

House trucks are probably the nearest lifestyle choice in New Zealand to the gypsy caravans that roamed across Europe. In recent years they have been joined on our roads by a new group of wanderers - the Aussies call them “Grey Nomads”. These are usually semi-retired types who hit the highway in style with most of the trappings of modern life on board.

I first heard of the Grey Nomads when an Australian friend told me about the thousands of people who migrate up the Eastern coasts to escape the winter and then go south again when the steamy heat of the Queensland summer returns. I thought this was only an Australian thing, but then I came across a Kamo couple who are doing something very similar – except in their case, they follow the seasonal work each year.

They are a very organized couple and prepared for this way of life years ago by building a self-contained flat in the basement of their house. This has become a home base while the rest of the house is rented out all year round. When I first met them they looked as fit as a fiddle and had lots of yarns about their trips throughout our beautiful land.

These days, they see heaps of other people on the road like themselves, who fancy some time away from home and want a lifestyle that frees them from the dreary chores of cutting hedges and mowing lawns. Feeding this self-fulfilling fantasy is a steady stream of ex-rental camper vans that come onto the market each year and attract buyers who at one time might have been after a caravan. Sadly, the property boom has seen many motor camps and caravan parks being sold to developers. This has made camper vans even more popular due their capacity to be able to be parked up in places unsuitable for caravans.

There are also plenty of motorized nomads who prefer to fit out their own motor homes (and house trucks) to suit their own needs and I find these vehicles the most interesting. Each person, or couple, have a unique way of fitting out their own vehicle and I am often impressed with how ingeniously they cram so much stuff into such a small space.

Modern communication technology has added aerials and satellite dishes to the outside of motor homes and I recently met a man who also has solar panels to extend his camping time. He used to be an advertising man and now earns a good living making hand illustrated cards with humorous and thoughtful sayings. On board are computers and a printer which help him produce the cards that he supplies to outlets all over New Zealand.

I must say that writing this article has given “Doodling Dave” some ideas. Who knows, one day you might occasionally see an aging campervan with the name “The Dawdling Doodler “ parked in some secluded spot while I write and draw my weekly cartoons.

Friday, February 19, 2010

The Cost Of Paying Less

Great news for the lowest income earners! The Government has decided to raise the minimum wage by 2 per cent and it is now $12.75 per hour. This is hardly an amount to make beneficiaries and the rising numbers of unemployed race out to seek work. However, I suppose the poor should count their blessings, at least the wage benchmark has not been cut like it was in the last depression.

What I am about to suggest could possibly make the blood pressure of some Kaipara Employers rise to bursting point. In my opinion, the minimum wage is not enough to live on and so it should be raised to $15 and then $18 and $20 in the next two years. This might sound absurdly undesirable, but it might be worth your time to look at my reasons.

I had the good fortune to be in New Zealand during the nineteen sixties and I remember it as a time when wage levels and working conditions were better than most of our trading partners. Our economy had a rich diversity of businesses, a large amount of New Zealand owned investment and unemployment and debt were at very low levels.

Since that time we have moved to a monetarist economy dominated by the rural and service sectors, which are increasingly becoming foreign owned. Many politicians think this is the best way to go because at least it helps maintain employment. But sadly in doing so we have slipped down the rich list of developed nations as huge amounts of investment income leave our shores.

When I was at school we were told that we should prepare for increased leisure time and early retirement. That seems like an unbelievable fantasy these days because most kiwis now work longer and harder than ever to keep the wolf from the door.

Obviously, we need new solutions and I think I found some when I watched a Country Calendar programme on TV. A group of New Zealand kiwifruit growers were inspecting new gold kiwifruit orchards in Italy. While they were there, they had a look at the pack houses and asked their Italian hosts where the workers were. They were told that (unlike in New Zealand) the plant was largely automated. They also noticed more harvesting machines in the orchards than in New Zealand.

The Italian orchardists did not seem to be dripping in money, so the Kiwis asked why they did not use local or immigrant labour, instead of forking out for very costly equipment. This was apparently due to the EEC setting high minimum wage rates and providing some government incentives - automation had kept them in business.

Most of the countries in the EEC now have a higher standard of living than we do and I think investment in applied technology has a large part to play. We could do the same as we live in a country very similar to many of the prosperous parts of Europe.

Our low wages are not helping us catch up with Australia either. In fact, far too many Kiwis with ‘get up and go’ are doing just that and crossing the ditch to seek greener pastures. We are starting to import unskilled labour to replace them and this is changing our country.

If this is what most Kiwis want then I guess the Minister of Labour, the Hon. Kate Wilkinson, is right to keep wages low. I would prefer that we went with a different plan that is working in parts of Europe and Japan. They use higher rates of pay, government grants, subsidized training and tax incentives to push continuing technological investment to improve efficiency and productivity.

These measures alone would not create instant miracles, but along with other policies, I think they would create real opportunities to restore that sense optimism and confidence in New Zealand remember in my youth.

A Gadget Getaway

The iPad has landed! After months of intense speculation, Apple has at last revealed their latest gadget to follow their incredibly successful iPod and iPhone. Computer tablets are not a new idea. Steve Jobs (Apple CEO), along with other PC makers, have tried and failed in the past to get enough customers to buy them. So what makes this new Apple tablet so special this time?

Some critics are a wee bit disappointed that the iPad does not combine all the best features of an iPhone and a laptop. Even seasoned Apple watchers predict that the best has yet to come. Despite these reservations there are plenty of good reasons to predict that Apple is onto something revolutionary that will change the phone, media player and PC markets.

The Mk1 model is in fact a stretched out iPhone that can be used as an internet connection, media player and an e-book reader. It competes with Amazon’s Kindle, which up till now has been the major player in the marketplace. If the iPad does really well, then in my opinion, the end is nigh for many hard copy newspapers.

The iPad’s high quality touch screen certainly puts it ahead of the Kindle. Apple has left the device open to outside applications and I think this feature is where the really exciting action is going to take place. Amazon realized this and it probably pushed them into recently buying a high-tech company called Touchco. Touchco has developed an affordable pressure sensitive surface for computer displays and could give Amazon’s Kindle e-reader the features it needs to keep it in the market.

I have a few friends, on the ‘alternative side of the fence’, who cannot help stifling a yawn when I rave on about the iPad. They are convinced that this kind of gadget is a time waster. It also depletes valuable energy resources and endangers the planet. I found it hard to argue against that, until I heard an energy expert on the radio providing data that compared today’s average household energy consumption to that of the 1970s.

I was surprised to learn that, in spite of all the new gadgets in houses these days, energy consumption is very much the same. He put this down to huge increases in the energy efficiency of household appliances and improvements in insulation. House designs have improved too and often take advantage of the seasonal movements of the sun.

Mind you, modern technology in the iPad, like Wi-Fi, has its dangers. Other people can hitchhike onto your internet account if you do not install a security lock. I know someone on Dial Up who discovered a Wi-Fi hot spot in one bedroom and now enjoys broadband free of charge. I wonder if many people see this as a plus when they buy or rent a house? If they do, then perhaps the men (and women) in blue will need an iPaddy Wagon one day to cruise the suburbs and keep us from temptation.