But is it not 2% after two years, because there is nothing to stop someone
refinancing their mortgage after the first year and re-borrowing the 1%
repaid in the previous year. That is the killer flaw.
Yes a flaw. I am sure it could be designed better. However bear in
mind that the current OCR rates are based on the last 6wks economic
figures. What is more sensible, set an OCR that impacts in 2 years time
or immediate impact for a brief time period?
a) cut the top personal tax rate to discourage negative gearing in property
investment
My top wish, however we have a govt that in 9 years hasn't even adjusted
the tax breaks.
b) reduce personal tax in general to encourage skilled workers to stay in NZ.
I don't see any great reason for staying in NZ after clocking up a 6 figure
student loan at a tertiary institution.
Yup.
However if the only time you have to pay it back is when you leave the
country it could actually encourage people to stay. It would be simple
to make it that you loan is wiped after 5 (?) years of working in NZ.
d) provide tax incentives to encourage people to save and invest in businesses
(kiwisaver sort of addresses this)
Kiwi saver forces people to invest with fund managers, which are shit.
Did you know that on average only a small % of fund managers beat a
basic bank savings accounts returns each year? The rest of the time
they are worse ! See Gareth Morgan web site.
Kiwi saver removes choice. If I want to invest in my business I get no
breaks, however the govt will encourage me if I dont. Also once we join
Kiwi we cant get out, however the same doesn't apply for the govt. I.e.
In 2 yrs time the govt could wipe all subsidies. Everyone who joined
would then be stuck paying into schemes that were only good because of
the govt top ups. (this happened hears ago to Life insurance perks).
c) get the IRD to root out speculators who are in the "business" of buying and
selling property and tax their income accordingly. There would be no need for
a capital gains tax on property, if the current tax laws were properly
enforced.
(Cullen has provided more funds to the IRD in the last budget to promote this)
d) stop inflating the public sector and creating jobs which add no value to
the economy
I dream of this :) At least they could make the public sector wages
similar to the private sector (currently the avg is much higher in public).
Todd.
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