Taxpayer Update: A new tax grab | Grant's confession | Super tax

September 07, 2021 Louis Houlbrooke

Dear Supporter,

Congestion charging: A new raid on commuters' wallets?

Traffic

Parliament's Transport Select Committee has completed an inquiry into congestion charging – and every party involved is keen on the idea.

The proposal would initially involve charging motorists entering central Auckland during peak traffic hours, but the door has been left open for other councils to introduce charges of their own.

Is this just another tax grab? It doesn't have to be: Parliament could mandate that all revenue from the charge is used to cut fuel tax. That would mean motorists who avoid peak-hour inner-city traffic get a discount.

But the committee is proposing raiding the revenue for public transport projects and "active transport" (read: cycleways).

On our Taxpayer talk podcast I spoke with National MP Chris Luxon, who was part of the inquiry, about whether his party is supporting a tax grab.

🔊 Click here to listen to the podcast.

He makes a strong case for using pricing to manage congestion the same way that private companies (such as airlines) vary prices according to demand. But, while he's keen on cutting fuel tax, he doesn't rule out using some of the revenue on other projects.

As we warned in June, if there’s even a hint that this policy will be used to extract more money from commuters, the idea will become politically toxic. With the hikes to fuel taxes, the ETS, and the Ute Tax, that last thing we need is yet another nasty tax on motorists.

It's early days yet (the legislation will need to be drafted and put through a consultation process) but your humble Taxpayers' Union is ready for a fight to demand any new tax is 'revenue neutral'. Watch this space.

Robertson's stunning $3b admission shows potential for taxpayer savings

Last week in Parliament the media somehow missed Grant Robertson admit something incredible: he's looked back at his "COVID response" spending projects and reckons he can "claw back" $3 billion.

In other words, he's confessed that he misused taxpayer money.

This comes after a week of pressure from the Taxpayers' Union and Opposition MPs. Here's National's Michael Woodhouse in Parliament citing some of our examples of how the COVID response fund was frittered away:

Michael Woodhouse Click here to watch the clip.

The $3 billion Robertson says he can reclaim equals around $1600 for every household in the country from his previously-allocated spending. If he can find this much money just by looking between the couch cushions, that suggests far more money could be reclaimed if he does a deep clean.

If Robertson doesn't do a thorough job clawing back low-priority spending, he's signalled he's willing to simply borrow to cover new costs. His justification is that thanks to better-than-expected economic performance we can keep borrowing while staying within debt forecasts. But the forecasts are disastrous, showing a Debt Monster of around $100,000 per household by 2024. Why on Earth would we treat that like a target?

A new push to hike taxes on working superannuants

Susan St John

An Auckland University academic is promoting a new plan to offset rising superannuation costs: Susan St John wants to hike taxes on superannuants, with a 39 percent flat rate tax on any income additional to Super.

It's a dumb idea. Working superannuants should be celebrated, not punished with higher taxes. They make a positive contribution to our national productivity and to our tax system. In fact, once you account for income tax, GST, and council rates, many working superannuants pay more in tax than they receive in Super.

A 39 percent tax rate would discourage older New Zealanders from remaining in work, which ultimately shrinks the tax base. It would also introduce a disturbing element of age discrimination to our tax system.

This plan is an attempt to dodge the fundamental problem of rising costs. A more sensible proposal would be to adjust Super payments for inflation instead of average wages. That would curb rising costs without cutting real incomes for over-65s.

Councils shouldn't be issuing parking tickets during lockdown

Wardens

Wellington City Council is ticketing parked vehicles in the CBD during lockdown – a practice out of line with other cities that have rightly told parking wardens to stay at home.

This is nasty revenue maximisation at a time when councils should be showing kindness. Parking charges and time restrictions are to ensure vehicles aren’t parked longer than necessary and to keep the parks revolving for other people. That is totally unnecessary when the City is largely abandoned.

In fact, Wellington City Council's ticketing strategy risks pushing people onto buses and trains where COVID is more likely to spread. Madness.

Three Waters reform: you need to know about this

What could be the downside to centralising our water infrastructure and allocating 50% ownership to iwi?

Three Waters reform is an issue we're following closely. The proposed reforms would remove control of billions of dollars' worth of assets from local authorities. We're preparing a tool to ensure ratepayers and taxpayers have their say in the submission process, which closes at the end of this month.

In the meantime, here's two new episodes of Taxpayer Talk to get you up to speed with the issue:

🔊 Click here to listen to the interview with Westland Mayor Bruce Smith.

🔊 Click here to listen to the interview with ACT MP Simon Court.

An Unexpected Premiere

Finally, Taxpayers' Union Analyst Neil Miller has been dwelling on the disastrous outcome of the taxpayer-funded subsidy granted to Amazon's Lord of the Rings series, which has now shifted production to Britain. Below I've pasted Neil's take on the saga in full.

***

In a hole in the Beehive there lived a hobbit. Not a nasty, dirty, wet hole, filled with the ends of worms: it was a Ministerial hole, and that means comfort. It had a perfectly round door like a porthole, painted bright red like a KiwiRail locomotive, with a shiny yellow brass knob in the exact middle.

The door opened on to a very comfortable office with panelled walls, floors tiled and carpeted, and polished chairs. This Minister was a very well-to-do Minister, and his name was Bilbo Twyford. Twyford had lived in the neighbourhood of The Hive for over four years. He was always accompanied by his loyal gardener, Samwise Nash.

One day, there came a loud knock. Not a ring, but a hard rat-tat on the Minister’s beautiful red door. Somebody was banging with a stick! Twyford and Nash were confused, they had no meetings in their diaries. Summoning up his most assertive tone, Bilbo Twyford wavered: “No thank you! We don't want any more visitors, well-wishers or distant relations!"

A deep voice boomed “And what about some very new friends?” The door swung open and there, clad in finest shimmering Armani, stood Amazon the Grey, the legendary wizard of taxpayer subsidies for multi-million-dollar films. “I have an adventure for you Masters Twyford and Nash. In truth, I have five seasons of adventures which will spread the name of the Hive far and wide,” Amazon told the astonished Ministers.

Bilbo and Samwise raced to their strongroom, deftly sidestepping the sleeping figure of Smaug Robertson. They returned with gold, silver, jewels, frankincense, myrrh, and most valuable of all in the Second Age of Pestilence, three-ply toilet paper. The deal was sealed with a solemn round of “paper, scissors, rock.”

In the first eon, matters appeared to be going well and there was no cause for alarum. Then, on a stormy night, Amazon the Grey returned to the Hive, this time accompanied by thirteen intellectual property lawyers, all stroking their beards and laughing into their bulging money pouches.

Amazon told the Ministers he had dark and troubling news. Then there was a flash of light and a cloud of smoke, and while Bilbo and Samwise were left gagging in the vapours of a cheap flash bang grenade, Amazon was spotted riding away on a Jaguar, laughing manically, and twirling his moustache. His lawyers left behind a short note saying the adventures had all moved to the Northern Kingdom, including taking the infrastructure of the whole series developed by the Hive, for various exciting tax purposes. They obviously attached an enormous legal bill.

A crestfallen Bilbo Twyford eventually penned a warning letter to the stout yeomen of the Northern Kingdom, to be delivered by Light Rail when the line was complete. He wrote these prophetic words:

Do not be seduced by Amazon’s bewitching words and card tricks. Watch out next year when the Kingdom of Croatia or the Lords of Canadaor come calling on the ring bearer with even larger taxpayer funded subsidies. There is no loyalty, there be only dragons. We know what it is like to have what we thought was Our Precious taken from us. Multi-national wizards like Amazon will always up and follow other people’s gold. They never put a Ring on it.

***

Enjoy the rest of your week,