OnPoint: Spoonfuls of sugar
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I'm not sure who it's "accepted" by, must be people who've never been anywhere else. The tax system here is mostly a doddle, with the odd complication. For a hideous mess, try Australia! <shudder>
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The tax system here is mostly a doddle, with the odd complication. For a hideous mess, try Australia!
It's the legacy of the penal colony. Murky regulations allow decisions to be made on the whim of minor bureaucrats. The number of lashes you receive are at the governor's pleasure.
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For all of the whining about the costs of Kiwisaver by business - the contribution they will have to meet is still half of that in Australia. Furthermore, in the longer term they are getting cheaper capital...
The short-sightedness of business lobbyists in NZ and their reflexive partisanship never ceases to amaze me.
And sorry Keith, I'm afraid I don't have too much sympathy for business being made to save on behalf its employees. I don't think it is unreasonable to ask business to share more of the gains of late given the otherwise ongoing falling share of national income going to wage and salary earners.
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Robyn siad
I always pay off my credit card by the end of the month and I save up for big purchases
Saving for things? I'm with Chaos on this. Having had a brother die of cancer in his early thirties makes you realise that there is no guarantee of making it to 65 -75 to need that money you've saved. Add to that the fact that things you want to do at 30 your body may not let you do when you are 50, means I've spent my fair share on the credit card.
It's about finding a balance you can live with. Right now we are in saving mode but I can undersstand why some folks would be spending rather than saving.
cheers
Bart -
There was a good point from Gareth Morgan this morning about who gets to invest the funds. I hope the Gummint is going to keep am eye on that, but overall it seems like a good deal.
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Continuing with my short-sightedness of business theme, again I struggle to see why business doesn't realise that in the new global economy, where NZ firms can't compete on price, that giving more money to workers to keep them in NZ, might be a good thing.
As a wage or salary earner it really makes no sense financially to remain in NZ vis-a-vis Australia unless you have to care for a sick relative or something (and don't give me no vague, BS notions of "lifestyle" otherwise). Only by delivering more income to employees will NZ be able to compete for workers with the skills to pay the national billz.
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"As a self-employed contractor it seems to be making it more and more tempting to setup my own company, because really, having the difference between everything I earn over $60k go from 6% to 9% is just getting to the point where I'd be silly not to."
it's not quite so simple. once you're business is in the company, it's not that easy getting cash out. it's ok up to the point that you withdraw cash to cover the initial assets you put into the business (which could take many years depending on how much you initially put in and how quickly you take it out). once you've repaid yourself for that, the options are limited.if you take out heaps of cash while leaving most of the taxable income in the company (to take advantage of the lower tax rate) you will end up owing the company heaps of money. the IRD requires you to pay interest on any money you owe the company (under FBT rules), which increases the income of the company - cancelling out the benefit of a reduced tax rate.
you can solve problem by paying yourself a dividend or a salary from the company, which then goes on your personal tax return. if that's over $38,000, then bingo, you pay 33% or 39%, depending on your personal tax rate, again cancelling out the benefit of the reduced tax rate.
you only get the benefits of the of the reduced company tax rate IF YOU REINVEST THE TAX SAVINGS INTO THE BUSINESS, which is of course good for productivity, the economy etc etc.
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People do come to NZ for "lifestyle reasons" - we moved back 2 years ago so my kids can grow up here - but I'm also consulting for a US employer and probably getting paid more than I would here in NZ
But your point is valid from a different direction - in the future (well now!) NZ employers will have to compete with overseas employers for not just the people who choose to relocate but also for those of us who choose to live here too
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Paul: I take your point, but I guess I had Australia in mind - where I really think there basically no "lifestyle gap" or depending how much value you place on sunshine, it may actually have an advantage.
I guess my point is that NZ exporters cannot generally compete on price/cost anymore in the global economy - this means that they must compete on quality. Quality requires highly skilled workers. Highly skilled workers can demand higher wages elsewhere - thus NZ needs to provide them with competitive wages. If NZ business is too shortsighted to do this, then I think that it is a task of Govt to make them do this - Kiwisaver is a start, but frankly it is a little half-assed in comparision to elsewhere.
Similarly, domestic firms need to pay higher wages to avoid losing the staff they and the NZ taxpayer have trained up - even if these firms are too short-sighted to realise this.
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I guess I had Australia in mind - where I really think there basically no "lifestyle gap" or depending how much value you place on sunshine, it may actually have an advantage.
I could never live in Australia - too many Kiwis!
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Saving for things? I'm with Chaos on this. Having had a brother die of cancer in his early thirties makes you realise that there is no guarantee of making it to 65 -75
This is a bit like the vaccination debate. It is pretty clear that it makes sense for the entire population to be vacciniated but as individuals we are concerned about the (generally very small) risk of complications for our children.
Statistically the chance of you making 65 are very high in New Zealand. We all know people who have sadly died young but this is not the norm. The rational approach is to make *some* provision for old age, it is not necessarily supported by the emotional approach.
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"why wait until you've accrued enough money for something before you get to enjoy the fruits of your labours, when something like this could just be around the corner . . ?"
So, I go out and get my iPod on credit and get hit by a bus. I can listen to my iPod in hospital and ACC pays for the iPod. Or I get 90% of the price of the iPod saved and get hit by a bus and realise there's more to life than an iPod........is that what you mean? ;-)
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Personally I already save by paying off mortgage. But Kiwisaver sounds like such a sweet deal I'll quite probably switch at least some of my surpluses into that.
My wife works in managed funds, and apparently the entire business has the biggest stonk-on right now about it. If anything will take us in the direction Ozzie has been going for 10 years, this is it.
But it's even better than Ozzie because there it's totally compulsory. Some people really are better off having more of their money now, and under the Cullen scheme it's their choice. It's carrot rather than stick.
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Some people really are better off having more of their money now, and under the Cullen scheme it's their choice. It's carrot rather than stick
Absolutely - it's a savings incentive not compulsory savings. If you don't take up Kiwisaver you'll lose out on the incentives, but your employer will like you (though not measurably, I suspect) for saving them 1-4%. Aussies have no choice but to have put away 9% of salary - which doesn't really buy them more than the Cullen fund does here.
Most people with mortgages probably should pay them down faster rather than put much into Kiwisaver.
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At the risk of sounding a tad Grinchy-y. I find it hard to muster much sympathy for a chorus of 'poor, poor pitiful me'from folks who have serious debt monkeys and very little to show for it. And I'd be eternally thankful to Doctor Cullen and Mr. Key if they even began to deliver a reality check on the downside of easy credit.
(Sorry about the late reply, Craig - time differences plus sickies.)
Yeah, me too. Still, there's going to be an awful lot of such people when the house bubble bursts and everyone with huge mortages realise their house is worth half as much. Suckers.
And interesting to hear it coming from you, because way I figured it, the philosophical divide was going to be on the choice issue: Do we give money back, knowing that the debt monkeys will stuff it all up, or do we keep the money and squirel it away for them?
It's one of those fundamental left-right divisions, ain't it?
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As a wage or salary earner it really makes no sense financially to remain in NZ vis-a-vis Australia unless you have to care for a sick relative or something (and don't give me no vague, BS notions of "lifestyle" otherwise).
So we should all pack our bags? I sense a lost boy who didn't find what he wanted here, so went elsewhere. Good for you, Marcus, but not all of us feel like you. This is my heart home, and regardless of politics or economics this is where I choose to live my life. I don't live here for the lifestyle, I live here because the land speaks to me, the bush speaks to me, the sea speaks to me. Doesn't happen for everybody, neither should it. We all value different things. Or is that a bit BS?
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As a wage or salary earner it really makes no sense financially to remain in NZ vis-a-vis Australia unless you have to care for a sick relative or something (and don't give me no vague, BS notions of "lifestyle" otherwise). Only by delivering more income to employees will NZ be able to compete for workers with the skills to pay the national billz.
Ahh, depends on the place in Oz and the job. My sister is in the same line of work as me and living in Sydney where she is paying 1/2 her income in rent. I own a house (well half I suppose), mortgage-free.
Technically, she earns about NZ$10 K a year more than me. When it comes to actual spending money, I'm richer.I'm interested that you appear to think "lifestyle" doesn't count, only income. Really?
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As a wage or salary earner it really makes no sense financially to remain in NZ vis-a-vis Australia unless you have to care for a sick relative or something (and don't give me no vague, BS notions of "lifestyle" otherwise). Only by delivering more income to employees will NZ be able to compete for workers with the skills to pay the national billz.
Gee who would have thought that lifestyle was a BS concept. I would say that lifestyle is the best reason, I love NZ it is my home, I was educated here, I feel at peace here, it is me. But now you tell me that is utter bullshit, being happy is crap. Oh well
Enjoy Australia Marcus!
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"Why is the RWC the only reason to build a decent transport system in Auckland. It only goes on for a month - Aucklanders have to get around the rest of the time.
It's a sporting event - why can't the fat gits going to the game get some exercise and *walk* to Eden Park - it's only 45 minutes from the city centre!"Well if the way is well signposted and traffic controlled a lot of the Europeans will be used to doing just that, and they are likely to make up the bulk of RWC visitors. Before games at Murrayfield there's a steady flow of people walking from Central Edinburgh and afterwards traffic comes to a halt as a convivial tide of humanity flows towards town. Instead of spending heaps on public transport for RWC, spend a little well planned money to make it practical and easy to walk from Queen St/K Road to Mt Eden.
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Charles Dickens said it long ago remember?
Income 19/6 spending 19/- = Happiness
Income 19/6 spending 20/- = Unhappiness.There is this continual chatter from the right about how many people are leaving to go to Australia,Mr Key is always dropping into his conversation.
I wonder when he will sell up and move over there?
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Keith Ng wrote:
And interesting to hear it coming from you, because way I figured it, the philosophical divide was going to be on the choice issue: Do we give money back, knowing that the debt monkeys will stuff it all up, or do we keep the money and squirel it away for them?It's one of those fundamental left-right divisions, ain't it?
Up to a point, but I do think there a marco-issue that's all about choice. Perhaps I'm a total freak, but in my upbringing and experience 'living within your means' was a virtue, keeping up with the Joneses wasn't an aspiration worth pursuing, and debt was something you didn't take on board lightly. I'm no sociologist, but that sure seems to have changed, and I don't know if it's ever going to change without a hell of a smash no matter what the polis do.
In the end, I don't think your grandchildren are going to look back on us with too much generosity. In their own ways, both Key and Cullen want us to believe there is such a thing as a free lunch -- as long as you don't think too hard about who's eventually going to be stiffed with the tab. And why should they: Baby Boomers and Gen Xers vote. Children don't. And why should we? It's a very comfortable lie to believe.
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I've just listened to Geoff Robinson's interview with Key's response to the Budget. When asked what HE would do rather than just bag Cullen..all Key could do was bag Cullen. And promise tax cuts.
Rather hiliariously Key also managed to totally contradict himself in the same interview claiming that even with Kiwisaver NZ'ers still couldn't afford to save because they were overtaxed unlike Australia....and then a few sentences later stated that the total Australian savings rate was no different to NZ!!
The National Party fixation with tax cuts is revealed by their continuous focus on Australian tax cuts....but never once a hint of the Australian compulsory super. Again Key bags Cullen for not indexing tax thresholds, yet in 2005 when Cullen proposed to do exactly that...he lead the chorus that derided them as "chewing gum tax cuts".
Really this guy speaks out of both sides of his mouth. These days the philosophical divide seems to come down to "tax and save" Labour party, and a "borrow and spend" National party.
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I can recall Irfan Yusuf's commentary from the Granny Herald in 2006:
"Australians pay less tax. We also pay more in living expenses. Imagine buying your first Sydney home in a passable suburb at an average price of $750,000. Imagine then paying stamp duty (say, $20,000), not to mention legal fees. Then there are state taxes, rates and a host of other hidden taxes."
"Even if Aussies pay lower tax than Kiwis, is that good enough reason to move to Bondi or Byron Bay? If tax is so crucial, why aren't the Packers (or indeed the Finns) moving to Monaco?"
Marcus N:
"If NZ business is too shortsighted to do this, then I think that it is a task of Govt to make them do this - Kiwisaver is a start, but frankly it is a little half-assed in comparision to elsewhere."
Could the real reason for private sector lobbyists bleating about public sector salaries be less related to State spending per se, than the perception that public sector pay rises make them look cheap & nasty?
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Well, I lived in South Korea for 4 years and was taxed between 7 and 10 percent and you can stick living there up your you know what.
There's a reason why people pay taxes. For the common good. Less taxes equals less money going into health care, or education (both probably already under funded by most estimates), less money into roading and transport infrastructure (and we see that we are going to get more taken off us by other means for these two in parts of NZ), less money for social welfare (which sees sod all people actually needing it at the moment, wait till we have increasing unemployment under the upcoming National government), less money for conservation (when we need it more than ever), and less money for damn near everything else you can think of.
I'd like to see Key outline exactly where they will spend less. He'll talk crap about surpluses (which would soon disappear... then what?) and he'd go on about cutting bureucracy (which is fine and dandy) but as a percentage of the total amount of tax spending would be miniscule.
.... and then labour walk back in at the next election as it all starts to fall apart for the empty party.
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There's a reason why people pay taxes. For the common good. Less taxes equals less money going into health care etc.
Then again, Yamis, a politically mature debate would involve reframing the debate to focus on the quality of public spending rather than the quantity. But I guess that would require a little more than sound bites designed to scare the crap out of people, wouldn't it?
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