Act Policy – Honesty for Taxpayers (yeah, right)

ACT Party leader Jamie Whyte announced a new policy yesterday that would require the Government to clearly state what policies would cost relative to potentially reductions in tax.

They want the public to be able to judge the value of proposed bills by ensuring they know the tax repercussions of new policy costs – ACT proposes an Honesty for Taxpayers policy.

For example, the government should be keen to alert taxpayers that, without Working for Families:

  • the 17.5% income tax rate would be 12.5% OR
  • the 10.5% income tax rate would be 3.5%.

The Minister for Tertiary Education should be keen to remind everyone that, if not for interest-free student loans

  • the 17.5% income tax rate be would 16% OR
  • the 28% company tax would be 25% OR
  • the 33% top income tax rate would be 30%.

I doubt that the Ministers would be keen to do that. Hence the necessity to require it.

On this policy, regulatory impact statements, cabinet submissions and ministers’ introductory speeches for Bills in parliament will need to state clearly that “but for this proposal, your income tax rate would be X percentage points lower”.

When taxpayers visit the website of any government agency or local council and any programme of that agency, they should have a clear idea of the price of that agency in their taxes or rates.

Government departments and agencies should be required to declare on their home webpage “but for this agency, your income tax rate would be X% lower”.

Similar rules should apply to local governments. They should be required to reveal how much lower rates would be if not for a particular new policy proposal or existing service of the Council.

If a minister, department, agency or local council believes that the programmes it administers do indeed offer value for money to taxpayers, they should be proud to say how they are putting taxes to work in the clearest way taxpayers can understand.

If you do not know what something costs, you cannot know if it is worth the price. Good decision-making depends on good information. In a democracy, this means that voters must be reminded of how much they are paying for government activities.

Politicians from the big spending parties will oppose this policy. That shows what a good idea it is. The bureaucracy will also resist it, because voters will be surprised to realise that much new spending is generated by bureaucrats. MPs and councillors will be more reluctant to just wave through spending when the information is publicly available.

By using the tools of the information age ACT seeks to make our elected representatives more accountable and allow citizens to participate in a more meaningful way.

Act would need to ensure that one of the favourite political cost covering lies is not able to be used, as done by Winston Peters in the weekend.

Tax dodgers, GST on food top NZ First hit list

New Zealand First would take GST off basic food items and rates bills and would target tax dodgers to fund the expensive policies, leader Winston Peters said yesterday.

Mr Peters said his policy would save New Zealanders but cost the Crown a whopping $3 billion a year or thereabouts.

Labour recently said to fund policies they would “clamp down on tax avoidance by multi-national corporations because we believe that everyone should pay their fair share.” From their Fiscal Plan:

Labour will close off tax advantages that promote speculation and clampdown on tax avoidance, particularly by multi-nationals.

Labour will set a target of reducing tax avoidance by $20 million a year in 2015/16, rising to $200 million a year in 2018/19.

Governments have been trying to “clamp down on” and minimise tax avoidance for yonks. The current government has been continually trying to reduce avoidance and evasion.

At least Labour has a relatively modest target of $200 million. NZ First look to be blatantly dishonest claiming they can cover $3 billion by targeting ‘tax dodgers’.

Act may find it difficult imposing honesty on government, but they think their small idea could end up being highly influential.

ACT has a new proposal to make our democracy more accountable. The proposal may seem small but it could be the most significant idea in this election.

Policies such as the one I am announcing today, which change the behaviour of politicians, have greater long term effects than any particular proposals for this or that government activity, such as giving school children laptops, subsidising solar panels and the rest of the little tax-funded bribes the other parties trade in.

A proposal to reform New Zealand’s government accounts was hardly noticed in the 1993 election campaign. Yet the Fiscal Responsibility Act of 1994 has had a profound effect on how New Zealand is governed. Government accounts are now transparent and neither Labour nor National wants to be responsible for a deficit. The Fiscal Responsibility Act is probably the real reason why the government books will be back in the black by next year.

ACT’s fresh idea could be as influential as the Fiscal Responsibility Act.

It could be influential – but it’s not easy making politicians and governments more accountable, especially when it comes to honestly justifying increased spending.

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1 Comment

  1. Brown

     /  21st July 2014

    When Winston makes any claims centered on integrity and honesty I just sigh and am grateful for the reminder why I could never vote for NZ First. There is a basic lesson with tax – make the amount reasonable, collect it in an unobtrusive way but visible way and people will pay it. No one on the center or left is talking about spending in line with income – its all about take more for more spending.


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