Treasury’s Message Mis-Read?
December 11th, 2008
Treasury has been caned by some commentators for what they see as its increasingly out-dated prescription for dealing with economic ill-health. There is even some suggestion Finance Minister Bill English in rejecting Treasury’s ideas on a capital gain tax, increasing GST and longer term a cut in national super rejected the briefing. But in fact much of the briefing could have been written by English himself.
Even on the tax issue Treasury is saying to create a business environment to encourage enterprise and investment, taxes should be shifted from bases which are internationally mobile and lower growth (labour and capital) to tax bases which are less mobile and less damaging to productivity growth (consumption and land) over time. It also advocates rates of tax on different forms of investment, including capital gains, should be equalised, to improve savings and investment. Treasury says it is vital to ensure the sustainability of the tax base in view of the declining proportion of working age people and long run pressures on expenditure.
Copyright © Trans Tasman Media Ltd
Duncan Cotterill