Gaynor nails it
By Vincent Heeringa,
Brian Gaynor, the Weekend Herald’s business commentator, nails it in last week’s column. In assessing the Budget he says it is all too little, too late. “New Zealand is sleep walking to the poor house.” The column echoes my own thoughts about the state we’re in economically. Gaynor makes some startling comparisons with Ireland, namely:
- Ireland has 4.2 million people, and yet is the best OECD performing economy since 1970
- Ireland has the reverse of our tax ystsem: high VAT (GST) and low income and company tax
- yet Ireland has twice the public spending power: $103 billion v NZ at $56 billion
- Ireland will spend $6200 per person on health; NZ will spend $2800
I share Gaynor’s view that the tax system is a critical factor in the reversal of our fortunes. It’s one platform that I believe we as a community of innovators, no as citizens!, need to explore with far more open mindednesss than this current government has. I thought the McLeod review on tax in 2004 was a total disappointment.
Who’s got the best tax system for rewarding innovation, creativity and entrepreneurship? Anyone know?
Comments
Paul Spence
I agree that our tax system does little to reward innovation, creativity and entrepreneurship? A 15% deduction on R&D over $20K? Frankly I'm totally underwhelmed by this. But I'm also growing a little tired of comparisons with Euro Tigers like Ireland and Finland.
Sure NZ is comparable in population size, but that is about where the comparison ends. European nations have a market of 400 million on their back doorstep and are backed up by squillions of Euro dollars in development funding from Brussels. Let's get real here.
What little countries like Ireland and Finland can teach us however is that agility can have its advantages. Can you imagine Germany or UK ever making headway in repurposing their economies as rapidly as their little neighbours did?
Raf Manji
Good work for continuing this theme Vincent. The burgeoning public sector is great news for Wellington property developers but not for the rest of us. I think we could do with much smaller government but that doesn't necessarily mean we must have National as opposed to Labour. What we need is smarter government, designed for the needs of now and the future. I think John Key is much more pragmatic and less controlling than Helen Clark and will be more willing to allow entrepreneurial activity to take place in communities instead of tight central government control.
I'm glad you raise the tax issue. I believe we should be not be taxing income (work and innovation) and instead be taxing consumption and land use. It will lead to a more productive economy and make us think more carefully about over consumption and land speculation which has no economic benefit at all other than to the owners of land.
I think it's really important to keep this conversation going but no more government inquiries required thanks.
Brian Hutching
Paul Spence says, "…I'm also growing a little tired of comparisons with Euro Tigers like Ireland and Finland." He then goes on to state that countries like Ireland have done well because they, "…are backed up by squillions of Euro dollars in development funding from Brussels."
That kind of thinking, I'm afraid just gets us where we are today. Blame outside events for our own lousy showing in the economic stakes. Yes, Ireland did get an injection but look where it started. England had already bled it of citizens and wealth, tried to destroy its culture and religion and only by judicious handling of this "windfall" and not by squandering its good fortune has it made it to where it is today. Many countries have injections of wealth eg African states yet are still poor. Ireland has put money into education and health and it is reaping the benefits. Instead of suggesting it was all handed to them on a plate let's look at their example here in New Zealand. On our back door step is Australia, South-east Asia and China. There are a lot more than 400 million people in these countries. Let's do what Ireland has done and make our country a place to invest in.
Ben Kepes
OK here is another example - Dubai. 30 or so years ago an astute Sheik decided to invest in infrastructure at a god forsaken beach in the middle of the desert. That god forsaken hole is now one of the leading centres in the region that is a magnet for multi nationals and earns diversified revenue. And it's not about oil - only 5% of Dubai's GDP comes from oil. Sure it took a long term view without the annoying influence of such factors of democracy and yet they did it. No Euro dollars or trade subsidies there. Anyone want to join me on a fact finding mission to the UAE? Idealog will foot the bill!
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