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THE MAGNIFICENT SEVEN

Once again, we have the same old chorus from the same voices, re increasing costs of Superannuation/Health requiring Increased Government Revenue streams, to meet those increasing costs. The Sunday Star Times has been running in my view, a series of shock, shallow and void of alternatives articles, on NZ Superannuation, failing to realize the wonderful Public Policy it is, with no alternative approaches suggested.

I suggest NZ Super policy is affordable for generations to come, but if new revenue is required see below

At the same time as the focus on NZ Super, statistics clearly show the gap between rich and poor, continues to widen, a trend over the past 4 decades, with massive social distress.

Classic red herrings are frequently raised, e.g. means test income (never assets) and increase the age of entitlement for New Zealand Super, to claw back costs. Those suggestions, often by politicians and commentators, awash with their own trust and asset protection schemes, camouflaging their own wealth. The common denominator is usually a single-issue fix, suitable for media 5 second sound bites, but never addressing comprehensive reform, and always protecting top tier consumption and large expensive residential home owners.

Increasing Government revenue lies in the “Magnificent 7”, no not the classic 1962 Western, starring Yul Brynner, but 7 economic levers which will increase Government revenue, assisting future costs in key areas.

What are these, Levers? Not in priority order (I favor a mix).

1. Capital Gains Tax, enhanced by Inheritance tax
2. Land Tax.
3. House tax equity. Known as the risk-free return method, taxing net equity components of rental and owner-occupied homes.
4. Increased productivity, emphasizing Research and Development spend, and Capital Investment.
5. City congestion charges
6. Wealth Tax
7. GST increase, with a Tax credit for the low-income sector

All the above, some incorporating features from the others, are the methods to increase Government revenue, and are the reform approaches required for quality Public Policy to revitalize New Zealand economy and re-align fairness and community well-being issues.

Several Tax working groups over the last few years, have produced sound arguments re many of these issues, but paralysis by analysis from powerful lobby group interests which dominate New Zealand politics and media channels, and right-wing voices have been able to muddy the waters, confuse the electorate, and continue their own protectionist ways.

These reforms address revenue stream increases, so great inter-generational Policy like NZ Super can remain for many decades to come.