What about a fairer so­ci­ety?


Two el­e­ments in how New Zealan­ders like to see them­selves – that we’re all in this to­gether, and that this is a great place to bring up kids – took a ham­mer­ing last week. First, In­land Rev­enue fig­ures showed that slightly more than half of 250 in­di­vid­u­als in this coun­try with wealth es­ti­mated in ex­cess of $50 mil­lion, are able to ar­range their fi­nances so that they can legally claim to be earn­ing less than $70,000 a year.

This means avoid­ing the top rate of tax, which cur­rently kicks in at 33 cents in the dol­lar.

Iron­i­cally, one of the main ar­gu­ments used in the past to jus­tify low­er­ing the top tax rate from 39 cents in the dol­lar to 33 cents had been that this would re­duce the in­cen­tive to avoid tax. Clearly not.

Most wage and salary earn­ers are not so for­tu­nate, or – per­haps – so un­scrupu­lous.

To crit­ics, this IRD ev­i­dence un­der­lined the need for a ro­bust cap­i­tal gains tax, so that all of this coun­try’s wealthy cit­i­zens pay their proper share of tax.

Even the gov­ern­ment’s Tax Work­ing Group in 2010 had ex­pressed con­cerns about the rich avoid­ing the top tax rate through in­come shel­ter­ing de­vices such as fam­ily trusts.

So far, the gov­ern­ment has done noth­ing about it.

At the other end of the so­cial scale, it ap­pears to be just as paral­ysed by the ex­tent of child poverty in New Zealand.

Even though def­i­ni­tions of poverty can vary, a re­port last week from an ex­pert panel ap­pointed by the Chil­dren’s Com­mis­sion in­di­cated that 270,000 New Zealand chil­dren are liv­ing in poverty.

In re­sponse, the re­port rec­om­mended ei­ther a univer­sal child ben­e­fit for un­der-6s that would peak at birth when costs were high­est and then grad­u­ally re­duce; or a sys­tem of tax cred­its for par­ents.

The re­port also urged a ‘‘ war­rant of fit­ness’’ for rental prop­er­ties in terms of warmth and in­su­la­tion; a wider food in schools pro­gramme; and the cre­ation of a Child Poverty Act with an­nual tar­gets to en­sure the gov­ern­ment of the day re­mained fo­cussed on the need to re­duce child poverty. Fat chance. The gov­ern­ment’s im­me­di­ate re­sponse could hardly have been less en­cour­ag­ing.

Prime Min­is­ter John Key called the sug­ges­tion of a univer­sal child pay­ment a ‘‘dopey’’ idea. He added: ‘‘We went away from that some years ago in New Zealand. We have a very tar­geted sys­tem through Work­ing for Fam­i­lies. It’s highly pro­por­tional to your in­come, so we make much larger pay­ments to lower in­come fam­i­lies.’’

What Key seemed un­able to grasp was that chil­dren in ben­e­fi­ciary fam­i­lies – who bear the brunt of child poverty – do not re­ceive any re­lief from Work­ing for Fam­i­lies, be­cause their par­ents are ex­cluded from it.

It was pre­cisely be­cause such chil­dren are fall­ing through the cracks that the Chil­dren Com­mis­sion re­port had rec­om­mended a univer­sal child ben­e­fit in the first place.

If any­one was be­ing ‘‘ dopey’’ here, they seemed to be sit­u­ated on the ninth floor of the Bee­hive.

To all out­ward signs, the gov­ern­ment ap­pears in­ca­pable of a cred­i­ble re­sponse on ei­ther front.

A wide-rang­ing cap­i­tal gains tax or a univer­sal child ben­e­fit may, or may not, be dumb ideas.

Yet hav­ing no ideas at all to of­fer about tax avoid­ance or child poverty made the gov­ern­ment look even dum­ber.

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