The smoke and mirrors maze of 100-day plans
If 100-day plans are the well-worn device of governments the world over to look as if they’re busily fulfilling their agenda, then it’s also the perfect opportunity to detect what they’re not willing to admit to.
While the coalition Government’s plan banned, abolished, and essentially dismantled Labour’s legislative work of the past six years – all part of the partners’ manifestos and what they were voted in on – what those voters will also find is the paradox of a Government that raises taxes in order to give them tax cuts.
You can hear Finance Minister Nicola Willis wailing the “books-were-in-a-much worse-state-than-we-ever-suspected” defence when the Budget is released on May 30, but in the four short months since gaining power her Government has increased taxes four times, with two of them broken campaign promises.
There’s the decision to keep Labour’s 39% Trust tax legislation in play, the full flip-flop on the app tax for accommodation, takeaways and rideshare trips, the reintroduction of fuel taxes in 2027 by 22 cents a litre, and the $50 increase in the cost of motor vehicle registration over the next two years.
Which would be all well and good if you were a Labour government, whose values rest on the principles of economic and social equality, less so when you’re National and your values on the party website specifically says, “lower taxes”.
And, in shrugging on its Labour-lite cloak, National has been afflicted with the same unjoined-up thinking of its predecessors.
When David Parker introduced the trust tax hike, Chartered Practitioners Australia warned that the rich would avoid the worst impacts, but mum and dad trusts would bear the brunt. Without giving details, Willis has hinted she wants “carve-outs”, essentially creating a twostep system with higher income-bearing trusts paying 39% and lower -earners taxed at the present 33%. With only 11% of trusts earning over $180,000, wouldn’t it be prudent for them to break their bigger trusts up into several smaller trusts, thus enjoying a lower tax rate? After all, between tax avoidance and tax evasion lies legislative obfuscation.
But it seems the Government isn’t happy with only making the country’s taxation regime more impenetrable, it also wants to meddle with the transparent universality of GST.
Just five months ago National vowed to repeal Labour’s app tax, which imposed GST on accommodation hosts and Uber drivers, even if they weren’t registered.
Back then, Willis said: “We will fight this new tax every step of the way.” Weeks after getting into power, Willis u-turned and reversed the change, eyeing the estimated $47 million it would reap annually, thus ensuring GST becomes more of a bureaucratic headache for small operators.
Because while those Uber drivers and mum-and-dad accommodation providers will have to charge the 15% GST, if they’re not registered for it, they’ll be able to get 8.5% back from Inland Revenue. Which annuls the universality of New Zealand’s GST system and is the first step in adopting the same kind of labyrinthine GST bureaucracy employed across the ditch.
And if taking on increasing trust taxes was a sin of omission and the flip-flop on the app tax one of commission, then axing Labour’s promised 12 cents fuel tax hike next term, only to bring it back in 2027 by 22 cents a litre, is a piece of political bastardry in its own category. No doubt PM Christopher Luxon will be patting himself on the back that he’s ticked another box on the 100-day plan, but it’s a pyrrhic tick at best.
Transport Minister Simeon Brown may be rushing headlong into replacing the fuel tax with road user charges, but his pledge that fuel taxes will be gone by the end of the decade already sounds like another broken promise. As does his nonsense claim that the $50 increase in motor vehicle registration fees over the next two years is a “one-off”. Aren’t all price increases?
National supporters will say these rises are simply a pragmatic solution to the costs involved in forming a tripartite government. That NZ First forcing National’s foreign buyers’ tax to be scrapped, and ACT’s bringing forward of landlords’ interest deductibility by a year, with the pace of increase stepped up for two years after that, leaves National $1.3 billion short in paying for tax cuts.
The uncomfortable truth is that while National’s tax cuts may have been “fully costed and audited” before they entered negotiations, they were prepared to sacrifice those numbers in the heat of coalition negotiations.
And in winning power they’ve also fallen foul of their promise to voters to help ease the cost-of-living crisis, of helping the “squeezed middle”.
Because tax cuts may be coming but one thing’s certain – we’ll be paying for them. Every time you get in an Uber or get that Airbnb, if your trust pays tax, or when you register your car and, in another three years, when you fill up with petrol.
Sweden officially joined the North Atlantic Treaty Organisation (Nato) yesterday, a historic shift that highlights how Russian President Vladimir Putin’s war in Ukraine is transforming European security in ways he may not have foreseen.
At a meeting in Washington, Swedish Prime Minister Ulf Kristersson deposited the final paperwork with American Secretary of State Antony Blinken – the last step needed for the former militarily nonaligned nation to become Nato’s 32nd member. Sweden’s neighbour, Finland, joined last year.
To justify his aggression in Ukraine, Putin cited the possibility of Nato expansion. Now, in one of the conflict’s many twists, his war has brought a bigger, stronger alliance to his door. Russia will have to live with the consequences for years.
“There is no clearer example today of the strategic debacle that Ukraine has become for Russia,” Blinken said, standing beside an elated Kristersson.
“Everything that Putin sought to prevent, he has actually precipitated by his actions, by his aggression.”
The addition of Sweden and Finland will strengthen Nato in the far north, where Russia keeps much of it second-strike nuclear capability, and boost its presence around the Baltic Sea, particularly around the Russian exclave of Kaliningrad.
Sweden’s navy has experience operating in – and under – Baltic waters, and its fighter jets will patrol the region’s skies, making it easier for Nato to supply or defend Baltic allies, should the need arise. Stockholm has already said it will send troops to join a multinational force based in Latvia.
“Sweden’s accession makes Nato stronger, Sweden safer, and the whole Alliance more secure,” Nato Secretary General Jens Stoltenberg wrote on X.
Kristersson said it was a “historic moment” and pledged that his country would meet the alliance’s defence spending target of 2% of gross domestic product (GDP) from this year onward.
“Unity and solidarity will be Sweden’s guiding light as a Nato member,” he said. “We will share burdens, responsibilities and risks with other allies.”
Although Sweden’s Nato bid was blocked at various points by Turkey, and then by Hungary, its admission yesterday sends an important signal to Putin as he wages war in Ukraine and threatens other neighbours, said Anna Wieslander, director for Northern Europe at the Atlantic Council.
That message: “That he cannot dictate, and if he does, there will be pushback.”
Russia did not immediately comment on the news. The country’s response to Finnish membership was muted, though Russian officials have talked in general terms about the need to adjust their military posture in response to Nato’s new borders and plans.
A few years ago, it would have been difficult to imagine Sweden joining Nato. Military nonalignment was a part of the country’s identity.
But Russia’s February 2022 invasion of Ukraine seemed to rouse Europe from a post-Cold War slumber, spurring deep changes in how the region’s relatively wealthy democracies think about their own security.
The European Union began the process of weaning itself off Russian oil and gas. It dug into its stockpiles to send weapons to Ukraine. And it has started to step up defence spending – albeit more slowly than many at Nato headquarters or in Washington might like. Nato, meanwhile, began its biggest overhaul since the Cold War, drawing up new battle plans that are more squarely focused on deterring Russia and defending every inch of Nato territory from day one should Moscow try anything. When Russian tanks rolled on Kyiv, Finnish sentiment about Nato shifted quickly. Sweden took slightly longer to come around but applied for membership alongside its neighbour in May 2022.
Yesterday, Blinken noted that most Swedes were not interested in Nato before Russia’s invasion but that Moscow’s actions prompted a dramatic rethink. “Swedes realized something very profound,” he said, “that if Putin was trying to erase one neighbour from the map, then he might not stop there.”
Both countries – and much of the alliance – expected a smooth accession process. But approving newcomers requires unanimity, and it soon became clear that Turkey would object at every step.
What followed was more than 20 months of obstruction and delay from Turkey, followed by stalling from Hungary – public feuding that no doubt pleased Putin.
When it became clear that Turkey’s problem was with Sweden, not Finland, their bids were split. Finland joined last spring, while Sweden kept negotiating.
Turkish President Recep Tayyip Erdogan sought F-16 fighter jets from the United States and insisted that Sweden crack down on groups that Turkey considers to be terrorists. Hungarian Prime Minister Viktor Orban pressed Sweden’s prime minister to visit Budapest and cut a deal to get more Swedish-built fighter jets.
In the end, after much drama and fraught diplomacy, both countries extracted what they could and agreed to welcome another new member.
The Swedish flag will not rise outside Nato’s Brussels headquarters until Monday, officials said, but Nato’s key protection – the collective defense clause known as Article 5 – goes into effect immediately.
“We will go to sleep here tonight with Article 5 embracing this country,” Wieslander, of the Atlantic Council, said in a phone call from Sweden. “That is a huge shift for us.”