Budget 2010

[lmsmith]

Surprised there hasn't been a thread about it on here yet.

What do you think?

http://treasury.govt.nz/budget/2010/execsumm

[phoenix44]

There hasn't been a thread about it cause this nature of discussion is the best way for friends to become enemies. Also political discussion is against the rules here.

I support Nationals Budget. A few things need tweaking, none of which i can mention here.

The term - 'financially sound' comes to mind on analysis of the Budget.

[lmsmith]

Considering it's now fact, it's not really political discussion; it's discussion of individual's financial reality.

I think that the budget is great; not perfect, but it does speak to our future financial sustainability.

[Scottie841]

Considering it's now fact, it's not really political discussion; it's discussion of individual's financial reality.

I think that the budget is great; not perfect, but it does speak to our future financial sustainability.

I personally do not think anyone on here is able to comment about the "future financial sustainability". There are very few people that are able to see what this budget will do to us in the future and most people will look at it in a short term. Unless you have spent years at uni and studied (doctorate) in finance then you should not comment

[lmsmith]

I personally do not think anyone on here is able to comment about the "future financial sustainability". There are very few people that are able to see what this budget will do to us in the future and most people will look at it in a short term. Unless you have spent years at uni and studied (doctorate) in finance then you should not comment

I don't think you necessarily need a doctorate in finance to comment on the budget - Bill English doesn't, and it's his budget. Sure, a working knowledge of how finance works is helpful, but there's nothing to stop any person who earns an income, pays taxes (including GST) or owns a business from having an opinion. I think it's a pretty healthy thing to have an opinion on, especially income tax and GST. It's fine to look at the budget in the short term - that's the easiest way to see how you personally will be affected.

[smidey]

this is going to be better than a peacock ID thread.... :lol:

[Insect Direct]

lol smidey.

I reckon its pretty budget

[phoenix44]

this is going to be better than a peacock ID thread.... :lol:

you read my mind :lol:

It's fine to look at the budget in the short term

No it isn't.

Plus the deduction income taxes and the rise in GST, maybe the largest overhaul of the fiscal system since 1985(?) but they are by no means the most important parts of the budget. They however are the most publicised aspects of the budget thanks to the media.

Personally I'd like to see less in the budget set aside for treaty settlements, and more for the important things like healthcare and infrastructure.

[lmsmith]

you read my mind :lol:

No it isn't.

Plus the deduction income taxes and the rise in GST, maybe the largest overhaul of the fiscal system since 1985(?) but they are by no means the most important parts of the budget. They however are the most publicised aspects of the budget thanks to the media.

Personally I'd like to see less in the budget set aside for treaty settlements, and more for the important things like healthcare and infrastructure.

For individuals looking at how it's going to affect their day to day cash in hand, they will be looking in the short term - from the 1 Oct, how much worse/better off am I going to be if I choose to spend more or save more or invest more?

I think most people like to think that they care how much goes into healthcare and education and infrastructure, but I can almost guarantee that if you asked 100 people this time last week how much money was put aside in the 2009 budget for those things, they couldn't tell you.

Yes, money that goes into those things are important, and yes, the government should be looking in the long term about those investments and liabilities, but at the end of the day, the media has hyped income tax and GST because that's what the majority of people want to know about.

p44 - while I do think that treaty settlements are important, I tend to agree that we should be limiting the pot and setting aside more for important things (or more important, at least) - I'd like to see more on education in the future. I'm tied on infrastructure - I'd like to see the plan of exactly where it's going to be spent before we put our money there (ie no more quick fix road patches, lets fix it properly, and I'd like to see more invested in sustainable, realistic public transport systems, including something for people who commute between the big cities by plane each week/month)

The decrease in company tax was a welcome surprise - I wonder if it will open job opportunities (businesses are more profitable and therefore may have extra funds to reinvest, creating jobs in the long term) or if the extra money will just be pocketed?

[phoenix44]

The decrease in company tax was a welcome surprise - I wonder if it will open job opportunities (businesses are more profitable and therefore may have extra funds to reinvest, creating jobs in the long term) or if the extra money will just be pocketed?

what sector in business were you thinking of?

[lmsmith]

what sector in business were you thinking of?

It could potentially apply to any sector, I suppose. I haven't had the time to

look too far into that part, what do you think is likely to happen? To be honest, I don't even think I know the govts intention in lowering the business tax, there must be more to it than just getting us in line with australia.

[alanmin4304]

It is all politics. It will make no real difference. The 75% of people that pay all the taxes still will be and the people that pay little because they make little and the 5% that are very rich will still pay very little taxes. I don't understand why the working people (anyone with a boss) are happy to see the top tax rate cut as the workers pay the tax and the rich are able to set things up so they don't pay tax. It must be the greedy nature of mankind where we all think we may be rich one day even though we don't have a snowballs and are better off without it. It gives us the time to keep fish rather than worrying ouselves about where the next million will come from.

[Scottie841]

It's fine to look at the budget in the short term - that's the easiest way to see how you personally will be affected.

Looking at it in the short term in my opinion is the worst thing that can be done. If they said they were going to half all taxes for example would be good in the short term and people would be happy till the govt went bankrupt and everyone lost every cent they have. As it is now they are changing things which will cost some more but in the long term will make life easier and cheaper for all. Yes GST is going up but that is just because it needs to because the previous govt put the current govt in a position to need to do it. This budget and all increases in tax have been caused by the last govt looking for a short term fix.

edit: all if the above is my opinion and I am not "educated" in finance. This is just what I think and what I have talked to guys at work about

[lmsmith]

Looking at it in the short term in my opinion is the worst thing that can be done. If they said they were going to half all taxes for example would be good in the short term and people would be happy till the govt went bankrupt and everyone lost every cent they have. As it is now they are changing things which will cost some more but in the long term will make life easier and cheaper for all. Yes GST is going up but that is just because it needs to because the previous govt put the current govt in a position to need to do it. This budget and all increases in tax have been caused by the last govt looking for a short term fix.

edit: all if the above is my opinion and I am not "educated" in finance. This is just what I think and what I have talked to guys at work about

I agree, I think people will look in the short term because they don't know how to look longer term, and something a like a budget is something that everyone has an opinion on. It's very normal to have an opinion on, too. Also, I think it's important to talk to other people about to help shape your opinion. Scottie, while the people at your work might not totally understand it any more than you or I do, every person you talk to about it helps to develop your opinion, at least you care enough about what's going on to talk about it.

I like the increase in gst because it's harder to avoid; all people have to pay gst and while you could potentially avoid income tax, you have to pay gst. That helps level the playing field of who contributes to our tax bill; generally wealthier people consume more. It's not perfect, but it's a step in the right direction.

[Scottie841]

I agree, I think people will look in the short term because they don't know how to look longer term, and something a like a budget is something that everyone has an opinion on. It's very normal to have an opinion on, too. Also, I think it's important to talk to other people about to help shape your opinion. Scottie, while the people at your work might not totally understand it any more than you or I do, every person you talk to about it helps to develop your opinion, at least you care enough about what's going on to talk about it.

I like the increase in gst because it's harder to avoid; all people have to pay gst and while you could potentially avoid income tax, you have to pay gst. That helps level the playing field of who contributes to our tax bill; generally wealthier people consume more. It's not perfect, but it's a step in the right direction.

I work in a bank and talk to the treasury people so they know a lot more than I do

As for the GST comment: More rich people will be able to avoid the tax as GST can be reclaimed if you have a good accountant

[Caryl]

Since the experts can't agree I don't see how "the man in the street" can do so either.

Remember the rules state;

Topics of this type will be removed and action taken against the poster(s):

- sensitive topics (political, religious, sexual reference or sexually oriented content etc)...

As I am a laid back moderator :lol: I am happy to leave it so far as long as nobody gets personal or starts slagging political parties or individuals. This will get me into trouble with the other mods who will, rightly, point out that rules are rules and where do we draw the line?

[David R]

I don't understand why the working people (anyone with a boss) are happy to see the top tax rate cut as the workers pay the tax and the rich are able to set things up so they don't pay tax.

You think anyone paying the top tax bracket is rich?!? Raising a family while paying a mortgage on a single income of $70-80k in Auckland isn't easy. School principals/DP's, supermarket store managers, machine operators, train drivers, etc, all paying the top tax rate, hardly rich listers really, there are plenty of "workers" being taxed at the top rate. IMO instead of cutting the tax rates, they should have stretched the brackets, making the top rate not kick in until ~$150k like Australia.

Wins for me:

Tax rejig-

According to the experts I'll be around $20 better off per week, although thats a wild guess because who knows how much anyone really spends. I like the idea of having the option to pay more off the mortgage or save for retirement, or spend it and pay the same amount of tax I was paying before.

Investment in rail-

A; its a huge slap-in-the-face for all the paranoid lefties who said "national is going to sell everything".

B; I think its vital to the country, building and maintaining our roads to handle the amount of freight rail moves would be far more expensive. Imagine somewhere between 300+ extra trucks per day between Auckland and Tauranga. Once the past 20 years of zero-investment have been made up for it should be a viable entity IMO.

C; it means my job is pretty secure.

[alanmin4304]

I think you missed my point. All the people you mention are workers and pay tax as you say. The very rich---way above that pay little because they can organise things so they don't. It is human nature that if you make 100k you could do with 150k and so on. There are plenty of people who would love to get 50k. Give it time and the paranoid commies may well prove to be right. Kiwibank will be first after the next election (that is if people don't vote them out for digging up the country)

[Scottie841]

Kiwibank will be first after the next election (that is if people don't vote them out for digging up the country)

Why would they sell something that is making them money? If it was loosing money I could understand it. Why would they throw away $20m+ per annum?

The current thought is that they might sell shares and still keep a majority so they are still in control. This would mean that people would have more interest in it as an investment and it would raise the required capital. To me it seem like the only logical step for them to make as it would be a stronger business if it becomes listed and has a share price

[phoenix44]

Yeah, kiwibank and the accounting practises used under IFRS make kiwibank a very attractive balance sheet item for the NZ Government.

The labour government is very good at raising public sentiment using emotive words but in practise none of what they say actually holds. The bank inquiry for one is a much laughed topic. great at making the public outraged at ludicrous fees etc, but yet empirically inept.

The NZ Govt. needs to separate itself from kiwibank as currently kiwibank holds a wholesale funds guarantee by the govt itself. This means it can raise capital on an international market, and its funds guarantee is secured by the NZ government, and thus the taxpayer. It is the only bank in the country to do so (and one of the few in the world), and is a protectionist measure for fear that kiwibank was going to be squeezed out of the market when it first started.

What the current government is suggesting is not a sale of the assets, (although I think it should be on the table and privatised, as should many other govt. sectors including ACC) but a partial sale of business to investors to raise capital, enhance the financial security and liquidity of a bank that on its own holds no where near enough capital given its current level of risk.

On its own kiwibank is not in any position to hold extra capital to make up for its vast growth in assets - as residential home loans, funded by very short term liabilities in the form of current account deposits. This mismatch is tricky for them to manage and is certainly an expensive process as kiwi needs to hold large amounts of govt. stock in its tier I capital... only... wait - this is the kicker. since they are owned by the govt, it is no different to the govt. holding its own stock.

It is sooo easy to get swayed by the comments that some political parties are making, as the strike a nerve with many that listen to them; but in reality not one of those claims have real evidential support. its all hearsay.

Standards and Poors themselves said kiwibank only had its current credit rating courtesy the NZ government. Then there is the added problem of separating post shop and kwibank's business. The task is near impossible given how the 2 businesses account for assets and expenses.

Ponder this - if someone was to sell kiwibank; who gets the land asset (the branch) - will it be kiwi bank, the post shop or the NZ govt that owns NZ post; or will it be a mixture of all three?

how do the staff and salaries get split?

what happens to kiwibanks staggering branch network?

I would not want to be the person overseeing the sale of that asset.

[Barrie]

your last few paragraphs is why I am against KB

plus it was started using my taxes to compete against the bank I was (and still am) with

I was similar to the social welfare dept asking one of my largest customers to give some work to a person that they were teaching and helping to start up their own business in oppersition to me. Yea rite! I loose work to a company that Im paying taxes to help start up meaning that I have to sack some-one to go on unemployment

Admittedly this was about 8 years ago and I would hope that social welfare has now had a rethink

[David R]

Don't forget this is a thread about the budget, not the politics of asset sales.....

I think you missed my point. All the people you mention are workers and pay tax as you say. The very rich---way above that pay little because they can organise things so they don't.

Some of them do, which is one good argument for having the top tax rate equal to that of trusts etc, but certainly not all of them. There are also plenty of "workers" dodging tax, not declaring income, doing cashies, etc and then often receiving a payout from working for families for doing so!

Also, if they don't pay the tax then they aren't going to benefit from the tax cut, so all the "tax cuts for the rich" arguments aren't really valid....

[alanmin4304]

Your last point was the one I was trying to make. I find it hilarious that this situation is so aplauded by the "higher paid workers" who are the ones paying a pile of tax but dream one day of being super rich and never will.

[David R]

I'm still not sure what your point is, higher paid workers will benefit from the drop in the top tax rate, and I'm not sure if they dream of being super-rich any more than anyone else does... :-?