Out of date and out of ideas (19 Feb, 2019)

[aardvark_admin]

This column is archived at: https://aardvark.co.nz/daily/2019/0219.shtml

Is our taxation paradigm past its best-by date?

Is it silly to try and use 20th-century tax strategies in the 21st century now that it has become simple for companies to operate in a way that allows them to quite legally dodge all but a token amount of tax? Is it time to ditch the concept of corporate tax altogether and recognise that *all* taxes are eventually paid by the consumer anyway?

If the government is (as appears to be the case) out of workable ideas, why aren't they coming to those who they are supposed to serve (the people) and admitting this fact -- whilst soliciting for good ideas to fix the situation?

Pride? Arrogance? Stupidity? Self-interest?

All of the above?

[par_annoyed]

I agree that most countries tax systems are completely unable to handle internet based services (and goods).
But how to fix it ??
No doubt govt would want to monitor all such web purchases and charge on that basis ? BIG privacy issues in there.
Relying on the company to declare sales is ridiculous when they are overseas.
Google doesn't even make its money from selling things....how to tax THAT ??
I'm out of ideas.... but we need something.

[Malcolm]

Google absolutely makes money from selling things. Just not selling things to you or me.

[hagfish]

Perhaps prices will go up. But my annual subscriptions for GMail, Twitter, Facebook, Instagram etc could double, and I doubt I'd notice.

You'd think that in this era of electronic commerce, clipping the ticket would be easy - much easier than trying to collect pigs or sestertii. Simply have a word with the payment processors - banks, credit card companies etc - and tell them how it is. There can't be more than a few hundred of them. It won't be effortless, but governments are still (mostly) allowed to enact laws.

Maybe the cost of a new iPhone will go from $2800 to $3500. Great - some chump is helping pay for my local hospital.

[Malcolm]

Perhaps the answer is to institute a financial transaction tax (FTT) on certain kinds of transfers. E.G moving large sums offshore.

[phill]

Maybe the cost of a new iPhone will go from $2800 to $3500. Great - some chump is helping pay for my local hospital.

cool link
i pay the same amount for an approximately = spec phone
as an iphones owner pays for a 2 year applecare + agreement

[Perry]

Is it time for the government to admit it's clueless and ask the public for their input?

Two things that as unlikely to happen as most anything I can imagine.

[RoddyAxn]

If I was the president of New Zealand
1. Progressive income tax so prime minister is highest paid person in nation (20% of GTP comes from income tax to run govt)
2. Death duties and gift duties are required also n a progressive way from zero to 100%

The second point is interesting. How do you see that working price?

[Malcolm]

If I was the president of New Zealand
1. Progressive income tax so prime minister is highest paid person in nation (20% of GTP comes from income tax to run govt)
2. Death duties and gift duties are required also n a progressive way from zero to 100%

The second point is interesting. How do you see that working price?

Tricky one that second one. The US implemented a death tax initially to try to prevent the kind of generational accumulation of wealth seen with the nobility in Europe. It would probably not kick in until a certain value of assets was reached, and possibly not include a family home if it stays in the family. Also we had a gift tax until very recently. National abolished it. Apparently treating cash transfers over $10k as income and taxing accordingly was creating a burden on middle NZ.

[Perry]

Also we had a gift tax until very recently. National abolished it. Apparently treating cash transfers over $10k as income and taxing accordingly was creating a burden on middle NZ.

Do you see the two as connected?

Gift tax (on amounts over $27k in one tax year) was costing more to administer than the revenue it generated.