The Greens on economics
Posted October 19, 2008
on:There has been a lot of chatter about the Green’s understanding of economics lately, so I thought it might be apropos to have a look at their economic policy, just released. The key points appear to be:
- Income taxes cut;
- Taxes on waste, pollution, speculation and scarce resources;
- Commitment to buying NZ made and Kiwisaver investment in NZ;
- Only citizens and residents allowed to purchase land.
Let’s start with the good bits. Income tax cuts are great because they reduce the distortion in peoples’ labour market decisions.
We’ve blogged so many times about our support for taxation of externalities that I’m not even going to bother linking it. That applies to the taxes on waste and pollution.
A tax on scarce resources just confuses me. Surely the cost of using scarce resources, absent of externalities, is the price. Unless we think that people are using the ‘wrong’ discount rate and over utilising them, I’m not sure of the point of a tax.
The effort to buy NZ made and invest more in NZ are unlikely to be beneficial to NZ as we have discussed previously on this blog.
Finally, I find the restriction on overseas purchases of land very odd. At first glance it seems out of step with the Greens’ very open immigration policy: why allow immigration but not land purchases? Why not allow those who value the land the most to buy it regardless of their country of residence? What about citizens living overseas? It smacks a little of the government’s blockade of the sale of Auckland airport, only without the ‘strategic importance’ to support it. I’ll wait until I’ve seen the final policy statement before passing judgement, but I really don’t see how this policy could be beneficial.
19 Responses to "The Greens on economics"
Okay, so they will create a tax free threshold (which doesn’t actually target those who most need it as those earning below $10,000 pay zero tax anyway) but what will they do to the upper tax brackets? I too will wait to see the full policy detail, but I don’t think we should give them too much credit unless they are planning to significantly flatten the entire tax structure.
If you take Queenstown there are an awful lot of foriegn owners and while it may be good for GNP it would seem bad from a community perspective. Some call it “over developed”
I think the goal is to keep property afforable and accessible and protect community.
The way things stand there isn’t any where that doesn’t get colonised by developers , (not withstanding energy shortages and/or the financial crisis).
The Ontario Greens have a land tax policy. Which aims to see rising property values go into the community. I like that idea but I’m not sure how it would work in practise.
I note developers off to Vanuatu. The locals get jobs but I can see unseen costs as they live in the shadow of business+goverment and the population increases around them until they are just a nuisance… unless they have a stake in land ownership.
[…] Visible Hand in Economics also has questions about restricting land ownership to New […]
“Oh, so the zero tax on the first $10,000 is the only tax cut they’re making? Weird.”
They put out a proposal on water (one of the scarce resources mentioned, I guess) use a few months ago that entailed reductions in rates or income tax (can’t remember) with increased (market?) rates for commercial water users.
There was also the proposal to cut income tax while introducing a carbon tax, but that’s off the table now. The ‘first 10,000’ seems to be more of a social policy, while the two examples i’ve given seem to be the direction they’d like to head in.
Perhaps a water market would’ve made them even more unpopular with farmers – who knows? As this post implies, they’re not that into economics (as Key and ‘40%’ have proven, a lot of politicians aren’t). I think they’re into base allocations + market rates with residential water, but that’s just an idea thats floating around more than anything concrete. Would certainly be interested in any more proposals like the carbon tax idea though!
Indeed.
And now they’re discussing the Tobin Tax again…to discourage currency speculation and kinda-sorta as a means of increasing aid budgets.
[…] 21 10 2008 So the Green’s want a Tobin tax do they (ht Frog Blog and Stephen). Ok, so I’m hoping they aren’t justifying it on externality grounds – this leaves us […]
1 | billbennettnz
October 19, 2008 at 4:27 pm
“A tax on scarce resources just confuses me. Surely the cost of using scarce resources, absent of externalities, is the price. Unless we think that people are using the ‘wrong’ discount rate and over utilising them, I’m not sure of the point of a tax.”
I suspect that’s exactly what some Greens are thinking. But they’d probably arrived there by an alternative logic and use different language to make the point.