Wednesday, May 6, 2015

Tax Freedom Day

It is tax freedom day in New Zealand - the notional day of the year on which we no longer have to hand over our hard-earned money to the government but can start to keep it for ourselves. May 7th is also the day on which businesses have to make their final provisional income tax and Goods and Services Tax payments for the previous financial year. For profitable small businesses like mine, that means making a very big payment to the Inland Revenue Department.

I do not willingly pay this money. I only hand over this large chunk of my income because the government threatens to incarcerate me if I don't. I know I could make better use of the money than the government does and that paying for my family's health, education and savings would cost me less than the wodge of cash I pay the government. And don't tell me it's the price of living in a civil society - according to the Minister of Finance, the New Zealand Government obtains 70% of its income tax revenue from 10% of its taxpayers so clearly I'm paying for a hell of lot more than what it actually costs me and my family to live in this society. Plus, there are perfectly civilised societies in the world, such as Monaco, that have no personal taxation at all.

I recently attended a discussion with Inland Revenue Department staff about the future of tax collection in New Zealand and was surprised when one of the representatives of the IRD said that they were considering all views on how tax services should be operated in future except for the view that 'taxation is immoral and should be abolished.' The fact that even in the fortress of taxation they acknowledged that the morality of taxation was not a certainty was very gratifying, if cold comfort for those like me who hold to that view.

I am not so quixotic as to believe that taxation will be abolished in my lifetime, but I do think we stand at a crossroads in respect of the burden of taxation. During the period from the mid-1980s until the end of the 1990s most Western governments reduced the burden of income tax on their populations, but many countries like New Zealand saw left-of-centre governments restored in the 2000s that increased tax rates again, albeit not to the staggeringly high levels that were commonplace before the 1980 reforms. Leftish parties in Britain, Australia and New Zealand now want to increase the burden further to pay for their profligate policies. The tax take as a percentage of GDP in New Zealand currently sits at about 39%. That's two dollars in every five that is taken by the government and too much already.

We must continually remind politicians that it is our money and our tolerance of the extortion that is taxation is not boundless.

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