Budget deficit worsens by $704m; IRD eyes tax on loans to business owners worth $29 billion; ComCom Chair says electricity system a 'market failure'; Congestion charges may cut need for RONS - Bishop
Watching a government deliberately hijack its own economy is truly something. It’s next level economic vandalism. Luxon’s political own game is systematically diminishing the nation’s future opportunities, locking in a climate liability obligation New Zealand won’t be able to jump over, and all the while, they’re laser-focused on fast-tracking ecological destruction. And their current strategy: looking down the back of couches for chump change.
That said, cutting costs is Luxon’s modus operandi, that’s what mid-level managers trained in selling soap and deodorant do. They manage the status quo. It’s all quarterly’s and KPIs. No risk. No innovation. No entrepreneurship. Just cut and pray. Cut and pray. Unfortunately for New Zealand’s amazing citizens, that means living through a time where a myopic government is hell bent on addressing today’s challenges with yesterday’s solutions. Just with even less funding. It’s like watching an engine with water and oil leaks made to work harder in the middle of summer. Eventually, something is going to go bang.
This is a gutless government with the IQ of a piece of wood and the aspiration of a rock, a small rock at that.
Great post Bernard. As you clearly point out, the govt as 'in control' of the economy as they have continued to boast... maybe they should stop the constant rubbish they are spouting of 'running the economy like a household' or plan b 'running the economy like a business' and actually run the economy like a government.
I just realised, I should have not said 'running the economy like a business', I should have said, 'running the economy like a business unit of fast moving consumer goods multinational company'... because business people innovate and pivot when things change... not just keep doing the same stupid thing that is clearly not working
The $B29 "loans" from businesses to shareholders were probably never intended to be paid back and were deliberate tax avoidance. IRD can still penalise tax avoidance can it not? So, shouldn't be hung up on not being able to use retroactive tax?
Retraining a bunch of people laid off in WN for IRD auditing would probably have a great ROI without introducing new or increasing existing taxes.
Bottom line: we need much more income just to break-even let alone improve our lot. Tax evasion and avoidance probably cost us big time.
This point was (sort of) addressed in The Hoon last evening, when it was mentioned that the target sector in this tax move are likely NACT voters - so they won't be squeezed too hard.
We should remember that the government's main priority will always be to get itself re-elected.
"the problem here, of course, is that you need someone to step forward and borrow. And when you have house prices stagnant, a lot of New Zealanders don't want to step forward and borrow and fear buying into a market that's still falling. It's a classic balance sheet recession problem" - Bernard
I know my qualifications are non existent, but as an armchair critic this sounds like a form of stagflation. Except it's a type of stagflation one only gets in "Housing markets with bits tacked on".
This Coalition cabinet passing a proposal to tax shareholder loans, yeh right!. There is no way they would alienate all their best mates (or probably their own beneficial financial arrangements) in order to do the right thing and close a loophole that borders on the crime of tax avoidance.
They must be getting desperate to get the books into balance. But if those numbers are correct that is a truck load of tax money coming in the next 12 months… not sure how it has managed to get that large ( it is an FBT issue surely as well)
if IRD liquidates a business that has loaned money to a shareholder/s then why can IRD not extract the full value of the loan (if necessary to cover debt owed to IRD) from the shareholder's/shareholders personal assets, and bankrupt the shareholder/s if necessary ?
at 31 March, 2024 $29 BILLION owed to 119,000 businesses !!! obviously a lot of people were knowledgeable about this practice. (it was a new skullduggery to me)
how many of the 165,000 shareholders who have obtained loans from their business/es are Nact politicians or Nact's financial supporters ?
I’ll join John Small and Shane Jones: the market system for electricity has failed. It was right wing dogma and a right wing fantasy.
Does Chris Bishop really believe that charges for motorways will deter the poor from using them, and it will save his budget and the country? Another dinner party policy.
1Many of us entrepreneurial small business owners have borrowed against our house to fund the business. This IRD claw back will tip more of us into bankruptcy and we will lose our house as well. A great incentive for us to up stacks and go to Australia.
Which leads to the question: What would the unemployment rate be if the exodus to Australia and elsewhere had not occurred?
"borrowing against our house" is a loan to the business from the shareholder.
it is those who have a loan from the business to the shareholder that the IRD is, quite correctly/rightly, contemplating to investigate. the numbers and amounts of those loans from businesses to shareholders is colossal (at March 2024 $29 BILLION).
Watching a government deliberately hijack its own economy is truly something. It’s next level economic vandalism. Luxon’s political own game is systematically diminishing the nation’s future opportunities, locking in a climate liability obligation New Zealand won’t be able to jump over, and all the while, they’re laser-focused on fast-tracking ecological destruction. And their current strategy: looking down the back of couches for chump change.
That said, cutting costs is Luxon’s modus operandi, that’s what mid-level managers trained in selling soap and deodorant do. They manage the status quo. It’s all quarterly’s and KPIs. No risk. No innovation. No entrepreneurship. Just cut and pray. Cut and pray. Unfortunately for New Zealand’s amazing citizens, that means living through a time where a myopic government is hell bent on addressing today’s challenges with yesterday’s solutions. Just with even less funding. It’s like watching an engine with water and oil leaks made to work harder in the middle of summer. Eventually, something is going to go bang.
This is a gutless government with the IQ of a piece of wood and the aspiration of a rock, a small rock at that.
well written James
Deliberately or ignorantly?
Let’s just take Luxon for simplicity. Here we go:
Exhibit 1. https://sustainability-leaders.com/air-new-zealand-sustainability-strategy/
Back to you Bryce, deliberate or ignorant? The prosecution rests.
Great post Bernard. As you clearly point out, the govt as 'in control' of the economy as they have continued to boast... maybe they should stop the constant rubbish they are spouting of 'running the economy like a household' or plan b 'running the economy like a business' and actually run the economy like a government.
I just realised, I should have not said 'running the economy like a business', I should have said, 'running the economy like a business unit of fast moving consumer goods multinational company'... because business people innovate and pivot when things change... not just keep doing the same stupid thing that is clearly not working
Smaug's huge pile of gold must have been great for the local economy.
Ha! Indeed.
The $B29 "loans" from businesses to shareholders were probably never intended to be paid back and were deliberate tax avoidance. IRD can still penalise tax avoidance can it not? So, shouldn't be hung up on not being able to use retroactive tax?
Retraining a bunch of people laid off in WN for IRD auditing would probably have a great ROI without introducing new or increasing existing taxes.
Bottom line: we need much more income just to break-even let alone improve our lot. Tax evasion and avoidance probably cost us big time.
This point was (sort of) addressed in The Hoon last evening, when it was mentioned that the target sector in this tax move are likely NACT voters - so they won't be squeezed too hard.
We should remember that the government's main priority will always be to get itself re-elected.
I remain committed to all the new years resolutions I haven't done yet.
Hi Bernard,
"the problem here, of course, is that you need someone to step forward and borrow. And when you have house prices stagnant, a lot of New Zealanders don't want to step forward and borrow and fear buying into a market that's still falling. It's a classic balance sheet recession problem" - Bernard
I know my qualifications are non existent, but as an armchair critic this sounds like a form of stagflation. Except it's a type of stagflation one only gets in "Housing markets with bits tacked on".
2026 suddenly looks bleak for the recreational boat market
This Coalition cabinet passing a proposal to tax shareholder loans, yeh right!. There is no way they would alienate all their best mates (or probably their own beneficial financial arrangements) in order to do the right thing and close a loophole that borders on the crime of tax avoidance.
They must be getting desperate to get the books into balance. But if those numbers are correct that is a truck load of tax money coming in the next 12 months… not sure how it has managed to get that large ( it is an FBT issue surely as well)
if IRD liquidates a business that has loaned money to a shareholder/s then why can IRD not extract the full value of the loan (if necessary to cover debt owed to IRD) from the shareholder's/shareholders personal assets, and bankrupt the shareholder/s if necessary ?
at 31 March, 2024 $29 BILLION owed to 119,000 businesses !!! obviously a lot of people were knowledgeable about this practice. (it was a new skullduggery to me)
how many of the 165,000 shareholders who have obtained loans from their business/es are Nact politicians or Nact's financial supporters ?
Great question Robert.
New to me as well! I thought it was just capital gains we were fumbling...
Did they look in multimillionaire and billionaires pockets?
I’ll join John Small and Shane Jones: the market system for electricity has failed. It was right wing dogma and a right wing fantasy.
Does Chris Bishop really believe that charges for motorways will deter the poor from using them, and it will save his budget and the country? Another dinner party policy.
1Many of us entrepreneurial small business owners have borrowed against our house to fund the business. This IRD claw back will tip more of us into bankruptcy and we will lose our house as well. A great incentive for us to up stacks and go to Australia.
Which leads to the question: What would the unemployment rate be if the exodus to Australia and elsewhere had not occurred?
"borrowing against our house" is a loan to the business from the shareholder.
it is those who have a loan from the business to the shareholder that the IRD is, quite correctly/rightly, contemplating to investigate. the numbers and amounts of those loans from businesses to shareholders is colossal (at March 2024 $29 BILLION).
I stand corrected!