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| Dr Eric Crampton | Chief Economist | eric.crampton@nzinitiative.org.nz | ||||||||||||
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This year’s could spark a shift away from tedious and fruitless discussions of Capital Gains Taxes. Inland Revenue proposes to investigate a range of alternatives. Some, like payroll taxes, make little sense. But IRD proposes examining progressive consumption taxes. And that is far more interesting. All taxes are awful. But consumption taxes are among the least bad. A consumption tax does not care whether your spending comes from wages, from investment dividends or capital gains, from inheritances, from borrowing against family wealth, or even from criminal activity. It does not care whether you consume today or decades from now in retirement. When income or wealth turns into consumption, it is taxed. The more that a tax system can rely on consumption taxes, rather than taxes on earnings or on company net income, the better. Consumption taxes hit a very broad tax base while not distorting choices about investment and savings. And New Zealand’s GST is the best in the world. Unfortunately, voters generally want governments to spend far more than can be raised through a flat income or consumption tax. And it is not Inland Revenue’s job to tell voters to exhibit some restraint. Its job is to raise the revenue government asks for in the least awful way possible. Progressive consumption taxes try to find ways of charging a higher consumption tax on those who spend more. There are a few ways of doing it. Some, like the X-tax or the Personal Expenditures Tax, would require a comprehensive re-write of the tax code – and are far too complicated to cover in a short column. But a simple version is much easier to add to our current tax mix. And it is much easier to explain in a short column as it is close to the 2010 tax shift. Canada provides a GST rebate as a tax credit to lower-income families, to a maximum of $680 for a couple, plus $179 for each child. The rebate scales down for families earning more than $44,000 per year and drops to zero by about $70,000. In principle, a substantial increase in GST could be combined with a rebate based on overall household income. The combination would maintain progressivity while allowing a shift away from worse taxes. And it is certainly more interesting than endless debates about CGTs. |
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| Dr Michael Johnston | Senior Fellow | michael.johnston@nzinitiative.org.nz | ||||||||||||
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While there is strong evidence linking bullying, absenteeism and poor achievement, the causal relationships between these phenomena are poorly understood. For example, it is plausible that being bullied increases the likelihood that children will be truant, with negative consequences for their learning. But it is equally plausible that children who achieve poorly are sometimes bullied for being ‘dumb’, leading to the avoidance of school. (A complication is that both high- and low-achieving students are at greater than average risk of being bullied.) In a recent literature review, Refa Laith and Tracy Vaillancourt from the University of Ottawa examined measured relationships between bullying, truancy, and educational achievement. The review focused on longitudinal studies, which helps to identify the causal direction of relationships between the variables. For example, if an increase in bullying at a school precedes a fall in academic achievement, but the converse is not true, it suggests that bullying causes poor achievement rather than the other way around. In fact, Laith and Vaillancourt’s found that being bullied can be both a cause and a consequence of low engagement and poor learning. Improving any of these three things, then, could contribute to a virtuous cycle of reduced bullying and improved attendance and learning. Directly addressing truancy is difficult. Truancy increased markedly in the aftermath of COVID lockdowns and is proving stubbornly difficult to shift. The government is introducing curriculum reforms and professional development for teachers that are likely to improve achievement, especially in critical areas like literacy and mathematics. But the reforms will take time to bed in, and the benefits for students who do not attend school regularly will be limited. To address bullying, Victoria University of Wellington’s Professor Vanessa Green favours the widespread adoption of the Finnish KiVa programme in New Zealand. (KiVa is Finnish for ‘kindness.’) The programme focusses both on intervening when bullying occurs and on preventing it in the first place. Green and her colleagues evaluated KiVa in the New Zealand context with positive results. They also noted international randomised trials of KiVa, which show that the programme can markedly reduce bullying within a year. Government funding for schools to adopt KiVa might not only reduce bullying and the suffering it causes, but also yield beneficial flow-on effects on both attendance and achievement. |
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| Max Salmon | Research Fellow | max.salmon@nzinitiative.org.nz | ||||||||||||
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However, there is a small problem. Trying to find savings for the same Minister, departments have used work-from-home policies to lower the amount of office space they require. Smaller offices mean lower rents for government, meaning departments can point to cost savings. Hence the government finds itself in a conundrum – it wants workers back in offices, but in many cases these offices no longer exist. Eager to help the government implement its policies effectively, the civil service has risen to meet the challenge. Their new set of policies unveiled today has been hailed as a masterstroke in "musical chairs economics." These ambitious plans aim to solve the age-old problem of having too many employees and not enough desks. "We've done the math," declared a triumphant spokesperson, "and we're confident that if we stack our civil servants vertically, we can fit at least 73% of them into our current office space." When asked about the remaining 27%, the spokesperson cheerfully suggested, "Well, that's what car parks are for, isn't it?" When pressed further on how employees would feel working in this brave new environment the spokesperson replied that “well if a few quit, that’s just helping us achieve our staffing targets, so I don’t really see the issue here.” In another inspired stroke of genius, the government has also decided to label local Mojo cafes as auxiliary office spaces. "We figure if our employees are going to spend half their day queuing for flat whites, they might as well be doing it on the clock," reasoned a senior official. The Statistics Department, always ahead of the curve, has already pioneered a revolutionary "fractal seating arrangement." By having employees sit on each other's laps in a recursive pattern, they've managed to fit the entire department into a broom closet. "It's cozy," one statistician reported, "and it's certainly brought us closer as a team." As for enforcing this new policy in the face of recently signed collective agreements between the government and the Public Services Association? The government's strategy appears to be a mix of fingers-in-ears and loud humming. "Contracts are more guidelines than actual rules," winked a legal advisor. "Besides, we're pretty sure no one actually reads those things." |
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