I will concede a few points there. My new position is he is getting $200 of meat for $170. [The difference being the tax saved of $30 which makes sense without doing detailed spreadsheets]
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For you FP, David Parker has some ideas about our exchange rate.
http://www.sharechat.co.nz/article/5...ys-parker.html
The value of our dollar is set by the market, hopefully never by intervening politicians. Parker and crowd want to lower our value, which is effectivly a pay cut for all NZers, certainly in real terms because our buying power would lower. Forget the interventionists/
A couple of times, in response to continual ignorant goading, the RBNZ did have a go at intervention. The effect was slight and lasted for a matter of an hour or two.
Think about it - the NZ $ is the tenth most traded international currency. The NZ GDP is less than a half per cent of the World GDP. Financial flows are something like ten times the size of the World GDP.
Parker has just made a supreme ignorant ass of himself.
I'm with you both on this one about exchange rates, and Brian Fallow wrote an article yesterday about it too.
http://www.nzherald.co.nz/business/n...ectid=10835174
An importer who adds no value to goods will be very happy with a high exchange rate. An exporter like a farmer or manufacturer, with a limited amount of imported costs to production, wants a low exchange rate.
To his credit, Parker suggested that the Reserve Bank policies be a bit less predictable, and that idea has some merit.
In the meantime, most businesses (including mine) are not leading edge, they don't spend enough on tech equipment or R&D, or in the case of farmers, don't concentrate on maximising profit very often. They are keener on limiting taxes, usually through paying interest on some new acquisition. And there we are, back to the exchange rate.
No doubt that income tax influences business behaviour and decisions. That's exactly why the top tax rate of 33% should be less punitive. Something Labour politicians are well aware of, but choose to promote higher rates to placate the great unwashed lower paid, envious NZ voters. Unfortunately many voters believe what they are preached, to their own detriment.
All that is possibly correct FP, but PAYE employees don't have quite the same problems with tax, as it is deducted at source. It's the trusts, companies, partnerships and sole traders who have a problem. Quite a bit of the tax calculation that might be due, is hidden inside the large churn of transactions that almost every firm has to make, to stay in business. So often for me, the big tax catchup happens after the annual books are completed. I suspect it catches many business people out, including my previous accountant, who as I mentioned was hauled into court and put into liquidation by the IRD, over unpaid tax. Maybe we should all run full sets of books and use these to keep an eye on profits, at least each quarter.
Is 33% too high a tax rate? In many ways it shouldn't be. There are tax rates at very similar levels overseas, and maybe if capital taxes are introduced here, the top income tax rate will come down further. The way I look at it, every dollar I'm smart enough to profit by, on paper, has partly been earned by the use of common assets owned by the state, the country as a whole. Reticulated power, water, sewage, roading, rail, port facilities, airline services, airports, customs, stats office, Trade and Enterprise, university linkages, etc. While some of these services have a private enterprise segment, or are partly covered by other local body taxes and excise taxes, the result is the same.
A lot of hard graft by other generations put this infrastructure here, my only problem is how to ensure the profits keep rolling. I will never be asked for taxes on paper profits I didn't make, and I'll never get to keep 2/3rds of them in my bank account either.
On another front - FP- do you think national have a gnat's chance of getting a third term at this stage? What with trying to amalgamate CHCH schools without giving the locals much say, the John Banks fiasco and stalled asset sales, it's not looking too good for them.