Our attitude is odd. I've been fascinated by the way charges for water and wastewater have been split from local body taxes and steadily increased with fairly muted electorate annoyance. Had the increases been made under the generic heading of "rates," the response would have been a noisy outrage.
And its sad but, I guess, inevitable that some people will unnecessarily charge the argument with emotion. Jenny Shipley mindlessly refers to Labour's "envy taxes," and one commentator implied that Jim Anderton's hint of higher income tax was "anti-capitalist." Actually, the glory of capitalism is its flexibility - the reason it survived the onslaught of communism and socialism.
As with any issue, there are idiots on one extreme who claim all tax is immoral and destructive, and fools on the other who claim we should be dispossessed of most of our income so it can be used by governments for some greater communal good.
So let's ignore them.
But people whose dudgeon takes wings at the horror of the "redistribution of income" and "social engineering" that they see as implicit in progressive taxation should get off their moral high horses because all forms of taxation are both of these things, something the tax review committee members certainly understand.
The interim report says excise on alcohol and tobacco is onerous and suggests reducing it and increasing GST to 16.7 per cent. The excise is social engineering but so is GST, and altering the level of either or both has interesting social implications.
GST, as the Australian electorate quickly grasped, shifts the taxation base from the well-off to the worse-off. Generally, you can choose whether you drink or smoke but you can't choose whether you eat or clothe yourself.
In the three decades after the Second World War, double taxation was pretty well standard in this country. One example: company profits were taxed and then taxed again when dividends became shareholders' income. Death duties were high. Rumblings against these impositions were occasional and muted because of the egalitarian mood of the times.
A case can be made that heavy death duties stimulate economic growth. I recall a conversation a few years ago with a successful dairy farmer who had built up three productive farms. He had sons managing two of them and he told me one day, guiltily, that they were clever, decent blokes but had none of the drive or hunger for success he had had at the same age. They had no need to struggle for many years to develop productivity and conquer debt. His motivation was he had started with nothing.
I hope the discussion on tax revision over the coming months can be conducted with common sense and tolerance even though it may juggle explosive political issues. I've received more abusive letters in recent months on this subject than on any other - again excepting religion.
When commentators recently insisted that growth can come only with low taxes, I pointed out a couple of times that some high-tax countries do better economically than most with low taxes. This seems to translate into advocacy for higher taxes in the minds of low-tax theorists.
The tax on homeowners' equity suggested by the tax review committee was, according to its chairman Robert McLeod, at least partly inspired by an OECD report that an excessive amount of money is invested in this sector in New Zealand.
It's worth remembering that international organisations such as the OECD exist in a cultural vacuum. Home ownership has historically reflected a deep-dyed need for personal and family security in this country, something people from some other countries find curious. It's hard to see how the equity tax fits nearly as comfortably with this tradition as a capital gains tax which would fall due only when taxpayers wanted to liquidate their asset.
It would be spurious to suggest that past generations were more socially conscious of the welfare of others than we are today, but it is true that people less ashamedly indulge their self-interest now than they did after the communal trauma of the economic slump of the 1930s and the war.
It would be heartening to have confidence that the forthcoming public taxation debate will treat our society holistically rather than just as an economy, but my mail does not leave me optimistic.
* People who want to express their views are encouraged to write to: The Secretary, Tax Review 2001, PO Box 3724, Wellington or by email to
info@taxreview2001.govt.nz
Tax Review 2001: Issues Paper
