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Andrew Dickens: Taxes riddled with unforeseen circumstances

Author
Andrew Dickens,
Publish Date
Fri, 2 Jun 2017, 6:51AM
Photo \ Getty Images
Photo \ Getty Images

Andrew Dickens: Taxes riddled with unforeseen circumstances

Author
Andrew Dickens,
Publish Date
Fri, 2 Jun 2017, 6:51AM

In the armory of weapons that government's and councils have, taxes are the double edged sword.

Taxes are what politicians use to raise money or to social engineer. The problem with many of them is that they are riddled with unforeseen circumstances. It takes a very clever person to introduce a tax that doesn't have a negative effect outside of its purpose.

Take the enormous taxes on cigarettes. A penalty to social engineer a change to people's habits. Making ciggies expensive to make them unaffordable has helped in a reduction in smoking rates. But the unforeseen circumstances is an impoverishing of already poor addicts and the rise of tobacco crime.

Make a packet of cancer sticks twice as expensive as a bottle of wine and suddenly they're worth stealing by violent means. We may have reduced our health costs but we've increased the cost of violence, thuggery and vandalism.

So the government has responded to the rise of violence by increasing spending. They're now investing in bollards for dairies. And here you were thinking this was a tax cutting low spending government. And while the consolidated fund is as will with cigarette tax dollars all they give is 1.8 million dollars to the worst hit dairies. Which we all know will just move where the crims hit next. This thing has the ability to spiral out of control.

I'd reduce the taxes, they've gone too far. And if the tobacco companies want to sell a product that affects health and causes violence then they need to figure out the way to sell them safely. Vending machines are not a stupid idea. Funding them with my taxes would be. And how come the government is more than happy to use taxes to penalise tobacco but shys away from sugar and bad fat? The best you could say is that they're hypocrites. Tax will do that to a politician.

Meanwhile in a bid to get more money Auckland Council has voted for a bed tax. Sorry targeted levy. On beds. Forgetting that the hotels already pay rates and taxes and they employ people who pay rates and taxes. Forget that it will costs ratepayers a fortune trying to track down the small traders on Air BnB who provide 20,000 beds in the city. Forget that tourism promotion also aids retailers, the government's GST revenue, rental car companies and airlines who escape tax free.

This tax is yet another tax on top of a whole lot of taxes and taxes on taxes are the worst taxes of them all. They're also an active disincentive for people to provide a bed in their home for the tourists and they're going to increase hotel room rates that may decrease the demand. It's a tax that may in fact wound the golden goose industry that is already paying ratepayers to fund the council. In which case it's shooting yourself in the foot.

Now not all taxes are evil. We all need to pay our share to drive on roads, to drink water, to run hospitals and police forces and schools. But taxes to solve short term infrastructure problems and social engineer through punishment are dangerous and artificially distort the issues rather than bringing them into focus and in to line.

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