Tuesday, February 27, 2007

Key's lightweight "policy"

John Key went to the Wellington City Mission today, and he had hinted that he would make a major policy announcement to help New Zealand's "underclass". So, what was it? Higher benefit levels? A commitment to retain non-market rents on state houses? An expansion of the state housing scheme to ensure everyone has a decent roof over their heads? Raising the minimum wage? A serious program targeting job training and education? Something to address transport issues or reduce other barriers to employment?

The answer to all of these questions is of course, "no". Instead, Key fiddled with tax deductions on charitible giving - a policy aimed more at the rich than the poor, the primary impact of which will be to help them dodge on their taxes. I think that shows you exactly how serious he is with his interest in the "underclass".


Yes - fiddling with taxes so that "the rich" can lower their tax burden by $1 for each $3 spent.

Whether you think National should do much more or not, this is a good move.

Posted by Graeme Edgeler : 2/27/2007 12:50:00 PM

Graeme: I'm fairly certain the accountants will be able to construct a dodge out of it (hell, they manage to find one for everything else). Despite the paranoia of ACTolytes, limits on charitable deductions don't get stuck in a tax system for no reason at all.

I do however think it will have some positive benefit - but a fairly small one. Wasn't this supposed to be something big, some policy heft, to show that Key was serious in his concerns? Unfortunately, it seems to be showing the opposite - Key is primarily interested in his rich friends, rather than the poor, and his interest in the "plight of the underclass" extends only so far as he can use them as a prop in a demand for a tax cut.

Posted by Idiot/Savant : 2/27/2007 01:03:00 PM

Dear Idiot, I already donate over the current limit (to Amnesty, the Fred Hollows Foundation, my local school, and a few ad hoc things). This wouldn't make much difference to my behaviour now but as and when my income increases, it may well do so.

I can't see how you would make a dodge out of this. Try to restrain your reflexive disdain for "the rich" - it is not becoming. Who knows, you might be rich yourself one day.

Posted by stephen : 2/27/2007 07:07:00 PM

getting tax back on your donations seems so aganst the spirit of donations.
It seems likely to give people the feeling of spending cheap money (or other people's money) that is the sort of approach I have seen regarding this.

Posted by Anonymous : 2/27/2007 09:30:00 PM

Great idea. Such an arbitrary limit was always difficult to justify. If idiot, or anyone else is really that concerned about 'the rich' (those really dreadful people) making money when they selfishly give it away, then perhaps a system similar to the UK's 'Gift Aid' scheme could be used instead where it is the charity that can claim back the income tax that the giver has already paid, thus increasing the benefit received.

Posted by magicduncan : 2/28/2007 04:25:00 AM

So - giving money to charities by people who can afford it is bad is it ? and is an advantage to rich people.

Well, in the first case who ever thinks that must have failed NCEA maths.

Secondly it seems that this is already seen by the media as a very good proposal - and that is a big win for key. And then to add to this is Maharey (I think) calling it Tory charity - I think thats is a foot in mouth sort of thing to do.

I cant help but think that key is playing the winner in Labours home turf here. He is smarter than most of us gave him credit for.

Posted by Anonymous : 2/28/2007 07:52:00 AM

I was expecting some official source to go out of their way to explain what the reasoning behind the limit is... haven't noticed anything so far.

But yes, I assume it's because it's eminently rortable.

That (biggish qualification) aside, it seems like a good idea.

Posted by Lyndon : 2/28/2007 09:35:00 AM

Well I guess you register as a charitable trust and get your mates to donate, then divvy up the tax saved, no?

Posted by Unknown : 2/28/2007 11:33:00 AM

inland revenue determines whether a trust qualifies as 'charitable'.

and i know for certain they're not to sorts to have the wool pulled over their eyes.

so no rorting via that avenue, mr. merc

Posted by Anonymous : 2/28/2007 11:49:00 AM

Doh, I'm such a useless criminal.

Posted by Unknown : 2/28/2007 12:19:00 PM

[copy of kiwiblog comments. sorry]

Ah, here we go...

"Taxpayers' ability to claim tax rebates, albeit limited, on donations made to charities is another significant form of assistance. The Government had indicated it is unwilling to provide further movement on tax rebates until there is a registration, reporting and monitoring regime. This support carries with it responsibilities for accountability to the government and the public.

"Successive Governments have expressed an interest in reform but have also expressed concern about the degree to which tax exemption for charities can be used for tax avoidance. These same concerns have at times been expressed from within the charitable sector itself."

Perhaps the new regime helps with this? I'm not clear on all the details - I had the impression some of it was more shuffling the bureaucracy.

Posted by Lyndon : 2/28/2007 12:21:00 PM


This policy will benefit the recievers of charity more than anyone else. I reckon that if it hadn't been put forward by National then you'd be all for it.

Posted by Anonymous : 2/28/2007 02:56:00 PM

It's not a very well targetted way of addressing problems of poverty. eg. I happen to know donations to the Karori Bird Sanctuary and the SPCA are currently deductible- and those are both worthy causes IMO but clearly not aimed at assisting the poor.

Posted by Amanda : 2/28/2007 07:32:00 PM