Tax

Well, last nights tax debate kind of got nowhere. Too many people, and a certain someone was a bit rude interupting constantly.
But the entire tax thing and inflation annoys me.
Inflation is caused by a number of things.
Government spending can cause inflation but so to can consumer spending.
See the economy is made up of several parts, government spending and consumer spending are a zero-sum game (excluding savings or debt by either). If one is higher the other is lower. Thus together they cause the same level of inflation no matter what (given the previous caveats). What really causes inflation is the other components of the economy, or other influences on consumer/government spending (e.g. money coming into the economy).

So, the sides talk past each other a bit too much really.

But the entire tax debate should also recall that the economy is going through a strong period. The surplus exists. But it won't during a bad economic time. During a recession the government will get less money and will spend more (on welfare). Thus it needs extra cash. It can either do that by raising tax levels during the recession, or it could have a reserve of spare cash to spend, or it could borrow money. The current government has decided to go for having spare cash from previous surpluses, while the opposition thinks having debt would be the way to go.

All up, tax me baby one more time.
« Home | Next »
| Next »
| Next »
| Next »
| Next »
| Next »
| Next »
| Next »
| Next »
| Next »

Blogger SubversNZ at 2/7/05 11:47 AM said

I agree.

It's good to know there is someone out there capable of looking at this debate honestly.    



» Post a Comment