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  1. #1
    Join Date
    May 2004
    Location
    Bay Of Plenty, NZ
    Posts
    3,604

    Default Reappointed Bollard 'to lift rates'

    Patience is a virtue.

  2. #2
    Join Date
    Jan 2005
    Location
    Auckland
    Posts
    1,530

    Default

    It gets a bit tedious hearing everyone harp on about our high dollar. We still have a 28c advantage over the American dollar, and a 12c advantage over the Ozzie.

    I understand that the biggest hardship has not been caused by the comparitive rate, but by the growth of our currency relative to others.

    Nevertheless we have had a dollar the has ranged from around 62c to 74c for some time now, and there is every likelihood we are going to have to get used to it.

    It would be great to see New Zealand companies come to terms with this, and work on becoming more productive and adding more value so that our goods and services are profitable at this level of exchange.

    Of course the government should have come to the party much more than it did, and should have lowered commercial taxes far further than they did.

    The government should be trying to provide an environment where the best high-added-value companies want to set up shop here. A commercial tax rate of 20c in the dollar would go some way towards achieving this.

    Further it would encourage the re-investment of profits, and the entrepreneurial spirit.

    One can only hope that the National party picks up on this, and works to lower taxes in the interests of our country's prosperity.

    Julian
    Gimme $20k. You will receive some well packaged generic advice that will put you on the road to riches beyond your wildest dreams ...yeah right!

  3. #3

    Default

    There is a lot of truth in what you say Julian.

    Low value currencies are for weak, low cost economies.

    We could easily cope with our current value and higher if we had a much stronger economy.

    It is like the argument about housing affordability - all the focus is on the cost of houses, but low wages are just as big an issue. Get these up through much higher productivitiy and the houses won't seem so expensive.

    And you are also right Julian about the road to riches - a much lower corporate tax rate.

    I have no doubt that we could replicate the Irish economic revolution with the same corporate tax rate - 12.5% - and putting the personal tax emphasis on those who spend, rather than those who earn.

    At the same time, I totally disagree with Bollard's approach. Inflation is caused by demand outstripping supply. Bollard's approach it to weaken demand, thru interest rate rises.

    I would much rather see supply increased thru the increase in production that would come with large scale investment following a dropping of the tax rate.

    Last word - as the Bloomberg article in yesterday's Herald explained, low tax rates are now on everyone's agenda, even the big economies. The UK has just dropped theirs to 28%.

    How the hell does a small economy like ours beat countries like the UK for investment when they have a lower corporate tax rate on top of all their other advantages. The sooner Cullen goes the better.

  4. #4
    Join Date
    Jul 2006
    Location
    Waikato
    Posts
    358

    Default

    Quote Originally Posted by Edinburgh View Post
    Inflation is caused by demand outstripping supply.
    There is an element of supply and demand (not enough houses or a huge net inflow of people) but Inflation in an economic sense of the the word is caused by an increase in the money supply. House price capital growth is an effect of this money supply.
    No price is too high to pay for the privilege of owning yourself. - Friedrich Nietzsche


 

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