3 October 2013
Nice of the Reserve Bank Governor to come out today and admit that the present government is failing in its responsibility to manage the New Zealand economy.
A central bank should be increasing interest rates for one reason only: to overcome inflation.
Inflation in New Zealand presently sits at a miserly 0.7% - and note that that is on the back of the Christchurch rebuild, which is now in full swing. Wages have shown no sign at all of inflationary pressure, despite the huge demand for skilled trades.
Yet here we have a central bank that is about to smack wage earners with increased costs. All in the name of trying to slow house prices being driven upwards by Key's complete rejection of capital gains taxes on unearned profits.
It is absurd that thousands of superannuitants are receiving taxpayer-funded pensions while concurrently receiving hundreds of thousands of dollars of untaxed capital gains. Raising interest rates isn't going to hurt those people - they will just put rents up to compensate.
Institution of a capital gains tax would offer relief to home-buyers and bring in hundreds of millions of taxes that could be used for social change.
Far too obvious.
Copyright © Alan Charman