Finance Minister, Michael Cullen stands like King Canute neck deep in the tidal surge for tax cuts. Every party in parliament save Labour campaigned for some tax relief. The Inland Revenue Department wants to cut tax rates, to reduce tax avoidance and remain competitive with Australia. Mr Canute’s own Treasury Department is now urging cuts in the personal and company tax rates to encourage growth. Mr Canute dismissed the briefing as the usual “ideological burp” from Treasury every three years. He remained largely unconvinced tax cuts would change the growth rate.
Every high school economics student knows that if you decrease the cost of an activity, you get more of that activity. If you decrease the the cost of doing business you get more business and in the long term, more tax revenue. Mr Canute is an intelligent man. Intelligent enough to comprehend basic economics. Maybe we should face the possibility that to Mr Canute personal power is more important than this nation’s economic wellbeing.