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Tuesday, June 28, 2005

How to cut government expenditure

Here's an idea. Now you might think I'm a little crazy, but your name's not Michael Cullen isn't it? You don't have that "oh I screwed up with the tax cuts" desperation that probably has you combing the blogs into the wee hours looking for some new angle to disguise expenditure.

And here it is. Your prayers have been answered Mikie. No, not another 500 million found in a Caymen Island bank account, to go through strict fiscal responsibility process and budgetary review controls (some lasting up to 35 seconds) in deciding how best to spend the windfall - no its a new accounting method.

I can show you how to cut government expenditure by at least 20%. Without cutting jobs. Without chopping departments. We wont even cut half of the crazy schemes the bureaucratic balmy army come up with.

There are 300,000 government workers. Three hundred thousand.

Government workers are paid by tax payers. Somewhere in the depths of IRD is a large vault with a few goblins doling out large pay checks each week. The weird thing is, after handing the dosh over to Mary Ministry of Health Policy Analyst, they immediately deduct the tax and put it back in the vault. Mary gets $1,200 a week, and pays about $300 of that in tax, leaving her with $900 to spend on the KiwiBank Mortgage, rates, GST assessable goods, half a tank of petrol, insurance levies, feltex shares for her retirement, a new All Blacks jersey for her kids and the HP on the Samsung Plasma. But she works for the government.

So why bother paying her the tax portion only to take it back? Pay her $900 per week - end of story.

Immediately, the department can cut their salaries budget by around 25%, if all their policy staff are on the same wicket. Across government, costs are down, expenditure as a percentage of GDP is down and Mikie is looking like a hero.

Of course, it would be the first step towards workers matching what they are paid with what they keep. When you think about it, government workers (and people on benefits, another 300,000) shouldn't be "paying" tax anyway. It gives them the mistaken impression they are adding to the income tax revenue. And they are not.

Posted by ZenTiger | 6/28/2005 12:13:00 pm


Blogger Errol said...

When you think about it, government workers (and people on benefits, another 300,000) shouldn't be "paying" tax anyway.

Bollocks. It's much easier to administer when they are treated the same as everybody else, especially when you realise that even the most lowly public service drones tend to get income from places other than the government.

6/28/2005 01:05:00 pm  
Blogger ZenTiger said...

Bollocks back atcha Errol. I clearly said most people would find the idea crazy, but this was my special favopur to Mikie. But this post was not serious, it was merely making a point.

Anyway, whenever did simplicity of a tax system mean anything to bureaucrats and the left? "That's what computers are for"

No, what you really mean is that if people don't have the tax taken up front, there's no way the government would be able to get it back off them further down the track. Far better to take too much, and have a surplus and wait for the odd person to spend hours calculating their refund, than remove all the costs of adminsitration and deciphering millions of lines of income tax laws to business, only to contest the findings in court.

Just imagine every business handing over the pay, no tax calculations, no deductions, no "special cases" multiple situations etc and the person responsible to square up their income with the government via a monthly invoice.

That would be so cool.

6/28/2005 01:17:00 pm  
Blogger ZenTiger said...

oh...and when I say "what you really mean" I don't mean you per se, it just works better for the reader to generate conflict and angst.

Ooh look - some-one's taken a position. There's going to be blood. Fight fight. $10 on the cat with sharp teeth. No, $5 on the guy in like Flyn.

Thanks for playing.

6/28/2005 01:25:00 pm  
Blogger Errol said...

The problem with this idea is that it isn't crazy - just not the best way of doing things. NZ benefits came tax-free until the mid-80s I think it was.
Mikie has more subtle ways of making himself look good - the Fiscal Responsibility Act wasn't really designed to stop pollies hiding surpluses.

6/28/2005 03:09:00 pm  
Blogger ZenTiger said...

Funny you should mention that...you might want to read GMAN's post (links on my post above)

6/28/2005 03:17:00 pm  
Blogger ZenTiger said...

So, its as I thought. No-one disputes my comment about goblins working in the depths of the IRD. Hmmm.

6/28/2005 11:16:00 pm  

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