FOREIGN INTERESTS, THE BANKS, AND BUSINESS

Immediately upon being sworn in as SOVEREIGNZ new Prime Minister, PM elect Brendon Hapi introduces legislation dismantling the income tax regime, fuel taxes, and road user fees; and gives notice to thousands of persons engaged in income tax and fuel tax administration to start looking for other productive employment.  Those redundant persons are offered 6 month’s severance pay, which includes the new no-PAYE tax provision.

The second business attended to is in the drafting and implementation of the new 30% Exit Tax, roughly merging it with the present GST system.  Talks are immediately begun with the banks and foreign corporations within New Zealand aiming to diffuse any major breakdown in commerce due to the new policies.

Foreign interests are given 60 days to identify, register, and/or remove direct foreign investment already made into New Zealand, which will be immune to the exit tax regime.  The bankers express their dismay at the extent to which their future profits will be subject to the exit tax; but relief in knowing that their local capital base will be largely unaffected, and that local profit will not be taxed.

Government immediately begins calling back to NZ all investments in other countries made by government, so that those investments can assist directly in the development of NZ rather than those foreign countries. $30 B is recalled for use in NZ to assist in the tax revision changeover period.

Government announces a six month grace period during which Kiwis can repatriate investments made offshore rather then become liable for the Exit Tax retroactively.

Government announces that the Bill of Rights Act 1990 shall be upheld in its literal meaning until a new constitution is drafted and ratified roughly following the 1948 Universal Declaration of Human Rights.  Of special note is Crown liability for cases of judicial abuse now deemed immune under Supreme Court rulings which overturned the Bill of Rights Act.

Legislation is drafted and ratified removing ‘limited liability’ protection for business directors and managers, who will now become personally responsible for their decisions negatively affecting other persons and/or the natural environment.

The Business Round Table meets with PM Hapi to discuss the ramifications of these changes; cautious to the effects of the loss of limited liability status, but generally supportive of the new no-income-tax incentive towards investment and production.  Business acknowledges the beneficial effects in directing investment towards real wealth creation rather than speculative opportunities and tax minimization.

The immediate effect in the financial sector is greater fluency in debt servicing by the poor, and greatly reduced interest rates due to less demand and an immediate deflationary effect caused by growth in the economy.

The immediate effects for business are increased consumer demand, more business opportunity, more efficient investment criteria, less tax and accounting costs, a cost advantage over imported consumer goods, and a clearer and more optimistic picture of future opportunities.

The greatest benefit accruing to the business sector arises in the area of small business now hamstrung with accounting costs, tax requirements, and debt servicing.

Once the Universal Basic Income is introduced- following a pronounced deflationary effect- a profound change occurs in the relationship between labour and capital; and between employees and managers.  Unemployment immediately disappears, now being a redundant concept.  Many persons now considered unemployed will leave the formal un-employed sector and take their UBI to less costly rural areas and start up their own small businesses.  Businesses will no longer be constrained by a minimum wage, but will need to compete vigorously to hire and keep staff.     

THE EFFECTS FELT BY GOVERNMENT

The government will immediately feel the effects of SOVEREIGNZ tax reform in a strong deflationary effect, as the economy responds to the ‘injection’ of $50 Billion in de-facto tax refunds.  Instead of gifting the banks billions by way of quantitative easing as the US government did following the crash of 2008, elected SOVEREIGNZ PM Brendon Hapi will, by carefully monitoring the Consumer Price Index, spend into the economy by way of the Reserve Bank the massive amount of money needed to stabilize prices and prevent a recession.

The new 30% Exit Tax and the existing GST will further deepen the deflationary effect of nil income taxes; and, spending only direct revenue from the new tax mix will be insufficient in dampening that deflation without further currency issue.  Deflation, previously considered the economy’s greatest threat in creating recession, will be recognized by the SOVEREIGNZ government as New Zealand’s greatest opportunity towards redressing the financial unfairness built into the previous tax system.

The Hapi government first utilizes the $30 Billion in repatriated government overseas investment, spending that directly into the economy; creating yet another double feed-back effect.  That additional stimulus creates yet more growth, and yet more deflationary effect; requiring yet more currency issue.

The Hapi government will immediately comprehend that government fiscal restraints are no longer present, and where before the government seemed dependent upon company PAYE tax receipts for funding; that no longer applies.  Consequently, government will enjoy a huge budget surplus allowing it to absolutely police and prevent industrial pollution of every kind.

Business will then be regulated and specifically held to account for industrial pollution and abuse of our natural environment.  PM Hapi will see and understand that unregulated growth- potentially running at around 30% per annum- creates both the worst-case scenario for industrial pollution, and, the perfect opportunity of restoring our natural environment to a pristine state. 

The new government can then force industry- even at great cost- to adapt measures to prevent pollution and environmental destruction.

Consequently, the new SOVEREIGNZ government will adapt an entirely new ‘rule of the road’ in ensuring that future growth in the economy is both environmentally sustainable and shared, at least in substantial part, by all segments of society.

Employees and Beneficiaries

Jo Retihua, now working at the meat works, will receive an additional $200 per week in take home pay.  This will allow Jo to rapidly pay off his high interest credit card debts and start saving towards the purchase of his first home.

Jo has also been thinking of taking on some extra work to provide for his growing family, but has hesitated due to the high rate of tax on secondary income.  Jo can now put his latent plan into action without fear of more taxes or prosecution for taking unreported cash income.

Ultimately Jo would like to start his own small business; and the new SOVEREIGNZ tax policy will finally make that dream far easier to attain.  Jo does indeed find a niche market for the wood carvings he makes as a hobby, and suddenly he is able to bring in another $200 per week in cash sales at the local crafts market.  Jo’s wife Heather grows a surplus of home veggies which she now sells through Jo’s market stall.  By both his tax savings and his own family’s further initiative Jo contributes to the rapidly growing consumer market which soon promises to create enough deflationary effect for government to fully fund the Universal Basic Income.

Jo is not entirely happy working the uneven hours at the meat works, with little chance for advancement.  But once the Universal Basic Income cuts in he sees the light at the end of the tunnel.  By combining his own family income with the $600 per week they receive on the UBI (a family of three), Jo can use the new free education system to up-skill his woodcarving skills, and move on from his job at the meat works.

However, there is nothing lost to the economy, as there are many young people who will appreciate Jo’s job, the tax-free income it provides, and the UBI that makes it a real stepping stone towards later and bigger opportunities in life.

Sandy Smith is a solo mother struggling to raise two small kids on the benefit.  A large part of her benefit goes to pay the rent on her Auckland flat.  Her ‘friend’, the father of her second child, is unemployed and lives nearby.  Neither dared share the details of their relationship with WINZ for fear of losing a large share of their benefit payments, and caused each to incur extra accommodation costs that were automatically assumed by the government.

Initially both Sandy and her secret admirer receive an extra $100- $150 in extra tax-free benefit once income taxes are removed, creating further lifestyle options for them.  But once the UBI is in place, the veil of poverty and secrecy is lifted.  The now freely announced ‘couple’ joined together their individual UBI payments without secrecy, cut their accommodation costs in half, and received a total of $800 per week from the UBI.  Is that enough to live comfortably in Auckland?  Maybe not.  But it also freed up Sandy or her partner to take on casual jobs for cash without jeopardizing the UBI; and still left one person free for full time parenting.

Sandy’s de-facto partner Hemi is one quarter Maori, and he has always identified himself as a Maori.  He has not really assimilated himself into urban culture, struggling to find only part time casual work; but has always been drawn to his Maori ancestral roots.  Once the UBI began operating (marginally reducing their combined incomes) the penny finally dropped. 

Hemi shares in a part ownership of Maori family land near Murupara.  His new family’s combined UBI, barely survivable in Auckland, is sufficient to allow the family to live in comfort in the surrounds of his own ancestral land in Murupara; and equally allows the couple to apply themselves in what small cottage industry or business they may wish to undertake there.

There is a quadruple feed-back mechanism at work here.  Migration away from the urban areas releases the strain on urban infrastructure, costs of living are much lower in the rural areas, the effect of money migrating to the rural areas stimulates rural economies, and that dollar migration provides new job opportunities where there were none.

Many of Hemi’s blood relatives of Maori descent will likewise be empowered to embrace lost cultural values, if that is what they wish.  Likewise, the no income tax regime, coupled with the UBI, will give every beneficiary and labourer a real leg up the economic ladder without tearing anyone down from above- whatever their ethnic origins.  Could this be the perfect system of charity?  It looks pretty good to me!