4 Aug 2008

Conflict in the Engkeylish camp of Tax Cuts, asset sales and increased Borrowing.

A simple question: How does a party leader this answer these questions and maintain logic:
"How will you fund the infra-structure building you plan to do with a reduced tax take from the large tax cuts you have promised?"
Answer""By borrowing thus increasing the public debt."
Question: "But aren't you borrowing to fund the deficit created by introducing huge tax cuts?"
Answer: "No we'd be borrowing to build infra-structure."
To any intelligent listener the logic of this series of answers is as somewhat tenuous and revealing of the speaker's fundamental lack of economic logic as the increased borrowing must logically follow from the reduced income created by the tax cutting programme that he espouses. If the Government has a decreased income flow because the tax take doesn't fund the planned spending then the borrowing is necessary to fund the tax-cuts.
Then the real answer must be that given by the man John Key says he'd be happy to resign to after one term holding the reins of power - Bill English who declared in a taped interview at the National Party Conference "We'll sell State assets - i.e. KiwiBank." (Un-said by underlying the message: at least not until we've been wielding power for a term... and have convinced the public that asset stripping, like the cane was said to be, good for the state as the country's assets are best held by foreign companies.) After all selling the family silver will allow National to reduce state taxes and allow private enterprise to levy taxes in the shape of tolls and increased charges and prices.

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