Why I Want to Reward Success and Achievement
Rodney Hide Speech to ACT members and supporters; ACT Leader's Brunch; the Backbencher; Sunday June 27, 2004.
People ask why I stand for low taxes.
Simple. I want to reward success and achievement.
I want to make this country richer and better.
I want to reward and encourage every hard working Kiwi.
I admire people who provide for themselves. Always have. Always will.
They don't take. They give.
They certainly don't deserve to be punished by the politics of envy.
First they find something useful to do. Something so useful, others are prepared to pay for it.
That's not easy.
We are all careful with our money. We don't part with it easily. We insist on real value before parting with something
we have worked so hard to earn.
And value comes in many forms. It could be a work of fine art. Or gravel dug out of a quarry.
But, whatever you do, it must be something that others are prepared to pay for. That's a huge achievement. It means
creating wealth.
The icing on the cake is to create so much value. To be in such demand from your fellow citizens that you need to
employ another person and then another.
Provide someone a job and you immediately make them valuable.
Now, they too are productive and useful.
Provide a job and you provide an income, food and shelter for another person and their family. You are creating even
more value.
You are a truly valuable member of society.
That's how the free market works.
By providing for yourself, you are creating wealth. You are making the country rich.
That's how businesses are built and wealth is created. On the back of successful people.
Success that breeds success.
For it is such success, such achievement, that provides us with the homes we live in, the food we eat, the cars we
drive, the money we earn.
Such success even pays for government.
The money we hand over in taxes is used on our behalf by the government for schools, hospitals, welfare payments and
pension schemes. That's how government funds itself.
All made possible because there are people producing the income that government taxes.
Without people providing for themselves, and providing work for others, we would have nothing.
For these are the wealth creators. The farmers, the electricians, the computer jocks, the café owners, the truck
drivers.
Without them, there would be no food on our tables, no schools for our children, no hospitals and no policeman to call.
It is the energy and enterprise of wealth creators that makes this country great.
To make our great country even better we need to celebrate that success. We need to celebrate everyone who provides for
themselves and for others.
And, if we are really smart, we will reward it too.
We will ensure achievement and success are worth the effort.
That's the way to spur everyone to greater effort.
That's the way to ensure greater opportunity for us all.
It's so obvious and yet we insist on doing the very opposite.
We actually insist on penalising those who provide for themselves. We do so in oh so many ways. We tie them up in red
tape; frustrate them with the need for government consent for the most mundane things. We make hiring and firing someone
tougher than getting married and divorced.
Frankly, when I see what people in business are up against, I am amazed that any one is left standing.
They have a tough job keeping their costs down and their customers happy. They are taxed hard only to be hassled and
frustrated by people whose wages they pay. Government bureaucrats who are seldom civil and don't understand that they
are in fact servants of the people.
We could do so much better. We could do so much better so easily.
Take the tax system. Tax penalises success and achievement.
Tax dulls the incentive to invest. It dulls the incentive to be entrepreneurial. It dulls the incentive to succeed and
to achieve. Tax takes away the very money you need to provide for yourself and for others.
And what was the first thing that Helen Clark did on taking office? She took away even more. She added a six
cent-surcharge to success and achievement.
For Michael Cullen, those earning over $60,000 "could afford to contribute more to the country's wellbeing."
That's typical Labour Party thinking. They think the only money that does any good is the money they take and spend.
And they penalise those who produce and succeed to take and spend more. Why? Because they resent success and
achievement. The Labour party prefers to foster poverty and dependency.
Helen Clark's tax hike was wrong when she did it. And it's wrong now.
That's why I disagree with Don Brash.
National has flip-flopped on Labour's tax policy. National opposed the six-cent tax hike. Now they are not in favour of
dropping it. That's a mistake.
Don Brash and the National party have effectively bought into the Labour Party's tax policy.
I can but repeat where ACT stands.
We should drop both the top and the middle rate of tax -- immediately.
We should drop the 39-cent rate. We should drop the 33-cent rate. We should drop the 33-cent business rate.
We should drop taxes to a top rate of 20 cents immediately. That's business tax and personal tax.
We can do so. And we should do so.
That would send a powerful signal that we want to celebrate success and achievement.
Not just celebrate it, but reward it too.
Reward the successful and the achievers by allowing them to keep more of what they earn.
Dropping taxes would boost business profitability by twenty per cent.
Those who provide for themselves would keep 80 cents out of every dollar profit instead of 67 or 61 cents as it is now.
There's no other single measure that a government could take that would give business and our economy such a boost.
The result would be more investment, greater productivity, higher wages, more growth, more opportunity and a more
prosperous New Zealand.
Over 700,000 working people would have an immediate boost in their pay.
And every single New Zealander would prosper from the resulting increased investment and entrepreneurship.
We would all be better off.
Our economy would grow stronger, each and every year, making us all richer.
We could do it. And we could do it now.
Michael Cullen argues that cutting taxes means closing schools and hospitals. He's wrong.
The government's operating surplus for this year is $6 billion. That's what government has left after all its spending.
Dropping the top rate of income tax to 20 cents would cost Government $5.5 billion.
That's the figure Michael Cullen supplied Parliament following my questioning. It's a very conservative estimate.
It assumes not one extra job, not one extra dollar of investment, not one extra dollar of production.
So we could drop income tax to a max tax of 20 cents in the dollar and still have surplus to spare.
Government could still make all the welfare payments it now makes.
Pay for all the hospitals that it now pays for.
Fund all our schools.
And put policemen back on the beat.
They could even fund Maori Television.
That's not to say that government should keep spending all the money it currently spends. Much of it is wasted. And
much of current government spending is counter-productive.
But we could drop taxes to 20 cents without cutting government spending.
Total government revenue for the year is $60 billion. That's 44 per cent of all that we produce.
Dropping to a max tax of 20 cents would reduce that revenue to 40 per cent. That's a small drop in government revenue.
It's less than 10 per cent. But it would provide a big boost to our economy.
The second argument against dropping taxes is that it's unfair because tax cuts just benefit the "rich".
Certainly, dropping taxes does benefit those who produce and succeed.
That's the whole point.
And, for Helen's benefit, the so-called rich would still pay more tax.
At a tax rate of 20 cents some one who earns twice as much as their neighbour still pays twice as much tax.
It's just that they no longer have to pay three times as much. They no longer have to pay the extra penalty of a higher
tax rate simply because they earn more.
We should reward hard work and success. Not punish it.
Besides cutting the envy tax benefits everyone.
The top personal and company tax rates drive investment and entrepreneurship.
Drop that rate and we will have more investment and more entrepreneurship.
That means more jobs, higher wages, greater growth, and more opportunity for everyone.
We need to celebrate and reward success and achievement. And by that I mean the success and achievement of providing
for yourself by helping your fellow citizens.
That's the way we will succeed and achieve as nation. We can do it. And we can do it well.
We just need to take the brakes off.
Ladies and gentlemen, there's only one party promising to drop the top rate of tax. And that's the party that I lead.
The ACT party.
I have a simple message for voters.
If you want to see success and achievement celebrated and rewarded, if you want to see taxes come down.
If you want a more prosperous future for yourself, your fellow New Zealanders and your country, then give your party
vote to ACT.
We can do it. But we need your vote and support to do so.
Thank you.