Between 1890 and the late 1950’s New Zealand’s per capita GDP was always one of the ten highest in the world. We are now about number 40. What went wrong?
The main problem was that the state took over about 60% of the economy in 1935 and ran it very inefficiently until 1984. Privatisation has helped but we still have very low
productivity and wages by western world standards.
We believe that there is only one way to kick start our economy – all full time employees earning less than $50,000 pay no tax and introduce a low flat tax for companies.
This would encourage foreign investors to invest heavily in New Zealand. Few New Zealand companies have the necessary capital to invest large sums and our stock market is very small on a per capita basis.
This approach has worked well in Ireland. The Irish used to have a small, low wage, low productivity agricultural economy like New Zealand 30 years ago with a similar per capita GDP. They brought in a 12.5% tax rate for companies and their per capita GDP is now about 40% higher than ours.
Large companies such as Intel established factories there and Ireland now has large and flourishing IT, banking and pharmaceutical sectors. It is now a high wage economy and the Irish diaspora have returned to drink Guinness and buy houses. Despite the tax rate reductions the total tax take has actually increased and there has been no cut to social services.