The Price of Cheese in the Wild West

There was some ludicrous debate going on in Parliament today. Amongst the rhetoric were a number of gaff’s and outright lies by National MP's. Most were reasonably inconsequential, but a couple I found rather amusing.

After saying that farmers were wrongly singled out for their tax avoidance, National MP David Carter said, and I quote “sheep thieves and dairy farmers.” Talk about foot in mouth disease.

I know that sheep rustling is a bit of an issue in New Zealand, but I was not aware that farmers themselves were stealing sheep. Perhaps he just meant farmers were thieves in general because they're avoiding paying their fair share of tax. That would seem the likely meaning to Carter's Freudian slip.

Inland Revenue Department figures provided to Labour revenue spokesman Stuart Nash earlier this year, showed that the average tax paid by dairy farms was a miserly $1506 in 2009. This is despite the average Fonterra payout being over NZ$500,000.

Prime Minister John Key went into bat for farmers, saying he thought farmers paid their fair share of tax:

"That was a story which confused revenue with profits and what people actually pay tax on. There’s nothing actually different about a farming business than there is any other business, that you have a lot of revenue, you take off your costs, and the balance you pay tax on. I’ve seen some reports from DairyNZ saying that, on average, they pay about NZ$300 million worth of tax a year. I don’t know the exact numbers myself, but I suspect you wouldn’t want to take one snapshot, and also compare apples with oranges, which is what that media report did," John Key said.

National clearly doesn't comprehend the numbers. In comparison to the average tax paid by dairy farms of $1506, the tax paid by an unemployed beneficiary aged over 25 in the same year was $1229 and the tax paid by a couple on the state pension was $3136 over twice as much as the average farmer paid.

The figures also show that more than half of those dairy farmers reported a loss for the 2009 year and 2635 reported trading income of between $1 and $20,000. This is because farmers are simply writing off income against expense and therefore not paying tax.

It's a tax dodge that allowed Fonterra to earn $1.86 billion before tax on turnover of $61.6 billion from May 2007 to January 2011. The reported after-tax profit was $1.88 billion due to them receiving net tax credits of $28 million, which is equivalent to a tax rate of negative 1.5%. The 17,244 farms registered as being in the sector, including companies, trusts and individuals, paid only $26 million in tax for 2009.

Effectively we're paying farmers to farm, and then paying top dollar for dairy products in the supermarkets as well. They justify their price gouging because of international demand for dairy products. We're also paying the costs of environmental damage from dirty dairying, something Dairy NZ denies is occurring. Let's not forget National forcing DOC to sign over more public land for private farm use as well, all of which essentially makes farmers parasites!

None of it seems to phase National though, who are still refusing to help New Zealand recover from recession by ensuring farmer's pay their fair share of tax. Speaking at a printing business in Lower Hutt that was printing the government's budget, Bill English spoke about the controversy:

"The Dominion Post story was based on a mistake! The mistake is to say that NZ$500,000 is the income of a dairy farm. That’s simply not the case. It’s like this business here. This business might have a turnover of who knows – NZ$10 million – but actually a lot of that goes on employing people who are printing the budget, and that means it’s not taxable. I’d suggest you go and talk to the dairy farmers about whether they’re making money, and to their accountants," Bill English said.

I guess New Zealand really is turning into the Wild West where anything goes. Despicably, the average farmer paying half as much tax as a couple of pensioners is perfectly acceptable to the likes of David Carter and the rest of the National Party flunkies. It's not acceptable to the rest of us though, who are paying for that tax evasion.

National has been vehemently attacking Labour for even considering fixing the disproportionate and unfair tax dodge. In this respect the National Party reminds me of the Mafia... David Carter is somewhat similar to Silvio Dante after all.