Friday, October 29, 2010

Hobbit tax cut needs an overall business sequel

The saving of the Hobbit movie and its production in New Zealand rather than taking off overseas by pumping taxpayer dosh into it puts me in a quandary.

Like most Kiwis I wanted the Hobbit to be made here and after New Zealand and foreign unions put that prospect at risk by black banning the movie back in August (read the ban documents here) I, like the majority of us was hobbit mad.

Rightly so, at risk was $670 million of badly needed foreign moola pumped into the Hobbit and the local economy and billions of dollars of future earnings at risk from other movie projects because of bone headed unions and brain dead actors.

Those future projects are still at risk due to the Hobbit fracas.

John Key has saved the day and boy did he do well to stitch up a last minute deal. US$ 20 million of taxpayer dosh was used to sweeten the deal by providing bigger "tax incentives".

This is what I am in a quandary about however.

I am clearly for the Hobbit being filmed here but I am against corporate welfare, which giving $20 million of taxpayer cash to Warner Brothers to make the movie is.

The movie will be a net earner for the country, $NZ670 million in direct revenue, plus possible billions in intangibles like more tourists, less just under NZ$100 million in taxpayer incentives, so it is moola well spent but what makes the movie industry so special?

Frankly it aint.

While it supposedly provides around NZ$3 billion in annual foreign revenue it is nowhere near our biggest industry or earner of foreign exchange.

That precious prize goes to tourism as a whole and the Dairy Industry comes in as the second sequel in the foreign earnings blockbuster stakes.

Of course these two industries are currently being hammered by increased government imposed cost through harebrained carbon taxes and other environmental extremism and a penchant for the Nats to roll over private property rights, so land owners cannot sell their properties to the highest bidder.

So you can see why I am in two minds cant you?

If the National Government thinks lowering taxes (effectively that is what tax incentives are) to make movies here is a good idea - and I think it is - then why not lower taxes for other industries as well.

We know lower taxes stimulate the economy from a personal tax cut point of view and the same is true of lower taxes for business.

They are a good thing!

Why not have lower taxes for all business instead of Governments trying to pick their favourite business of the moment.

With the Hobbit they have chosen a clear winner but when have you seen Governments of any hue pick business winners?

The answer lies in a long record of wasted billions in failed businesses.

So John, you did well this time but if you are listening I know you know that lower taxes are great for our economy, it shows in your policies. Why not spread the tax love around and let business choose what they do with that extra dosh rather than you.

It will make the forthcoming blockbuster Hobbit movies look like an art film by comparison.

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