Why Not Follow Ireland’s Example?

New Zealand seems stuck in a cycle of pushing for more taxes, which makes it harder for businesses and consumers to get ahead. But instead of squeezing more out of individuals and companies, why don’t we take a closer look at what Ireland is doing? Ireland has seen incredible success by lowering taxes, attracting international investment, and driving economic growth—all while being able to offer cost-of-living relief to its citizens. Their low-tax regime has resulted in huge surpluses, allowing them to support both businesses and households. It begs the question: why can’t we do the same?

Extra taxes on individuals and businesses can have serious consequences for both personal finances and the broader economy. Here are a few key points to consider:

1. Reduced Disposable Income: When individuals are taxed more, they have less money in their pockets. This leads to reduced spending on goods and services, which in turn affects overall consumer demand. As consumer spending slows, so does economic growth.
2. Decreased Business Investment: Companies facing higher taxes often have less capital to reinvest in growth. This means fewer new projects, less equipment investment, and a slowdown in hiring. When businesses can't invest in growth, the entire economy feels the impact.
3. Discouragement of Entrepreneurship: High taxes can discourage new businesses from starting up. Entrepreneurs, who take on huge personal risk to start new ventures, may feel that the potential rewards don't justify the effort if a large chunk of their profits will be taken by the government. This stifles innovation and reduces job creation.
4. Increased Costs Passed to Consumers: Businesses don’t just absorb extra taxes. Instead, they often pass these additional costs onto consumers by raising prices for goods and services. This leads to inflation and erodes the purchasing power of everyday Kiwis.
5. Potential Job Losses: When businesses face higher taxes, many respond by cutting jobs or reducing employee benefits to maintain profitability. This creates further strain on the economy, as job losses reduce household incomes and spending power.
6. Capital Flight: High taxes can also drive companies and wealthy individuals to move their operations and investments to countries with lower tax rates. When this happens, New Zealand not only loses tax revenue but also the economic activity that comes with those businesses and individuals.
7. Growth of the Underground Economy: In an attempt to avoid heavy taxation, some businesses and individuals turn to tax evasion or the informal economy. This reduces the tax base, ultimately forcing the government to increase taxes further to make up for the shortfall—creating a vicious cycle.

These negative consequences create a drag on overall economic growth, ultimately affecting government revenue in the long term. It’s short-sighted to think that constantly raising taxes is the solution to New Zealand's economic challenges.

Ireland, on the other hand, has taken a smarter approach. By lowering taxes, they’ve been able to attract multinational companies, particularly in tech and pharmaceuticals, driving economic growth and boosting public finances. With the surpluses they’ve generated, Ireland is now able to offer cost-of-living help and infrastructure investment, all while maintaining a competitive, low-tax environment for businesses and individuals.

New Zealand could benefit greatly by looking at Ireland’s model. Rather than piling on more taxes and making it harder for Kiwis and businesses to get ahead, we should be looking at ways to reduce taxes, stimulate investment, and create a more business-friendly environment. This would not only attract foreign investment but also help home-grown businesses thrive, creating jobs and increasing government revenue in the long run.

It’s time for New Zealand to rethink its approach. Let’s stop taxing businesses and individuals to the point where it stifles growth, and instead create a system that rewards hard work, encourages entrepreneurship, and makes our economy competitive on the global stage