IMHO
Traditionally taxation is used for 3 reasons
1. Funding of Government services
2. Re-distributing wealth
3. dis-incentivizing certain behaviours like Tobacco usage, importation of fuel.

The 3rd area is of particular interest to this discussion.
When a new tax is created it is natural the people and businesses will try to avoid that new tax.
The big boom of GST's introduction is that everyone had to pay the tax, before that the consumption of the wealthy was not taxed and the wealthy were able to afford accountants so that they would not have to pay income tax. Even today some of the wealthiest people in NZ pay only GST as there income may be derived from overseas funds.

If a tax such as FTT is introduced those super wealthy will avoid paying it once again. One simple way is to start using more overseas share broking firms, and there share transactions won't be subject to FTT. If they are warned about the tax, the only time they will pay it is when they repatriate what they want to spend back to NZ.

Lets take Google, Facebook, and Apple as examples, through fancy paperwork and accounts they pay virtually no income tax in New Zealand. The only tax that IRD scrapes of them is via GST. I strongly suspect that on an FTT introduction they will be able to avoid that as well.

Yes I would like a Robin Hood Tax, but it must be implemented with various other countries simultaneously. The USA for example has a massive internal economy and a Robin Hood Tax would be far more efficient there than here. In NZ it would be far too easy for the rich to skip, and the only payers of it to be the poor.

Another idea might be GST rebates. If a worker were to collect all there GST docs together, they could then be rebated for there expenses on a regular basis. I spend about 1000$ a year on work clothing maybe another $1000 on transport. How about I have the ability to claim that money back from the Government. eg 2000$ would give me about 260$ a year rebate.
Business can claim expenses back, but because workers aren't able to GST register their work they can't claim their work expenses back.

@colindavies I think in order for your final idea to work, we'd need to simplify the tax code.

Even without your idea, we should simplify the tax code. Taxes are complicated, and it's why the rich are the only ones who don't pay them. They're the only ones who can afford accountants to figure it all out for them.

@reidalexanderwicks
Yes I think key to any good tax system is simplicity and lack of exemptions.
The moment we make an exemption for natural fresh foods to be exempt from GST. A truck load of bluff oysters will drive through the loop hole on its way to restaurants.

@colindavies Yeah, I got turned around on that one. Due to both the simplicity argument, and the fact that I'd be giving a gift to the companies that run our supermarkets.

I think that if the robin hood tax were to work the government would have to look at what the European countries that have this tax in place and how they managed to get it to work for them.

Yes I think we should watch the European experience,
It's a pity we can't join them.

@colindavies "Even today some of the wealthiest people in NZ pay only GST as there income may be derived from overseas funds."

I must not be rich enough. My overseas gains are taxed. Sure, if I re-structured things, I might be able to lower that bill, but for a normal person with a flat left in a foreign country leased out, they should be paying the IRD for that income.

But the truly rich don't have income, they invest and receive gains. The capital gain is untaxed, so the truly rich pay $0.

The fairest tax is a tax not on income, or spending, but on wealth. But that's also one of the hardest to administer, and hits responsible retirees hardest, but those are so few, it's overall the most fair. So we stick to income taxes, but those have massive holes in them. Capital gains aren't taxed, so properly structured portfolios can grow billions in a year, tax-free.

The "fix" would be to treat all income the same. The other fix is to tax all trusts on gross, not net income. Why should a house I buy to live in be paid for with "after-tax" dollars, but a house I buy to rent out for a profit be paid for with "pre-tax" dollars?

The current system is designed to screw the average person. If you can't afford investment property, then you are paying more taxes on your property than the rich guy who owns 100s of houses and apartments and makes millions doing nothing, other than raising rents when he wants a new yacht.

The reason Robin Hood is popular in the US/UK is that the money mangers trade money millions of times a day. They do so at high frequency to squeeze profits from the market, again, as the expense of the common man. Robin Hood is a response to irresponsible HFT, not bank profits.

@marcwhinery
Play along with me here please.
How could a wealth tax work ?
Would everyone have to fill out a form every year of what assets they owned, with valuations attached ?

@colindavies It wouldn't, which is why nobody does it.

You file a list of assets every year, with secured loans against them (if you want to tax equity in a house, rather than the full value). For most people, it's 0-1 houses and 0-2 cars. It's easy to file, easy to verify, and is no harder than most income taxes.

But for the super-rich, they have more paperwork. All their share holdings, investments, boats, houses, helicopters, etc listed out.

Every business and most "rich" people already have those lists. So in actual practice, it isn't much harder than the system today, and could even be easier.

It's the "most fair" because it does the most to close the gap between the rich and the poor.

With income taxes (exempting capital gains) the rich above about $10M can make $1M a year or so with no income taxes at all. They are only left paying GST, one of the most regressive taxes in use.

@marcwhinery
Lets call the wealth Tax an equity tax then
As equity has another meaning of being fair and reasonable.

GST is indeed the most regressive tax. However if we abolished GST, I would virtually pay no tax in NZ.
Since when I returned to NZ 17 years ago I payed tax once virtually at the airport and have not paid income tax since. Although I still pay a large ACC levy.
So you'd think I'd want GST abolished, but its the contrary.
Also I doubt I'd pay any FTT if it was established.
However this new 'Equity tax' I believe I'd have to pay that, so I think it sounds like a good idea.

Great, so how do we put that into policy?

It's an awesome idea. I saw it in doco about inequalith in NZ. My argument would be that the banks are charging us all over the top fee's I personally pay hundreds some months on normal transactions and this law would give sonething back to NZ. Aussie Banks are taking too much out of NZ

Just to Clarify. This tax is only paid by banks for inter bank transactions.

I don't claim to be an expert but the difficulty facing a tax on foreign exchange transactions is that it would drive trading offshore so it would have to be implemented in conjunction with other countries. I think a Robin Hood tax is desirable but have heard it is difficult to implement Out of my depth here. Why not a tiny transaction tax (stamp duty) on all bank transactions . The banks would be implementing it and it would be automatic so collection costs would be low. The only disadvantage I can see is people would avoid it by using cash. but that occurs anyway on present taxation systems, GST PAYE, and large scale cheating would give all those redundant IRD officers something to do. I would welcome criticism of this idea.

@haraldgerhardt - what are their margins..?
@iankiddle - "I don’t claim to be an expert but the difficulty facing a tax on foreign exchange transactions is that it would drive trading offshore so it would have to be implemented in conjunction with other countries." - good point. Any ideas on if it's possible to get around this. Given its position as one of the most traded currencies, I think this wouldn't be a bad thing if it discouraged it to some extent, as it doesn't appear to be particularly good for us:
"This might sound wonderful, but it isn't, it's bad news for our country and the sooner we can get off this merry go-round the better. It is currently a very sad system with no real benefit to us as a whole.

The only reason "Traders" trade our currency is to make money. That is their sole interest. They don't care anything about NZ at all. The more they can batter the currency around, the greater their opportunities to make profits.

Hence this is why every solitary statement is taken and absorbed so as they can seize it as an opportunity to manipulate the currency and make movements, either up or down, and control their opportunity to make profits.

We need to realise that our currency is completely manipulated, controlled and tossed around like a soccer ball on the ocean, with no regard for the betterment of NZ, but purely as a means for speculators to cream us.

Hopefully the moves being made internationally to align currencies to a brand new gold based system, resistant to current manipulation, will bring this current non-beneficial system to an end."
Source: Second comment to the article here: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11121855
Also see http://neweconomics.net.nz/index.php/2011/11/financial-transaction-tax-needed-to-stop-obscene-bank-profits/
"Leverage in the forex market

Leverage for forex trading is the highest of any market. Many forex brokers operating in New Zealand provide leverage of 200:1 and even 400:1. Compare this to a 5 per cent deposit on a house which is 20:1 leverage (20 times your deposit) and you can see that forex has a whole lot of leverage available!

Some people see this leverage as risky and others see it as a benefit. The reality is that it can be both and it is somewhat of a double-edged sword as per the opening statement. The risky argument is that anytime that someone can put $1000 into an account and trade a $200k forex position (that's what you can do with 200:1 leverage) that the risk is very high. Indeed it is! The counter argument is that just because you 'can' put $1000 into an account and trade a $200k position does not mean that you 'should' put $1000 into an account and trade a $200k position! Anyone that does such a thing is either trying to get rich quick and is therefore gambling or 'taking a punt' or they have not got a clue what they are doing - most likely all of the above.

People who try to get rich quickly from the markets have unrealistic expectations and certainly do not have a professional trader's mentality. This approach is dangerous and the market helps a lot more people get poor quickly than the alternative. A lot of people do exactly this however - they lose all their money very quickly due to their own mistakes and then go and tell people how risky forex trading is. Risky, yes. VERY risky in the wrong hands, without a shadow of a doubt!

The benefit argument by those that enjoy forex trading and the leverage it provides plus understand the risks and manage them well and make sure they have the required knowledge and education before commencing trading is this; they can put a smaller amount of money into their trading account, therefore have a smaller amount of capital exposed to the market and still trade their standard position sizes. A trader with $200k of real capital to trade with does not need to put that full $200k into their trading account. Leverage allows them to expose a much smaller amount of their capital, let's say $20k, and the other $180k can be left elsewhere with less risk e.g. in a bank account earning interest. This forms part of a risk management plan in itself by keeping the trader's money diversified.

The professional trader also uses a stop loss as a risk aversion tool. A stop loss is a predefined point where they will automatically take their loss if the trade goes against them. Professionals use stops religiously, know when they are wrong and cut their losses quickly. Amateurs hold on to losing trades and let them become bigger losses in the 'hope' that they will come back to profit. This is risky for the amateur but the biggest risk is in the hands of the inexperienced trader themselves.

Whenever you open a forex account you will see a message something along the lines of 'Forex trading involves risk and it is possible that losses will exceed your margin deposit'. Your margin deposit is like the money put down as a deposit on a house that we described above. In the house buying scenario, we also know that losses can exceed if the property deposit if price moves against us. Traders have to put some real money down and the forex broker will provide them with leverage to trade a larger position.":http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10907366
"“It is high time New Zealand as a country started earning some income from these currency traders that costs shareholders in Sanford and other trading companies many millions of dollars each year,” Barratt said. “A tax on non trade related currency transactions could not only earn significant income for the government it could also result in our exchange rate moving closer to its realistic value and thereby add significant value to the wealth of New Zealanders.” ": http://www.sharechat.co.nz/article/c8970b60/sanford-s-barratt-calls-for-tax-on-forex-trading-as-soaring-kiwi-erodes-profit.html

Traders do provide liquidity. i.e.. When an exporter wants to convert their overseas earnings to NZ dollars there is someone available to take the other side of the trade. Why is the NZ dollar one of the most highly traded currencies in the world? I don't know but it is probably because NZ is a stable reliable, open , uncorrupt, democracy and because of that the NZ dollar is a reliable store of value and we pay the price of an overvalued dollar.The Swiss had this problem relative to the Euro and they ended up printing money to devalue the franc .
The Hong Kong dollar is fixed against the US dollar and it seems to work for them. Much as I would like to tax parasites maybe the whole floating dollar system is not going to work for a small economy like NZ

Replying to Heath Blyde. I am not sure what the difference is between a Robin Hood tax and a Financial Transaction Tax?

For those that disagree on the basis of @haraldgerhardt @colindavies comment (tax banks not traders) - banks are traders, traders are banks to a large degree, no...?

What I'm proposing could potentially be implemented as part of the architecture of a new Payments System that the Reserve Bankis currently consulting on, and would therefore be zero cost to the banks in terms of admin. http://www.rbnz.govt.nz/markets_and_payment_operations/payment_system_review/ @dennisdorney - it this is just a financial transaction tax, then is there a proposal on that in this forum..? I agree that this should probably apply to all bank transactions.

@marcwhinery - I believe 0.05% shouldn't be a problem for most overseas travel. The point is that it's a very small amount, so on your $1000 (say) international travel money, you will indeed probably pay an extra 50 cents.

For those that trade in hundreds of millions of dollars per day, it's a substantial amount, but I'd contend 0.05% is still relatively 'insignificant' amount, although it depends on their margins. @haraldgerhardt - what are their margins.....?

@nathansurendran " I believe 0.05% shouldn’t be a problem for most overseas travel. The point is that it’s a very small amount, so on your $1000 (say) international travel money, you will indeed probably pay an extra 50 cents.

For those that trade in hundreds of millions of dollars per day, it’s a substantial amount, but I’d contend 0.05% is still relatively ‘insignificant’ amount, "

If I were a billion dollar bank, I'd raise prices on casual trading by 10% and blame it on the oppressive government regulation. They interfere with my ability to execute rapid trades to get you the best price.

The banks are in quiet collusion. Any industry in which collusion is not allowed still has it. They just call it "market analysis". So the "someone will trade for better" line is naive and idealistic. The banks will punish the users for any regulations "against" them.

They make billions in profits, but still complain about the unfavorable regulations. This won't set them back.

@nathansurendran
Why not have a special Bank Income Tax.
Tax the banks on their profits.
Currently being a bank is not a right in NZ but a privilege.
So the government has the same right to tax that privilege.
If an FTT is brought in tomorrow I can just transfer my money elsewhere in the world, and then buy my groceries in Australia and have them delivered in New Zealand.
Whatever way you try to introduce this people with good accountants and lawyers will find a way of minimizing.
The real organisations who will be effected will be exporters who will just have another obstacle to there productivity.
A Robin Hood Tax should not make use of the politics of envy.