The New Zealand Herald et al are all reporting that Prime Minister John Key has unveiled small business tax changes "worth $480 million over the next four years".
Why do they multiply a dollar figure by four and then announce the sum as funding for the next four years?
Why don't they just say what the Treasury anticipates it will cost the Crown (in reduced revenue) per year, given that each year the Crown goes to Parliament to seek authority for the next 12 months' of expenditure and the next year's debt issuance programme to fund that expenditure?
There is nothing particularly special about "four" - if it is an on-going operational loss of revenue to the Crown, then it goes on forever - it would make as much sense to say the government today announced "$1.2 billion worth of small business tax relief over the next ten years".
Why does the NZ Herald report it this way?
Because that is what Government Press Statements say - regardless of who is the government, that is the way governments in New Zealand describe operational spending decisions.
But it isn't obligatory for the media to report what spin doctors write in press statements.
It would be a lot more meaningful to taxpayers to say that the Treasury anticipates that the Crown will forgo $120 million in tax revenue in the next 12 months in this new initiative.
To get a rough idea of how significant this is for the economy as a whole, which is what taxpayers would also be interested in, well 120 million divided by four million works out at the equivalent of about $30 per New Zealander in business tax relief in the year ahead.
As for the substance of what has been announced, the more substantive elements of John Key's annoucement today is covered in the Labour-Progressive Government's July (2008) Tax Bill, currently before Select Committee - good sensible stuff like reduced compliance costs on administering GST, FBT and PAYE returns.
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