Balancing the books

What does this mean? The “books” means the budget or the money that we earn and spend. If we balance the books we have enough money coming in to pay for what we spend. The same happens with our government. However, at the moment New Zealand has a very large debt and has to borrow money to pay the debt. The government spends about $300m a week to pay interest on the money which is borrowed.

The National Party says that it can balance the books by selling some state assets. They are AirNZ (the government owns 80% of this company now) and four energy companies owned 100% by the government. These are Solid Energy which sells coal, and three electricity companies. However, the National Party plans to sell only 49% of the shares and keep 51%. These sales could bring in between $5bn and $7bn but the government would lose about $300m in dividends from those companies each year.

The Labour Party on the other hand says it can balance the books by increasing the tax on rich people and by bringing in a Capital Gains tax. “Gains” is another word for an increase. If you buy shares or a company or flats for renting you put your capital (your money) into these investments. Then if you sell them later and make a profit, the Labour Party thinks you should pay tax on that profit. The Labour Party says this is fair because workers pay tax on the money they earn.

Both the National Party and the Labour Party think they can balance the books in three years.

For more on State Asset sales and Capital Gains tax listen to July 14 2011.


Vocabulary

Make sure you know these words concerning finance:

balance, the budget, debt, interest on debt, assets, state assets, shares, dividends, investments, profit, capital

Questions
In one recent poll, 68% of New Zealanders said they did not want the government to sell state assets; however, when we vote for a party, we consider many things not just one thing. What do you think are the most important things in an election – jobs, tax, education, health, the economy, personalities or something else?

Why does the National Party plan to keep 51% of the shares in state assets?






2 Comments

  1. Please. Can you make the party policy?
    I want to know about that but it is very complicated.
    Thanks.
    Good day!

  2. I think that the government in any coutry should think that the shares does not sell. The better thing to increase the money is allow the investment of capital but do not sell anything.

    The government can give a grant (concesión) for a time to the entrepreneurs.

    This way the goverment does not lose the shares.
    The government does not sell the assets.

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