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Tax Freedom Day

There is plenty of debate about tax freedom day. Some of it is just about the date.

Ours has been calculated by the business roundtable to be 24 April. Given that tax is a significantly greater proportion of our GDP than it is in the US this looks early, compared to US tax freedom day calculated as 17 April. But, the difference may be accounted for by the balance of tax on personal income versus other sources. Plus, the business roundtable is hardly a pro-tax lobby, so we'll take it. Maybe the yanks have shifted those WMD analysts over to the technical backwater of calculating tax freedom day.

Anyway - those of us who are self employed see every hard-earned cent we send off to Wellington, and when we read stories about how well spent it is, we get upset. So it tends to mean something. Have a quick read of this blog for more.

Prudential UK Survey - Lifetime Spending

A though provoking survey has been prepared by Prudential in the UK, reported on here by The Independent (the UK daily that is, not our own business weekly of the same name).

A really interesting figure is how much more people spend in retirement than during the last ten or fifteen years of their working life - that's right, more, not less. We've asked the Pru for a copy of the report and if you are interested drop us a line.

Finance Company Disclosure

In this article Justin Kerr, executive director of the Financial Services Federation, comments on the Securities Commission report on disclosure by finance companies.

I am keen on relatively lighter disclosure, but I spent some time in the company of a couple of American bond market experts a couple of years ago, which convinced me that we could do with a little more 'effort' in this area than we have seen in the past.

If such effort is based on better disclosure, more bond ratings, and transparency then it'll be about right in my book. If we see the same formula applied to the work on financial advisers we should count ourselves very fortunate indeed.

TOWER Small Shareholders Plan

Attentive readers will recall that I bought a very small parcel of TOWER shares once while I was demonstrating an online share-trading system.

TOWER has been exploring the idea of mopping these up to reduce the number of people on their share register. There are pros and cons. Fewer shareholders technically means less liquidity - but in practice these shares are not really 'in play' they are likely to be in parcels so small that they are forgotten about and are not being held as a result of any particular investment belief.

But I am sure it will cause debate. The other one which always exercises people is the matter of share splits and share consolidations. Air New Zealand's recent consolidation appeared crafted to return the typical share price to a level which looks broadly similar to that before the whole "September11/Singapore Airlines deal decline disaster" and subsequent bail-out by government.

Reaching further back I remember how advisers complained when Sovereign did a share split (and this was a long time before listing).

The effects of such things are subject to a lot of reasearch. Famous for having a huge share price is Berkshire Hathaway, yesterday's price was $84,500 US even after a lacklustre year. You don't need a PhD to figure out that this can make investing tricky for the smaller player. Their B shares trade a more palatable $2,824 US.

My TOWER shares definitely look small!

Interest Rate Bet

Campbell joined us for dinner on Friday and we debated again the wisdom of our bet on interest rates. The ASB predicts on this report that I shall lose my bet, but only by a couple of weeks - as the market has priced the RBNZ probably not increasing in late April, but likely to increase in early July.

Campbell will get lunch at Pasha if he is right. Check it out at www.pasha.co.nz

Feeling on a roll the mystery that is Campbell offered to double up on an early election. This has difficulties, but we did not explore it long. I reckon if we debated it we would both think it unlikely at the end of the discussion.

Maybe we should be on house prices? Any of you brave enough to make a prediction?