Archive for November, 2015

The government is now proposing to apply GST to goods and services sold online by overseas vendors. This would mean that your netflix subscriptions, Steam purchases, Amazon purchases, iTunes purchases, Google Play purchases, and possibly your Kickstarter donations, (depending on how much revenue Kickstarter takes in fro New Zealand- it may well be above $60k annually. Kickstarter already allows projects in New Zealand dollars so may already have its GST infrastructure set up) would all need to track how much money comes from New Zealand purchases, and return 15% of revenues to the New Zealand government if their total annual revenues from New Zealand exceed $60,000.00.

Or would they?

If you read the press release carefully, you’ll notice that as New Zealand law can’t apply overseas, they’re essentially just asking very nicely for these companies to track tax information, and expect them to voluntarily comply out of the goodness of their own heart, or at “risk to [their] reputation”. That’s incredibly naive, and much more likely to hit medium-sized digital businesses than large multinationals, who largely have no problem tax dodging. *cough*google*cough*facebook*cough*vodafone*cough* – sorry about that, had something in my throat.

If the government is really concerned with fairness around transaction taxes, it should axe GST and shift the tax burden to unproductive areas of the economy, (such as large-scale capital gains, speculative investment, pollution, and other social ills) as it’s an incredibly unfair tax in general, and it’s complicated to administer. Applying GST to even more goods and services is just further discouraging involvement in digital life for New Zealanders, who already pay unfairly high prices for digital goods, which have no sunk cost to be sold in New Zealand beyond their actual development.

The systems to do this would not be complicated- the government’s proposal largely mirrors the EU’s existing tax requirements, so the UI should already be designed and ready to go for any firms doing business in both Europe and New Zealand, which is likely to be most of them. Basically it says that if any two pieces of information collected for the transaction (say, a credit card through a New Zealand bank, New Zealand address, New Zealand phone number, or a New Zealand IP) agree that the transaction originates from New Zealand, GST should apply.

Basically the only changes for users are possible price inflation of online services that pass on GST costs to consumers, (which is a double-hit against overseas digital services, as we already pay extra value so it can be converted into a sizable profit in US dollars) and that self-employed businesspeople or small businesses earning over $60k may need to provide GST information when purchasing digital goods and services, or shipping goods in online from overseas, and will be liable to a fine of up to $25,000.00 if they try to provide false info. Because there are so many avenues to identify whether someone is from New Zealand, I highly doubt the speculation on twitter that anyone is going to be hit with a similar fine for using a VPN to somehow “dodge” GST, especially as they will most likely be paying from a New Zealand bank and providing a New Zealand address when buying goods and services online.

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Fairfax has an interesting article up by Eric Crampton, in which he laments that the referendum might not pick a Condorcet winner. He actually understands voting systems, I would say, but he’s not exactly picked a great one to advocate. I agree with him to the extent that I think releasing anonymized voting data so people can run it through other electoral systems seems like a legitimate use of the OIA to me, and shouldn’t compromise secrecy. (I have fired off an enquiry to the Electoral Commission checking on this info, and asking them to identify any legislation that would prevent disclosure of the number of each unique preference order chosen in the first referendum)

Update: I did get my OIA back, but it refused to release the information on the same grounds, and I really didn’t think it was worth taking to the Ombudsman.

But determining if there even is a Condorcet winner requires voters to rank every option, an exercise that often fatigues voters who only want to vote for options they’re enthusiastic about. Requiring people to rank minnow options is a recipe for suppressing voter turnout. (They had to make voting compulsory in Australia to combat the fact that people don’t want to rank every option, which their at-large STV system requires for no sensible reason) Many people legitimately do not care which of several options they get if their actual preferred options are knocked out of the race.

There are two other problems with a Condorcet race. The first is that in insisting that head-to-head (or pairwise) competitions are the best measure of success, it actually robs the race of wider context. Sure A beats B, and B beats C, and A beats C, but you can only ever tell how any option fared relative to a single other option. You can’t see that actually A is the second or third choice of many voters, and that in a more expressive race B might actually be the best candidate.

I have said before that the way the referendum works is the best way it could work, if we vote using an election system we’ve already trialed in New Zealand.

The last problem with a Condorcet race is that it often doesn’t produce a winner. Using flags as an example, what if Koru beats Red Peak, Red Peak beats the Red White and Blue silver fern, but that silver fern beats Koru, and they all beat the remaining two options? Then there is no Condorcet winner. Election systems based on this idea of head-to-head contests then apply mathematical rules, often about how decisively each option has beaten each other option, to decide a winner, when this information should be supplied by voters. STV does a crude version of this by asking voters to rank every option they want to win. (Our version in New Zealand allows them to omit options they don’t care about, and treats them all as last-equal, never assigning your vote to them)

STV is not a perfect voting system. It’s not even the best voting system we know about. It fails the “favourite betrayal” criteria under certain circumstances, meaning you can cause your favourite to win by ranking them lower than your actual preference, and cause them to lose by ranking them first. But it is a more expressive and generally superior voting system to Condorcet systems, and it generally produces a good result compared with FPP “tick only one box” systems.

If Eric wants a more representative vote, I suggest he advocate Range Voting for future referenda. Here’s what it might look like for the first referendum: (You could even sneak the current flag onto the ballot and eliminate the need for two referenda in this system, as unlike STV, it wouldn’t cause any issues adding the current flag into the ballot)

flag referendum range vote

Basically, you rate as many flags as you like from 1-9. The voting form could be exactly as simple as the STV one, or you could include check boxes like above for people with difficulty writing clearly distinct numbers.  On the form above, we would count the vote as 9 for Black and White silver fern, 8 for Red Peak, 5 for Black Blue and Red silver fern, no preference for Koru, and 1 for Red White and Blue silver fern.

That would mean that this voter would feel that Black and White silver fern is the best possible option, and Red White and Blue silver fern is the worst possible option. They think Red Peak is very good, and that the Black Blue and Red fern is average. The scores for each option are then averaged in each counting station, and weighted by the number of people who recorded a preference for each option. (The number that didn’t vote for each option is also recorded) These totals can be passed to a central office, where some simple multiplication and addition can determine national-level winners easily. (The winner is the option with the highest average score that reaches a minimum threshold of people choosing to vote for that option. If say, less than 10% of voters expressed a preference for an option, it would be discarded regardless of it’s rating as being too obscure, to protect from obscure options winning with a relatively small number of votes, especially in elections with a large number of available options to rate)

The advantages of this system are numerous. First, it implies a preference order. Secondly, it allows people to express the size of the gaps in their preference order- this voter not only thinks that the Red White and Blue fern is the worst option, they think that even their second-to-last preference is average, while that option is terrible. It allows voters to express how bad they feel the options they don’t prefer are. Voters can even deliberately rank their most-preferred option lower than 9, or their least-preferred option higher than 1, if that’s how they honestly feel. (although that’s a less strategic way of voting- it’s a form of deliberate favourite betrayal, described above)

It has all the advantage of determining a “beat path” (from Condorcet) or a “preference order” (from STV) with the added bonus that it puts these things in context of how much each option beats or loses to each other option, and doesn’t require complicated totalling, instant runoffs, (which can introduce accidental favourite betrayal) or mathematical resolution when no condorcet winner is found. (For range voting to result in a draw, the electorate actually has to exactly prefer the candidates by the same amount)

This is the perfect system to use for a referendum when there are multiple options to choose from. It lets you independently express opinions for multiple options without one option affecting another, it can eliminate multiple-stage or multiple-question referenda like the flag referendum or the MMP referendum. And it’s just a more expressive way of voting.