Monday, November 25, 2013

Who Do You Know Who Killed the Golden Goose!

In view of the recently announced power, water and sewerage hikes (in Australia), many people are concerned about how they will meet the additional costs.

All of us realise that if we want services from governments we have to pay taxes. I don't mind paying reasonable taxes and charges, the key word being "reasonable". With power and water, it's a user-pays system which appeals to me; use a service and pay for it ... and vice versa. However, governments, like any business, must make sure they don't kill the golden goose.


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Because there will be flow-on effects on local shop prices, local government house rates etc, some people are saying they will leave the Northern Territory for a less expensive location.

In the United Kingdom the government increased the income tax rate to 50 percent which resulted in 66 percent of those earning over one million pounds annually, leaving the country. The government's plan to increase income resulted in a significant drop in income ... they killed the golden goose.

According to MSN Money, millionaires in all high tax regimes and where there is political instability are leaving in droves. One Belize firm even advertises a "safe, close and English speaking haven" for disaffected people to resettle.

There is a message here for the private sector too. That is, people are more shopper savvy, they check prices on the Internet. If your prices are too high, you'll kill the golden goose and lose sales.

The other part of that message is that you can't just pass on increased operating costs to your customers ad infinitum. What you need to do is to find ways to reduce your operating costs by operating more efficiently and keep your prices to a reasonable margin. If you do that, you will have a better chance of surviving in an economically challenging environment.

Robin

PS: Who do you know that killed a golden goose? Tell us about your experience.

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