Capital gains tax to be introduced

Written By: - Date published: 11:45 am, May 17th, 2015 - 196 comments
Categories: Economy, housing, john key, national, Politics, same old national - Tags:

John Key in 2012:

I hate capital gains taxes – I just don’t like them. The reason I don’t like them is that, in political terms I don’t think they work.

If government was prepared to do with a capital gains tax what had been done with GST – put it on “virtually absolutely everything with no exceptions – they work well.

Because, in theory, if you earn NZ$100,000 from going out there and having a job, and you pay tax on it, well fair enough. If you earn NZ$100,000 from buying a property, well you probably should pay tax on that – fair enough.

But this is where the problem comes along, and that is, that no politician has the guts to do that. Because they go, ‘well that’s a vote-loser.’ They turn around and say, ‘OK, we’re going to have exemptions – the exemptions are all private housing.

John Key in 2015

Update from Radio New Zealand:

The Government is going to introduce a capital gains tax on properties that are sold within two years of purchase.

The new tax will be included in this Thursday’s budget.

Prime Minister John Key made the announcement at the party’s lower North Island regional conference in Silverstream, near Wellington.

The new tax will not apply to the family home, death estates or properties sold as part of a relationship property settlement.

It will come into effect from 1 October and the rate will be the same as the seller’s income tax rate.

Other measures will require all non-resident buyers and sellers to provide a tax identification number from their home country along with identification such as a passport.

They must also have an Inland Revenue Department number and New Zealand bank account.

https://twitter.com/MrDuttonPeabody/status/599717463467536384

196 comments on “Capital gains tax to be introduced ”

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  1. Ad 1
    17 May 2015 at 11:50 am

    Is this real or some kind of cosmic joke?
    Which Minister is fronting?

    Pretty spectacular politics if it’s true.

    Particularly given Labour’s catastrophic electoral loss was in part due to this same policy. Helluva a lead up to Budget.

    • mickysavage 1.1
      17 May 2015 at 11:54 am

      The devil will be in the detail. First quick comments are a two year period is a joke, people will keep houses for two years and one day before selling.

      The stuff about requiring tax numbers and passports may or may not have any practical effect.

      The requirement for an IRD number is an interesting proposal but can be avoided by the use of proxies.

      • Draco T Bastard 1.1.1
        17 May 2015 at 12:00 pm

        The requirement for an IRD number is an interesting proposal but can be avoided by the use of proxies.

        It’s possible to make the use of proxies illegal as well especially if used in conjunction of the requirement for passports and identification from home countries.

        • dukeofurl 1.1.1.1
          17 May 2015 at 1:35 pm

          There is an interesting court case in Sydney involving a commercial property.

          A Sydney guy with one if the international vulture banks sold an old pub that needed a major do up. A hospitality industry whizz did the deal and the place was a roaring sucess, now the owner is trying to force him out as he paid the rent a day late ( Monday instead of Saturday when it was due!).

          The shifty bit come in how the deal was structured as it was basically a sale agreement but they did it as a ‘put and call option’ The deposit was the so called ‘fee for the option’ and the rest of the payments for the full price were called ‘interest’. You can see how this was done to get arount GST on a commercial propery ( if the place was closed) and the interest wouldnt be considered for capital gains to the original owner.

          Very slippery indeed. But its common in Auckland for commercial property to be sold as ‘shares in a business’ which owns a particular building. Financial transactions are excluded from GST and likely this 24 months capital gains as well

      • Tracey 1.1.2
        17 May 2015 at 2:27 pm

        do we know how many properties are turned over within 2 years of purchase. this line in the sand must be based on something. a controlled “leak”? time to strike it out of the budget if reaction next 2 days is negative?

        • sabine 1.1.2.1
          17 May 2015 at 3:14 pm

          house across from my business in west auckland sold twice in since november.
          house up the road sold 4 times since i moved two years ago, signs are up again for auctions.
          house further up the road, on the market for the second time in less then 12month.
          Most of these properties stay empty or are rented on a 6 month rental contract only.

          years ago, i lived for almost 4 years in Arch Hill, the property next to mine sold like clockwerk every 6 month and was occupied by the owners once.

          Everytime it got sold, they slapped a 50 – 60 grand ontop of the last sale price and bingo presto..profit. The house only sold to returning expats, who after six month returned to england due to the low wages, lack of opportunity and provincial mindedness as I was told by the guys that actually lived in the house before selling it again.

        • aerobubble 1.1.2.2
          17 May 2015 at 3:31 pm

          Hooten, again being insidiously deceptive, missed the obvious again on q&a.
          others have cgt, this distorts our economy as investment is attracted here, and its easier to borrow money, etc. So when Hooten wants a full cgt, no exemptions, he is essentially declaring support for a new distortion, but in the other direction.
          Now Key is going to declare for a non standard cgt also. We should just cut and paste Australia’s cgt and stop the distortion. Distortion aid people in dodging tax.

      • David H 1.1.3
        17 May 2015 at 10:30 pm

        “The requirement for an IRD number is an interesting proposal but can be avoided by the use of proxies.”

        Just get the IRD to say that Anyone caught acting as a Proxy will be fined 5 times the cost of the property /ies. Simple. and very effective who’s going to throw away about $4-6 Million?

    • David H 1.2
      17 May 2015 at 10:27 pm

      “Some kind of cosmic joke?”

      Nope it’s Fate laughing it’s ass off

  2. Ad 2
    17 May 2015 at 11:56 am

    Commented before update.
    Good to see PM finally burning some political capital on something worthwhile.
    Very hard for Labour – especially Little – to respond since they effectively folded on the idea after the defeat.

    • Pasupial 2.1
      17 May 2015 at 12:08 pm

      My guess is that it’s Labour’s shelving of the CGT (probably so as to use it as a postelection bargaining chip) that has given the Nats the room to take the idea for themselves, and make it look like they’re doing something to address the housing market. I’m sure the internal NP polling has been showing them as week on the issue of foreigners property banking in NZ, especially after the Northland defeat has given Peters greater prominence. By doing it now themselves, they can insert all manner of loopholes and exemptions for their mates.

      As MS says; “The devil will be in the detail”.

    • linda 2.2
      17 May 2015 at 12:28 pm

      john key condemed a capital gain tax during the election in short the fucker lied again

    • b waghorn 2.3
      17 May 2015 at 12:30 pm

      Did little actually 100% say no cgt or did he say it’s under review .

      • Karen 2.3.1
        17 May 2015 at 12:37 pm

        He said it is under review.

        • b waghorn 2.3.1.1
          17 May 2015 at 12:45 pm

          They are sweet then they don’t have campaign on it they can just wait till there elected and then turn it into a tax on all houses at sale and extend it to shares and anything that needs it . kill some gst off to make it tax neutral and there voters will wear it. IMO
          Please labour people don’t come out and try score points on this you’ll get slaughtered by the press.

      • mickysavage 2.3.2
        17 May 2015 at 7:28 pm

        Auckland Conference this weekend decided to put it under review. The proposal was for a future Labour Government to consider all options including a CGT.

        Stand by for the spin on the issue however. Hooton has already started.

    • Tracey 2.4
      17 May 2015 at 2:30 pm

      as long as its a real solution and nkt smoke and mirrors. suggests nats polling shows more aucklanders see it as a problem…. was seymour getting a jump with his wierd revelation last week?

    • sabine 2.5
      17 May 2015 at 3:16 pm

      Nope, it is very easy to respond.

      They should say,….. we’ve told you so, and thanks doing it for us.

      We were right. Labour.

  3. Draco T Bastard 3
    17 May 2015 at 12:01 pm

    It will come into effect from 1 October and the rate will be the same as the seller’s income tax rate.
    Well, that’s better than Labour’s 15% tax rate.

    • Colonial Rawshark 3.1
      17 May 2015 at 12:48 pm

      yeah its very gutsy on behalf of the NATs. And I just realised – Key and English are doing this to limit/slow down any coming collapse of the Auckland property bubble!!! The measure will have this affect because it will dissuade panic listing of properties on the market once it looks like a pricing down turn is occurring.

      The NATs really are good at this.

      • One Anonymous Bloke 3.1.1
        17 May 2015 at 12:57 pm

        As Warren Buffet once said, taxation never deterred anyone from trying to make a profit.

        Making a profit and sharing it with the government is a lot better than making a loss.

      • Tracey 3.1.2
        17 May 2015 at 2:32 pm

        and makes you think they knew what wheeler was going to do this week…

      • Sans Cle 3.1.3
        17 May 2015 at 7:40 pm

        Regardless of political point-scoring (on behalf of the National Party), I welcome the introduction of a CGT on equity grounds. We shall see how it will affect the distribution of wealth, the devil being in the detail of course……Overall, it’s a long overdue policy move.
        Hopefully NZ can move out of being in the Five expat-friendly countries with no capital gains taxes , which is not a good thing!

    • Saarbo 3.2
      17 May 2015 at 9:12 pm

      @DTB…Agree!,
      at Income Tax Rate makes it tougher than Aussie’s CGT also. I think the really interesting thing is if CGT is extended to the full monty eventually (By Labour or National) then @Full Income Tax has been set as the precedent by the Nats…nice.

  4. johnm 4
    17 May 2015 at 12:13 pm

    This CGT is an impotent gesture. Property CG merchants almost always hold their houses longer than two years. The income tax rate charged is ineffectual. Will do almost nothing to rid society of this evil practice. The Parasitism of those able to access bank capital will continue, our young couples will continue to be renting serfs.

    • linda 4.1
      17 May 2015 at 12:45 pm

      John key lied again he has to resign it is admission they the nacts have miss managed the economy and put us all at risk the damage has already done nz is $510 billion in debt the average mortgage is $500000 dollars that is unplayable to little to late from this worthless useless government for there failure they all should resign.

    • Colonial Rawshark 4.2
      17 May 2015 at 12:49 pm

      The income tax rate charged is ineffectual. Will do almost nothing to rid society of this evil practice.

      It’s a far higher tax rate than Labour was proposing.

      • Tracey 4.2.1
        17 May 2015 at 2:36 pm

        lp was charging on all second properties. we dont know how many properties are sold within 2 years of purchase so it cld be a higher tax but on far fewer properties.

    • Tracey 4.3
      17 May 2015 at 2:34 pm

      agree. 2 years…. why 2 years? will they ever tell us why they chose 2 years and will anyone ask

  5. phillip ure 5
    17 May 2015 at 12:18 pm

    how wrong-footed/lame-arsed does his make littles’ denunciations of cgt look..eh..?

    ..dismissed by little as too radical…

    ..un-fucken-believeable..

    • Anne 5.1
      17 May 2015 at 12:41 pm

      That’s not true phillip ure.

      Lets go back 9 months. The electorate emphatically voted against CGT. Anyone who believes otherwise is deluded. The bulk of the electorate was wrong as they often are… but if they insist on believing the Nat. party liars and not believing the opposition parties who tell the truth then you’re on a hiding to nothing if you don’t take it into consideration. Little recognised this and said we will therefore look at other ways of achieving the same goal. I don’t recall him ever dismissing it as too radical and I’ve heard him talking about it in person numerous times.

      • phillip ure 5.1.1
        17 May 2015 at 12:51 pm

        don’t come the raw-prawn there anne..

        ..little whinnies and rears whenever the dreaded-letters are uttered..

        (and i see u r believing the official line/finger-pointing..’it woz cgt wot dun it!..!..guv..!’..)

        i call bullshit on that official-blame-story – and it gets a special award – (‘the facepalm’) – as the most glaring example of simplistic-political-thinking in quite a long while..

        the list of reasons for labours’ defeat is long – and cgt is not one of the leading contenders..

        and what now..?..will labour now campaign to repeal this cgt that they no longer support..?

        ..and hold responsible for their defeat..?

        ..oh the dilemna..!..hoisted on their own petard..!

        ..shape-shifting into a pretzel-shape..

        ..fuck-en hil-ar-i-ous..(and sad..)

        ..this is what we have to regard as our ‘progressive’-party..?

        ..really..?

        • phillip ure 5.1.1.1
          17 May 2015 at 1:03 pm

          robertson now quoted as saying ‘labour doesn’t see fiddling with the tax as an answer’..

          ..turei said it was a good idea – and good to see national implement what has been green party policy for a very long time..

          ..now..out of those two – who seems more ‘onto it’..?..eh..?

      • Draco T Bastard 5.1.2
        17 May 2015 at 1:26 pm

        The electorate emphatically voted against CGT.

        Did they? I don’t recall a referendum on it. Only a general election that was manipulated through attacking the Left parties via the MSM.

        In fact, this seems to indicate a general support for a CGT at the time of the last election:

        There is strong support for making landlords pay capital gains tax when they sell their rental properties, according to early results from the Vote Compass survey.

        Or this one:

        According to the poll of 750 New Zealanders earlier this month almost 41 per cent of respondents were either strongly or moderately in favour of the tax. That’s up from just under 38 per cent in July 2011 and more than 10 percentage points higher than the number of respondents who said they would vote Labour in September.

        Now, the CGT may have put off a few but it doesn’t appear to be as many as a lot of people are making out.

        • Anne 5.1.2.2
          17 May 2015 at 4:01 pm

          Now, the CGT may have put off a few but it doesn’t appear to be as many as a lot of people are making out.

          Okay DTB you could be right but I’m going on what some people said to me in the days prior to the last election. They were people who either have – or one day hope to have – an investment property. I think they were indicative of a lot of people who may have initially been ambivalent about the CGT but when it became clear it could affect them sometime in the future they backed away from it. Of course for most of them an investment property is probably nothing but a pipe dream.

      • Matthew Hooton 5.1.3
        17 May 2015 at 4:41 pm

        I don’t think the electorate voted against a CGT. I think they voted more generally against Laboir and its leader. Was their any polling on this point around the time, which might suggest which of us is right?

        • felix 5.1.3.1
          17 May 2015 at 6:03 pm

          Don’t know, but I can show you plenty of statements from National MPs along the lines of ‘They went to the electorate with a capital gains tax and it was roundly rejected’.

    • Karen 5.2
      17 May 2015 at 12:46 pm

      Little didn’t say it was too radical. He said it was difficult to sell as part of election policy as it was a complex tax, and it was easy for the Nats to demand detailed answers to particular situations that weren’t easily answered. Cunliffe was tripped up in the debate and again the next day in news reporter interviews.
      Yes, it was unfair to expect him to know the detail of every scenario but the general public don’t know that and damage was done.

      • phillip ure 5.2.1
        17 May 2015 at 1:08 pm

        so..fear of what nats might say -stilled littles’ hand/formed his view..?

        ..there’s a lot of that in labour..eh..?

        ..that ‘fear of what nats might say’..

        ..scared timid wee mouse – that labour..

        • Karen 5.2.1.1
          17 May 2015 at 1:14 pm

          That’s not what I said, Phil. I was explaining why Little believes the CGT lost Labour votes in the last election. Nothing to do with being scared.

          • phillip ure 5.2.1.1.1
            17 May 2015 at 1:50 pm

            i see labour as being timid/’scared’..

            ..and like i said – if looking for a scapegoat/vote-killer – i wdn’t look past raising the super age..

            ..cgt is getting far too much of the blame..

            ..i wonder if piss-weak/national-lite policies have been cited at all..?..mentioned in dispatches..?

            • Karen 5.2.1.1.1.1
              17 May 2015 at 2:11 pm

              Little has also said the policy to raise the age of eligibility for Superannuation lost Labour votes. At no stage has Little ever suggested that the only reason, or even the main reason, for Labour losing the last election was the CGT policy. He has listed a number of reasons for Labour’s failure, including caucus disunity.

              • phillip ure …
                17 May 2015 at 2:15 pm

                karen..can’t you see the farce in national now introducing a cgt..?

                ..surely that is ‘the point’..?

                • Karen …
                  17 May 2015 at 2:42 pm

                  I don’t think what the Nats are doing is a CGT. It is a tax on a tiny proportion of assets that are sold within a limited time frame. It won’t stop land banking or investment for capital gain, because it will be easy to avoid. Holding on to a property for 2 years won’t pose a big problem.

                  This policy is just designed to pretend the Nats are doing something about Auckland property prices, and I am sure many people will be fooled. A real capital gains tax would be applied to all assets and have no time limits.

                  One good thing that will come out of it is more data will be available that could be useful for more effective policies.

                  • phillip ure …
                    17 May 2015 at 3:16 pm

                    yes..once it is there..

                    ..it can be easily improved..

                  • greywarshark …
                    17 May 2015 at 6:14 pm

                    Karen
                    I think you are right about it being doing the minimum. Political maneouvring to point to later. Without this action it was a bat that Labour could smack them with.

    • Stephanie Rodgers 5.3
      17 May 2015 at 1:52 pm

      You keep pushing this line that Andrew Little dismissed the CGT because it’s “too radical”. You’ve at least had the good sense to drop your fake quotation marks this time, but you still haven’t provided any kind of evidence of any kind of statement from Little which even vaguely backs this up.

      But hey, I’m not going to stop you from making even more of a fool out of yourself.

      • phillip ure 5.3.1
        17 May 2015 at 2:04 pm

        so why did/does little drop it/run from it like a scalded-cat/curl his upper lip in contempt whenever it is mentioned..?

        so..if not ‘radical’..how about you tell us the correct word to use..?

        ..you could call it his neoliberal-gene/long-‘business-friendly’ conditioning – kicking in..i s’pose..

        • Stephanie Rodgers 5.3.1.1
          17 May 2015 at 2:09 pm

          More mudslinging with nothing to back it up. Your entire website is a glorified link aggregator, phil, I’m sure you can come up with better than that. 🙄

        • Clemgeopin 5.3.1.2
          17 May 2015 at 2:51 pm

          Little and Labour are not your enemies, you dork. Think things through carefully before going on a dopey crusade against them.

          • phillip ure 5.3.1.2.1
            17 May 2015 at 2:57 pm

            a neoliberal/national-lite/fuck-the-poor! little/labor most certainly is my ‘enemy’..

            ..they totally betray progressive-politics/the left/the poor..

            ..and such a labour party is a cause of our current problems..

            ..are you forgetting their history..?

            • Clemgeopin 5.3.1.2.1.1
              17 May 2015 at 3:57 pm

              Wake up, Rip Van Winkle. The world has moved on.

              Labour is not anti poor. Not ‘un-friends’ of the poor. They want to reduce the income gap. They want to reduce inequality. They want to help the homeless and the hungry. They want to do the best for everyone, including the less wealthy, the vulnerable and the poor. You want to help the poor. I want to too. So does Labour and Little. Trust me on that.

              A party has to take a lot of people, ordinary people, the majority along with it to win votes and be in the government to do all the possible social good. You can not win elections by beating a singular drum, be it for poverty or marijuana.

              • phillip ure …
                17 May 2015 at 4:56 pm

                reality-check:..clem..labour ’14 election policy was benefit rates to rise at the rate of inflation..same as national..

                ..and just a continuation of those nine long fucken uncaring/fuck-the-poor! clark yrs..

                ..that all really makes yr ‘want to help’ claims just a pile of fresh/steaming horse-shit..eh..?

                ..how can it not..?

                • Clemgeopin …
                  17 May 2015 at 7:03 pm

                  You dope, you can’t win elections on wishful thinking and lofty magnanimous benefit level policies. Not that they are wrong, but are scary to people (most of whom are doing fine) to accept easily. Those fair and good things you speak of can and will happen when a progressive Labour led government is in power. That has been the historical case in New Zealand all along, through the budget rounds like the recent policies on WWF, minimum wage increases, living wage initiatives, Kiwi saver, etc.

                  Going all out on policies primarily aimed at you or the poor or the beneficiaries or the dope smokers etc is a recipe for losing an election. I think you are intelligent enough to fathom that.

                  If wishes are horses, you could fly. Mana was primarily battling foe the poor. They got no where. Don’t blame KDC for that. Blame the voters especially the low income people all over the country that did not give Mana/Internet those much needed votes. I did, though. Did you?

                  • phillip ure …
                    17 May 2015 at 7:13 pm

                    “..Those fair and good things you speak of can and will happen when a progressive Labour led government is in power. ..”

                    like a labour govt that was running surpluses for nine yrs..?

                    ..is that the type of ‘progressive’ labour govt u r speaking of..?

                    ..clark wasn’t it..?

                    ..and yr kneejerk reactions are wrong/incorrect – polling shows that people are caring about poverty/inequality..

                    ..polling also shows that most favour ending cannabis prohibition..

                    ..they just want/need formulae to do both..

                    ..certainly a fuck sight more nz’ers support both those causes – than actually voted for labour..eh..?..

                    ..so go figure..!..with yr bullshit..eh..?

                    ..and if you think poverty/ending-prohibition are the only policies i care/argue about – you clearly haven’t been paying attention..

                    [lprent: FFS: The only person who appears to bullshitting here is you.

                    Banned for 6 months for making a lying assertion without even attempting to prove it, and then personally attacking those pulling you up on it. Little can’t remove policy from the Labour party. No leader can. It has to be done in conferences. All he can do is to say that he isn’t likely to emphasise it for the next election.

                    Most of the times I have had to ban you was for doing this kind of lying crap followed by dickhead renunciations of others pulling you up on it is really pissing me off. I’m tired of you doing it and crapping all over the discussions.

                    If you want to comment here then you will follow our rules or you can fuck off permanently. Give me any excuse to do so and that is what I will do next. ]

                    • Clemgeopin …
                      17 May 2015 at 8:13 pm

                      So, how come Mana Internet did not even get 5% of votes? What is your excuse?

                    • phillip ure …
                      17 May 2015 at 8:34 pm

                      that is quite the groin-stretching leap- from how neolib/fuck-the-poor labour – then and now..

                      ..to why did mana lose..?

                      ..oh well..seeing as you asked..

                      ..failure has many fathers/mothers..

                      ..my favourite reason is..pot…

                      ..’cos..y’see..!..the internet party had this really clever end pot-prohibition ad campaign worked up..

                      ..but harawira..who is a total reactionary/prohibitionist on this subject..

                      ..threw a tanty..and the ad-campaign never ran..

                      ..and harawira painted internet-mana as pot- prohibitionists in the process..

                      ..now..if we look at the election-result..approx 13,000 votes went to the aotearoa legalise cannabis party.

                      ..and those votes were up for grabs – but they had nowhere to go..

                      ..harawira spurned them…the greens spurned them..labour spurned them…

                      ..the other result to look at is harawiras’..

                      ..and had that end pot-prohibition campaign ran for internet-mana..

                      ..i don’t think it is a stretch to call that there wd have been more than enough pot-smokers..from west auckland to north cape..

                      ..who wd have gone and voted..and got harawira over the line..

                      ..so if you ask me what caused harawira/int-manas’ defeat..

                      ..i hafta say..i blame the drugs…eh..?

                    • lurgee …
                      18 May 2015 at 6:24 am

                      Banned for 6 months …

                      Oh, crap, this is going to start another wave of walk outs and vigils.

                      [lprent: Why should I care? Phil has a track record of doing this behaviour. If he can’t back up his assertions, keeps repeatably making them, and attacks anyone telling him he is wrong – then he is behaving like any other troll.

                      He gets treated a recidivist offender – just as I would anyone else acting like a pain in the arse and wasting my time after being warned and banned.

                      In case you hadn’t realised, I REALLY don’t like trolls. I’m uninterested in taking cognisance of people who support trolls especially since no-one has even put up a viable link to support his assertions.

                      This strange attitude of mine is probably a result of spending far too much time cleaning trolls out of the damn comment stream. I’m not inclined to tolerate this kind of repeated crappy behaviour on this site from anyone. ]

                    • felix …
                      18 May 2015 at 7:36 am

                      Just so I know where the line is, Lynn, was phil banned for saying the policy was “dropped” when he should have said “mentioning the policy in public has been dropped”?

                      Or was he banned for saying it was “too radical” when he should have said it was “too unpopular with non-radical voters”?

                      [lprent: It was never “dropped” in public or anywhere else. It was put up high in the list of policies to review for the next election. It happens with every largish political party every election, especially after they lose.

                      Apart from philu repeatably lying that it was “dropped”, he also appeared to trying the pattern of some kind of daft shoutdown meme formation that is so redolent of the dirty tricks brigade of trolls back in 2008. That was when and why I dumped in the prohibition on doing it here into the policy.

                      If you want to make an assertion then you should expect to support it or at least be able to argue in its support.

                      You do not do personal attacks on everyone who said that the assertion was completely false. That always raises my ire because the resulting flamewars are a complete pain to read. It often leads to some abrupt warnings and bans. What you should do is argue it, or link to support, or just avoid it.

                      philu knows this. I’ve banned him for doing it a couple of times. You know this. You must have seen me do it a hundred times. ]

                    • the pigman …
                      20 May 2015 at 1:59 am

                      Oh, crap, this is going to start another wave of walk outs and vigils.

                      Nope, probably just a lot more visits to Phil’s blog (http://whoar.co.nz) and followers to his twitter account (https://twitter.com/vegandogs50) by people who recognise a sysop fail when they see one.

                      Pretty pathetic.

                      [lprent: Feel free to move elsewhere if you don’t like it. I will even help by limiting your ability to return if you whine too much before leaving. ]

                  • Clemgeopin …
                    17 May 2015 at 8:09 pm

                    Ha! WFF!

                    • phillip ure …
                      17 May 2015 at 8:36 pm

                      correction:..wfsf…

                      working for some families..

                    • Clemgeopin …
                      17 May 2015 at 10:33 pm

                      Hey Phil , if there are so many people ‘west auckland to north cape’ and all over Aotearoa NZ that support that dope policy then tell me, now come the aotearoa legalise cannabis party did not even get 5%, especially when you say more people support this than the bad, bad, very bad Labour party’s support?

        • Clemgeopin 5.3.1.3
          17 May 2015 at 2:56 pm

          If you think that Labour or Little should not be ‘business-friendly’, then you are the fool, not them.

          • phillip ure 5.3.1.3.1
            17 May 2015 at 2:59 pm

            it’s more the poor-unfriendly that concerns me..

            ..they seem to make it so either/or..

            ..and of course ‘business’ must be a part of the solutions we need..

            ..and i am not on any ‘crusade’..i am just commenting on events as they unfold..

            ..it’s all littles’ own work – really..

          • adam 5.3.1.3.2
            17 May 2015 at 3:11 pm

            What the Clemgeopin “If you think that Labour or Little should not be ‘business-friendly’, then you are the fool, not them.”

            Do you understand what economics means? I’d be interested to hear – because that comment there – just proves to me you have no idea.

            • Clemgeopin 5.3.1.3.2.1
              17 May 2015 at 4:34 pm

              My comment there proves nothing of the sort unless you equate millions of jobs creating business as being evil, risk taking business people as being bad, hard working business entrepreneurs as being anti people etc or unless you equate all business as being crooked excessive profit making powerful corporates or capitalist crooks or competition killing monopolies.

              Leaving all that aside, you tell me how my comment shows that ‘I do not understand economics’ and that it ‘proves that I have no idea?’. Come on, spit it out clearly, so that I, and may be others too, can learn from your knowledge and wisdom.

              Keen to hear, as it is never too late to learn.

              • adam …
                17 May 2015 at 9:46 pm

                And you come back with economic orthodoxy. Or the liberal buy line…

                Do you even know what left wing economics is? Have you read anyone apart from the orthodox economic thinkers? Ever heard of the term political economy?

                • Clemgeopin …
                  17 May 2015 at 10:54 pm

                  Jeez Adam! I asked you to enlighten me with your knowledge and wisdom. You gave me nothing. Just questions!

                  So, cut your third degree for now and enlighten me as to where I am going wrong in ‘left wing economics’, ‘liberal buy line’, ‘economic orthodoxy’ and above all, ‘political economy’.

                  All that seems so exciting and interesting! I definitely need to understand and learn what you mean.

                  I am keen. Honest. Have a go and explain what you mean. It might help me and perhaps anyone else who may be interested.

                  Give us the massage. This is a message board after all. Thanks in advance.

      • felix 5.3.2
        17 May 2015 at 6:30 pm

        “You keep pushing this line that Andrew Little dismissed the CGT because it’s “too radical”. You’ve at least had the good sense to drop your fake quotation marks this time, but you still haven’t provided any kind of evidence of any kind of statement from Little which even vaguely backs this up.”

        As I understand it, the policy was dropped as it was deemed to be too unpopular with too many people.

        Do you agree with my reading of the situation so far, Stephanie?

        [lprent: Wrong. His opinion was expressed during and after his election as NZLP leader. After being elected leader it was reported that:-

        Little told a news conference the Capital Gains Tax and New Zealand Superannuation policies would be reviewed by the Party’s Council and Caucus.

        and surprise, surprise (because it is in the NZLP constitution) there is a review of policies and which ones to present as priorities…

        Little signalled a review of all policies and rejected suggestions he did not have the support of the caucus or the party at large, given they had supported Robertson.

        “We need to get the policy review process underway and that has been a point of discussion during this election race and we need to make sure that the policies we go into 2017 with are the policies that are New Zealander’s priorities, they are clear, understood and they give us the chance to win in 2017,” Little told a news conference.

        Which incidentally is exactly what he (and every other candidate) said in every meeting I was at during the leadership campaign, and everything that was reported afterwards.

        Basically philu is being a fuckwit after inventing a untrue story, and then in his attacks on others for pointing this out. I’m rather pissed off with the damn stupid bullshitting about any parties policies without bothering to reference some backup for them. ]

        • Stephanie Rodgers 5.3.2.1
          17 May 2015 at 8:40 pm

          What does that have to do with phil’s insistence on making unsubstantiated accusations?

          • felix 5.3.2.1.1
            17 May 2015 at 9:15 pm

            Phillip is welcome to answer if he likes, but I was asking you.

            Do you think it’s a fair characterisation I’ve made?

            • Stephanie Rodgers 5.3.2.1.1.1
              17 May 2015 at 9:22 pm

              Sorry, felix: I’ve no interest in playing whatever game you have in mind. The point I have made is that phil has repeatedly misrepresented Andrew Little’s statements on a CGT and refuses to back up his assertions. That’s all I have to say on this thread.

              • felix …
                17 May 2015 at 9:35 pm

                I’m not playing games. I think what I’ve said is quite uncontroversial.

                Do you think I’m misrepresenting Andrew Little’s statements?

                If so, why not say?

              • lprent …
                17 May 2015 at 10:32 pm

                He managed to piss me off early in the day, not so much for the idiot lie that he used, but because of the way that he attacked everyone who pointed out that he was wrong and didn’t back up his assertions.

                But I have been on a pad since midday and I find it hard to leave moderator notes on a small screen.

                Besides, I have had an Economist to read on a relaxing sunday.

        • lprent 5.3.2.2
          17 May 2015 at 9:38 pm

          Felix: The policy wasn’t “dropped”. The way that the NZLP develops policy doesn’t work that way. The party develops policy and the caucus and party leadership decide which parts get pushed heading into a particular election.

          When too much policy is pushed then it is easy for the Nats and their media poodles to make it sound as confused as they did in 2014. When too little is pushed then it looks like there is none.

          Labour needs to decide 18 months out for the election which policies get pushed for the next election. It needs the 18 months prior to that to review which out of a smorgasbord of policies they want to bring forward. Little picked that one out as being particularly hard to sell to the voters when it got down to detail. So it got stuck in the review pile.

          Philu is lying when he says that Little dropped it.

          • felix 5.3.2.2.1
            17 May 2015 at 9:55 pm

            That’s just semantics.

            Labour was promoting the policy publicly. Now they’re not.

            Little has been pretty clear about this.

            • lprent 5.3.2.2.1.1
              17 May 2015 at 10:22 pm

              He was clear. All policies would be reviewed to decide what Labour went into the next election with. That was one of them.

              The NZLP has several hundred policies that I know about stashed in the constitution. It also has an entire book for the policy platform which has more general effect. Most of them require decades of work to bring to fruition.

              What it has to do is to present a coherent subset of policies to the electorate as being the things that they are planning on doing in the next electoral term.

              It was pretty clear after the 2011 elections that the CGT was a policy that kiwis liked in principle – provided that someone else suffered it. It tripped Phil Goff up. What was irritating in the 2014 election was that CGT was sort of carried over from 2014 because Labour pushed too many policies forward.

              It was too complex and too hard to explain as a CGT during an election campaign because when everyone realised that it might apply to their aspirations they didn’t like it. That makes it a great fear, uncertainty, and doubt (FUD) axis point for National. Which is what they jumped onto Cunliffe when that wasn’t even meant to be one of the things pushed in the 2014 election.

              That was what was getting reviewed. Apart from anything else, Labour needs to clean the boards of all promised policy after each election so it can match the policy up with what they can get elected on, and what they can do in the next parliamentary term. You sure as help can’t do several hundred things in 3 years.

              • felix …
                17 May 2015 at 11:04 pm

                “He was clear. All policies would be reviewed to decide what Labour went into the next election with. That was one of them.”

                So what? This was a flagship policy. Ask a Labour MP what the policy on asset sales is. You’re not going to get a “Well we’re actually reconsidering our position and we might just sell the fucking lot” to that question.

                “It was too complex and too hard to explain as a CGT during an election campaign because when everyone realised that it might apply to their aspirations they didn’t like it. “

                Yep, that’s what “unpopular” means. That’s why I said so. And Andrew Little agrees:

                I’ve made a judgement that the superannuation policy and the capital gains tax policy have been problems for us and are two reasons why people haven’t voted for us, and therefore we need to review them,” he said.

                “We will have a review process, we will go through that. I will argue my case in the forums of the party, but my firm view is that we should not be going to the 2017 election with those policies on our slate.

                http://tvnz.co.nz/national-news/andrew-little-wants-drop-super-age-capital-gains-tax-policy-6135059

                Any fool can see that that policy has been taken off the table for all intents and purposes.

                If I’m wrong, I’m sure you’d be able to find examples of Labour MPs publicly arguing the case for a CGT since then, just like they do with all the other policy positions that are under review.

                • Lanthanide …
                  17 May 2015 at 11:32 pm

                  Little has even gone further, to say that the entire tax system will be reviewed from top to bottom, but no changes will be made until they can be presented to the public and a mandate sought (ie, after they win in 2017, they’ll present a complete tax package to the electorate in 2020).

                  That suggests that even if they win 2017, they will not be inacting large new tax policies like CGT, regardless of whether it is technically in their backlog of policy but simply not “pushed” for the election.

                  Personally I think Little is angling for a UBI, which I think is likely to get broad support (several righties around these traps have said they’d hold their nose and vote for it), so long as they can placate the elderly (based on Gareth Morgan’s Big Kahuna, the elderly end up on less than current super) and avoid the ‘bludger’ vibe. Probably the only spanner in the works is the IRD computer upgrade, which probably still won’t be complete by 2020 so essentially throwing out the current tax and benefits system and replacing it with another probably won’t be logistically possible. Then again, if a new system is still under development, that may be the best time to attempt such a big change.

                • Kiwiri …
                  17 May 2015 at 11:36 pm

                  Any fool can see that that policy has been taken off the table for all intents and purposes.

                  Mmm …… there was no reference to CGT in Grant’s pre-budget speech that was posted:

                  http://thestandard.org.nz/grant-robertsons-pre-budget-speech/

                  Nor in Andrew’s:

                  http://thestandard.org.nz/andrew-littles-pre-budget-speech/

                  • felix …
                    17 May 2015 at 11:51 pm

                    Of course there wasn’t.

                    It’s gone.

                    Kaput.

                    Vamoosed.

                    Just don’t say it was “dropped” though, apparently that’s a dirty word.

                    • weka …
                      18 May 2015 at 12:14 am

                      If the CGT is under review, what exactly would they say about it in a pre-budget speech? ‘Dropped’ doesn’t sound like the right word to me. Put aside to be looked at later seems more accurate.

                    • felix …
                      18 May 2015 at 12:25 am

                      Well Lynn seems to think every policy is under review for the first 18 months after an election, so what would they say about anything?

                      Absurd, isn’t it?

                      But it definitely hasn’t been dropped, and it definitely wasn’t considered to be unelectable. 🙄

                      [lprent: How many people have I heard complaining after every election that Labour doesn’t sprout their policy after losing an election? FFS: the Greens and NZ First get a lot quieter about it when they don’t have a list or a win.

                      They didn’t get the votes that they’d hoped for from the policies they pushed. It needs a review. Labour has a pretty specific process that it goes through after elections. And even more so this election.

                      Ask Brian Gould about it. I believe that they’re finishing up the review of the last election soon.]

    • Bearded Git 5.4
      18 May 2015 at 9:54 am

      Another positive comment Phillip-keep up the good work.

  6. RedLogix 6
    17 May 2015 at 12:41 pm

    At present, capital gains are taxed if IRD believes it was the intention of the seller to make a capital gain on a property.

    That rule will remain in addition to the bright-line test so that if somebody flicked on a property after two years and one day, they would almost certainly have to pay tax on the gain.

    The Government will also introduce rules that could make the over-heated Auckland housing market less attractive to non-resident speculators.

    The Government had not forecast collecting anything extra in capital gains tax through the bright line test but it will make the rules clearer.

    Herald today.

    All this two year period does is put some clarity and teeth around the existing rules. We always did have a CGT on property – but back in the 90’s the National govt of the day made them so vague that only a few actually paid it.

    So in one sense this is nothing new.

    • b waghorn 6.1
      17 May 2015 at 12:57 pm

      “All this two year period does is put some clarity and teeth around the existing rules. We always did have a CGT on property – but back in the 90’s the National govt of the day made them so vague that only a few actually paid it.”
      There is a ex member of Tauranga ( not Winston) that I was told sold 100 odd rentals but because he told the ird that he sold them due to a change in business direction and not for profit ird chose not to pursue the talk owed.

      • RedLogix 6.1.1
        17 May 2015 at 1:10 pm

        Well CGT’s on all asset classes are the most problematic tax the world over. Nor are they necessarily a silver bullet that stops property inflation in it’s tracks. There are plenty of examples of countries which do have CGT’s and have still experienced severe bubbles.

        Personally I’d prefer a standard CGT on ALL assets classes across the board. That would restore some horizontal equity from the taxation perspective. But just don’t expect a tax ambulance at the bottom of the credit cliff to solve the problem caused by banks pouring money over the top of it.

        • Colonial Rawshark 6.1.1.1
          17 May 2015 at 1:17 pm

          But just don’t expect a tax ambulance at the bottom of the credit cliff to solve the problem caused by banks pouring money over the top of it.

          Exactly

        • lprent 6.1.1.2
          17 May 2015 at 1:23 pm

          That would be my preference as well. Make it as uniform as possible.

      • mikesh 6.1.2
        17 May 2015 at 1:16 pm

        The existing rules don’t provide for a capital gains tax. They provide for the payment of income tax where the capital gain, under certain circumstances, is deemed to be “income”.

        • RedLogix 6.1.2.1
          17 May 2015 at 1:19 pm

          Sheesh- splitting hairs are we not?

          If a tax on income from a capital gain is not a tax on capital gain – then what the fuck is it?

          (Unless of course you are thinking of the difference between a CGT that is calculated on realised versus unrealised gains. Another big bag of tax worms – people absolutely HATE being taxed on a paper gain for which they have yet to to realise any actual cash.)

          • David 6.1.2.1.1
            17 May 2015 at 2:04 pm

            Of course people hate being taxes on paper gains, they have to pay it out of income that is not just paper. The FIF rules on international shares, for example, create a huge incentive to invest in other things to avoid that taxation on paper gains.

          • mikesh 6.1.2.1.2
            17 May 2015 at 2:07 pm

            [Sheesh- splitting hairs are we not]

            Not at all. An income tax, to state the obvious, is a tax on income. A capital gains tax is a tax on capital gain. Two different things.

            [If a tax on income from a capital gain is not a tax on capital gain – then what the fuck is it?]

            One needs to be clear about what constitutes income. If I grow a crop of potatoes then that crop is income because the potatoes didn’t exist before I grew them. When the potatoes are sold we tend to treat the cash received as income, but this is really just a matter of convenience – where bookkeeping and taxation are concerned it is clearly more convenient to deal in monetary equivalents rather than real products. However this should not blind us to the fact that it is the crop of potatoes that represents income not the cash that we receive for it.

            In the case of a a property sale the house is same, presumably, as it always was so, with nothing new being created, there is no actual income. (However in a limited number of cases IRD, rightly or wrongly, feels justified as treating the seller as equivalent to to a shopkeeper selling his wares and the capital therefore as equivalent to income.)

            These sorts of distinction are important because if a capital gains tax is imposed we are involved in a double taxation situation. The buyer of a property pays for it out of his tax paid income and the seller then pays tax again on the same dollop of income. This may be OK if a greater good is being achieved thereby, but we need to be clear about what is going on before we can make that decision.

            • RedLogix 6.1.2.1.2.1
              17 May 2015 at 2:34 pm

              One needs to be clear about what constitutes income.

              OK an fair enough explanation. But then again you didn’t raise the crop of potatoes just for the love of it – you wanted the cash or income from selling them. And that is why we treat that cash as taxable income.

              Now as an owner of a shop, and the buyer of those spuds you’ve just grown for me – I’ll stick them on my shelves and sell them on for a profit. Arguably they are the same old spud and nothing much new was being created. Apart perhaps from the value added logistical convenience of my mass purchasing, transport etc. However these spuds get treated for tax purposes as stock, and the profit I make on them taxed as ordinary income.

              Along the way I buy a truck to transport them. As a capital asset it will likely decrease in value over time and there is a whole bunch depreciation rules around that.

              But I also bought a block of land and built a shop. And this capital asset increased in value (mainly because of the land it was sitting on) – and after decades in business I decide to retire. And it turns out that the capital gain I make on selling my old shop exceeds the cash I made turning over spuds all those years. And as far as my bank account is concerned it’s all the same money.

              But we struggle conceptually here because while it’s possible to see the value I added when I was selling spuds, it’s harder to see how I added value to the land just by sitting on it.

              But if I’m going to be taxed on profit I made on selling the land, can I offset that against the loss I made on my truck fleet over all those years as well? After all they were both capital assets?

              And as you say the person who buys that buys your old shop is paying out of taxed income – but that is not different to all the people who did their grocery shopping with you all those years as well. So it’s hard to see why it should be treated differently.

              As I said above – CGT’s are a problematic tax – unless you just treat capital gain as another source of income.

              • mikesh …
                17 May 2015 at 3:36 pm

                [OK an fair enough explanation. But then again you didn’t raise the crop of potatoes just for the love of it – you wanted the cash or income from selling them. And that is why we treat that cash as taxable income.]

                Technically the crop should be taxable whether we sell it or consume it ourselves. In the latter case however the IRD considers taxing it impractical.

                [And as you say the person who buys that buys your old shop is paying out of taxed income – but that is not different to all the people who did their grocery shopping with you all those years as well. So it’s hard to see why it should be treated differently.]

                The shopkeeper pays tax because additional income is created from the service he provides – additional, that is, to the income on which the customer has already paid tax. The shopkeeper’s service lies in providing a venue where people can conveniently shop. The mark up on the potatoes is his reward for providing that service.

                [As I said above – CGT’s are a problematic tax – unless you just treat capital gain as another source of income.]

                As I said, a capital gains tax, no matter how illogical, may nevertheless be justifiable if a “greater good” is served. Treating a capital gain as income, though, leaves us in danger of not seeing the need to ascertain whether a “greater good” is really being served, and whether it represents adequate justification.

      • greywarshark 6.1.3
        17 May 2015 at 6:18 pm

        …not to pursue the tax owed I think? What the IRD did do apparently was just talk!

        • b waghorn 6.1.3.1
          17 May 2015 at 6:50 pm

          Bugger yes tax . I was told that he told the ird he would fight it in the courts and the ird decided the cost and hassle wasn’t worth it.

  7. Colonial Rawshark 7
    17 May 2015 at 12:43 pm

    National is going to GAIN political capital from this very smart move not “burn” political capital. Just you watch. Key and English will be lauded in the business news and the MSM this week. “The National Government has committed to decisive steps to counter the property speculation, especially by foreign investors, that has been pushing Auckland housing prices out of the reach of ordinary Kiwis.”

    A brilliant out-manoeuvre of the Left.

    • Karen 7.1
      17 May 2015 at 12:53 pm

      I agree the Nats will benefit from this. Their polling must have been showing they were losing ground because of this issue, and this will be enough to turn that around in time for the next Roy Morgan poll. They have achieved this without upsetting their property investment mates as 2 years is too short to make any difference.

      • Bearded Git 7.1.1
        18 May 2015 at 10:07 am

        @Karen It does give Labour the chance to adopt a policy to change the period from 2 years to 3 years to make it even tougher to speculate, while reminding people that this is National’s CGT and they are just refining it.

    • NicTheNZer 7.2
      17 May 2015 at 3:55 pm

      Even if that’s true it’s still a huge advantage for the left. If what you said is true then the left will never gain support from a CGT policy. They have now avoided having to push it.
      On the other hand National is taking the risk if it fails to deliver. I am highly sceptical that this tax works anyway because I can’t find a single country in the world where it’s been observed to slow down a property bubble.

      • lprent 7.2.1
        17 May 2015 at 5:45 pm

        It doesn’t slow the current bubbles down. If you are in one, then it is too late for it to affect much.

        What it does if it is done effectively is to limit the investment decisions to something that is a bit more rational on the next time around.

        When you are inside a property bubble caused by high demand and a lack of supply like the Auckland residential market is at present, then the best solution is to supply what is demanded. In this case it is residences close to the current transport and (especially) public transport nexuses. In Auckland that is going to require villas to be knocked down and medium density apartments and townhouses put up on the land.

        But do that within the 10km of the CBD where the demand is crazy and where people want to live. You only need to see where the house price growth is to see where the demand is.

        Don’t get as crazy as those joint morons of John Key, Nick Smith, and Simon Bridges who appear to want to put housing for 20,000 people 27kms from the CBD and at least 10km form the nearest work. They want to do it without first fulfilling their side of the housing accord and opening up the transport along State Highway 16 or the railway. That is a recipe to simply increase congestion on an already congested road.

        National = lazy untrustworthy damn pikers.

        • NicTheNZer 7.2.1.1
          17 May 2015 at 7:36 pm

          “What it does if it is done effectively is to limit the investment decisions to something that is a bit more rational the next time around”

          Australia introduced CGT in 1986.
          Canada introduced CGT in 1972.
          UK introduced CGT in 1965.

          Still don’t think it works myself.

          • b waghorn 7.2.1.1.1
            17 May 2015 at 7:46 pm

            Who cares if it don’t work to be a fair tax system everybody has to pay there share , hell who knows I every bugger did pay there fair share we could all pay less.

          • Saarbo 7.2.1.1.2
            17 May 2015 at 9:16 pm

            One of the reasons it hasn’t worked in other countries is because it is still taxed at lower rates than Income Tax…so there is still a tax benefit of investing in property.

        • Brendon Harre 7.2.1.2
          17 May 2015 at 11:58 pm

          National do not understand cities. They never have. They are stuck in the 1950s.

          John Key is the ‘PM for Parnell’. The housing crisis didn’t concern him until polling turned sour and now it is too late to fix with little tinkering policy changes like this weak CGT. Even now John Key like the Reserve Bank is probably only concerned about the bubble bursting not the social/economic effect unaffordable housing has on future generations.

          Only a full on stealing of Labour policies, KiwiBuild, new public transport infrastructure to housing developments – express busways, passenger rail with an upgrade CRL network, putting the brakes on immigration and stopping/taxing foreign buyers has a hope of turning around this housing crisis before the next election. I can’t see John doing that -he is too much of a conservative status quo man. John Key is a conservative centrist not a progressive centrist.

          That just leaves tinkering and bluffing and I believe this will skewer Key. It is forcing him out of his comfort zone -the laidback, friendly, carefree PM. It makes him accountable, brainfading will not work, there is too much material on record.

    • Matthew Hooton 7.3
      17 May 2015 at 4:45 pm

      So people are above are saying the CGT was a vote loser for Labour and you’re saying it may be a vote winner for National. On reflection, you may all be right. Which goes to the issue of leadership and why NZ Labour and UK Labour were unwise to go to an election with weirdos as leaders, elected by unions and “the membership”.

      • swordfish 7.3.1
        17 May 2015 at 5:08 pm

        “weirdos as leaders”

        Two words……Pony…..and…..Tails.

      • Karen 7.3.2
        17 May 2015 at 5:08 pm

        Both can be true, Matthew.

        There is only anecdotal evidence that the CGT lost Labour votes, and nobody is suggesting that without the CGT they would necessarily have won the election. However, there is quite a lot of anecdotal evidence, and Cunliffe’s stumbling over the CGT during the TV debate and in the following days wouldn’t have done him much good with wavering voters.

        The reason the Nats will probably benefit is that, superficially, it looks like they are finally doing something about the housing crisis in Auckland. I suspect internal polling showed they were losing ground. However, their policy is not going to upset their property developer mates because it is a tax that is easily avoided.

        David Cunliffe and Ed Milliband are both highly intelligent, honorable men who were subject to unrelenting character assassination by MSM bullies and PR hacks like yourself.

      • felix 7.3.3
        17 May 2015 at 5:56 pm

        Who chose John Key to be leader of the National party?

        Presumably they were party members, no? And presumably with the support of business lobby groups, no?

  8. dukeofurl 8
    17 May 2015 at 1:01 pm

    One effect will be stopping dead in its tracks real estate agents buying the property they are supposed to be acting for the seller.

    They use an associate in the agency often another agent, who just signs the sale agreement in “their name or nominee”

    The agent then keeps marketing the property and can often get another buyer at a higher price at the settlement time.

    Its amazing what the National party has achieved regarding proerty scams over the last few years.
    1) The took away the negative gearing advantage holiday homes had by being rented for only a few weeks a year, essentially they had to be rented full time for a mortgage deduction.
    2) Depreciation for buildings removed, including a massive whack high end homes had that were rented out. Nobody ever paid the depreciation back when sold as they could just claim the increase was due to ‘land value’
    3) Now this getting rid of the nonsense over whether a property was an investment or a just a quick turnover.

    For those who think its a capital gains tax in all but name, I remember Australia had a similar rule but only for 12 months and it covered all property including family home with the usual exemptions. Then they introduced a capital gains tax

    • RedBaronCV 8.1
      17 May 2015 at 9:20 pm

      but will the CGT catch the re sale of the property before settlement. What is being sold in an agreement to purchase a property not the property – chose in action if I remember correctly?

      and will they forecast some incoming tax to help land the old 747 on the pinhead?

  9. dv 9
    17 May 2015 at 1:01 pm

    Good heavens we were told it was only a supply problem!!

    Now we have this CGT test AND points system for migrants going outside auck.

  10. Ovid 10
    17 May 2015 at 1:04 pm

    With this move coming into effect on 1 October, it will kick the can down the road until after the next general election if speculators hold off on selling until after 2 years have passed. I think we’ve just witnessed quite a deft act of political ninjutsu.

    • Colonial Rawshark 10.1
      17 May 2015 at 1:15 pm

      +1

    • Draco T Bastard 10.2
      17 May 2015 at 1:18 pm

      Which pretty much means that National are pretty much planning to lose the next general election and so be able to blame it on the next Labour led government.

      • Colonial Rawshark 10.2.1
        17 May 2015 at 1:36 pm

        National aren’t planning to lose the next GE!

      • phillip ure 10.2.2
        17 May 2015 at 1:54 pm

        rubbish draco..!

        national are campaigning full-tilt for a 4th term..

        ..and to date..they seem to be doing ok at it….

        ..serious-question:..will labour now support a cgt..or not…?

        ..the suspense is killing me..!

      • David 10.2.3
        17 May 2015 at 2:07 pm

        No politician who gains power plans to lose it, it’s far too addictive for them.

  11. linda 11
    17 May 2015 at 1:07 pm

    no national are admitting they have failed this is the stuff of desperation and panic
    new zealand is a debt bomb ,with the 3rd highest house hold debt levels in the world
    we as a nation have already went off the cliff we just havent hit the bottom yet but like any fall the ground will come .

  12. wyndham 12
    17 May 2015 at 1:26 pm

    Didn’t Bill Rowling introduce exactly this same tax back in 1970’s ? It was known then as ‘speculation tax’ since property wheeling and dealing was rampant.
    I believe it was a failure and was quickly repealed.

  13. greywarbler 13
    17 May 2015 at 1:32 pm

    Thinking about housing and banks creating credit. Pete Young commenting on NZTalk on Radionz says that Switzerland and Iceland are looking at reducing banks’ powers to create credit.
    A youtube link has been provided but is in another language and only subtitled German is available as choice. For those of you who are up on your German…!

    Also, there is a petition underway in Switzerland to force a referendum to stop banks creating “money”, and the problem is being openly discussed on their national TV https://www.youtube.com/watch?v=0-t_v5GUfyU 8.31mins
    In Iceland, the Government called for a report about the problem and is now considering whether to prohibit commercial banks from creating currency.
    and
    However, the consequences of ignoring such a practice are so enormous that even countries like UK, Switzerland and the Netherlands are openly discussing it. For example the UK Parliament recently held a debate about this very problem https://www.youtube.com/watch?v=s6a_0zJDsr8

    • David 13.1
      17 May 2015 at 2:12 pm

      They can stop banks creating money overnight by requiring a 1:1 reserve ratio. That would be an end to fractional reserve banking and a complete stop to all lending for years. Do you really think that will solve anything that makes the problems it creates worth it?

      • greywarshark 13.1.1
        17 May 2015 at 3:27 pm

        What sort of argument is that David? Picking a ratio that would be sure to halt everything as the most likely thing to happen, indeed the only thing that could happen! Could there be another ratio introduced that would slow slightly but not halt investment. It would gradually reduce the hot air in the balloon as good ballooners know how to do when they want to ground it

      • dukeofurl 13.1.2
        17 May 2015 at 5:16 pm

        The banks ‘create money’ for business overdrafts but if they want overnight liquidity they have to borrow from the Reserve Bank.

        If the lend for secured assets like land or housing they borrow that money elsewhere through the short term money market or depositors. There is a substantial amount in deposits and term deposits.
        Similar arrangements happen for credit cards.

        Banks make their money by borrowing short term 1- 3 months or 9 months and lending long term say 10 , 15 or 20 years. You can see the wholesale rate from the Reserve banks monthly interest rate setting and that which they will lend to homeowners.

        If they relied on ‘creating money’ they would have hardly any to lend, borrowing elsewhere makes massive amounts available to on lend at margins of 4% fully secured.

        • NicTheNZer 13.1.2.1
          17 May 2015 at 5:24 pm

          Baa a haha haha. The reserve bank acknowledges that M3 (mostly bank deposits) is part of the money supply.

        • Colonial Rawshark 13.1.2.2
          17 May 2015 at 5:29 pm

          Banks make their money by borrowing short term 1- 3 months or 9 months and lending long term say 10 , 15 or 20 years.

          That’s only the traditional old fashioned part of banking profits, nowadays.

          • dukeofurl 13.1.2.2.1
            18 May 2015 at 2:05 pm

            Its the other way round. The so called fractional banking is only a small part of lending

            Just checked Westpac NZs financails

            Interest income (2014) 3.9bill

            Interest expense (2014) 2.3 bill

            Thats a lot of money paying out in interest if they can ‘create it’ at whim for nothing

            Their loan book is $64.5 bill, the deposits are $50.5 bill with another $12.5 bill other debt issues.

            Not much fractional banking there. As mostly their loans are covered by borrowed money from others. Biggest chunk is from deposits

    • NicTheNZer 13.2
      17 May 2015 at 4:12 pm

      It’s complicated, but it’s unlikely that a full reserve banking system can really be enforced. Similar proposals were tried in the eighties, called monetarism, and all they achieved was wild fluctuations in lending rates. The idea was to control the total quantity of money but this failed.

      • Colonial Rawshark 13.2.1
        17 May 2015 at 5:31 pm

        Yes, they went to controlling interest rates instead, adding or wthdrawing liquidity as required to hit their desired target interest rate.

      • mikesh 13.2.2
        17 May 2015 at 7:54 pm

        Where was this tried?

        Monetarism involved controlling inflation through monetary policy, but I don,t think this involved 100% reserve ratios.

        • NicTheNZer 13.2.2.1
          17 May 2015 at 8:08 pm

          No a full reserve system was not tried, but a lower reserve ratio was assumed to work. The result was the reserve supply didn’t limit deposit creation anyway. I don’t believe a full reserve ratio will be any different without causing issues with payment stability. So I think the CB will just end up supplying all necessary reserves as they do now.

          • dukeofurl 13.2.2.1.1
            18 May 2015 at 2:07 pm

            I think you are right there.

            Any ‘instant money’ needed is borrowed from the Reserve Bank on a nightly basis and only for extremely short terms.

            Its just cheaper to go to money markets and overseas to get asset based lending

    • mikesh 13.3
      17 May 2015 at 8:20 pm

      Would this be an account of Iceland’s experience?

      http://journal-neo.org/2015/04/21/iceland-s-economic-revolution/

  14. ianmac 14
    17 May 2015 at 2:19 pm

    Those waiting for Capital Gains would wait for 2-3+ years so why not all those with 2nd+ houses pay CGT?

  15. Clemgeopin 15
    17 May 2015 at 2:27 pm

    On the face of it the policy looks good. However, I am skeptical of Nationals genuine intentions here for the following reasons:

    The fact that this CGT applies only if the property is sold within 2 years and 1 day
    and in any case, does not apply to the ‘family’ home. So, this is actually a weak Clayton’s measure. A cunning PR exercise but lacking practical effect on money making property sharks. Here is an example :

    Say John Dow owns five rental properties and one family home, home #6. This is what he will or could do to circumvent, fool or pay along with Key’s BS policy and not pay anything in capital gains tax to English who is also happily playing along : John D can just buy a new home #7 and live in THIS one for 2 years and 1 day while putting what was his previous family home #6 on rent. After those 2 yrs1 month period, he could sell this home #7 and enjoy the capital gains to put it for hereditary for his lucky progeny. In fact, he could use equity and buy and sell any number of houses after owning each for over that set period without paying a cent legally as per the rules!

    So, I think this is a BS policy which will let the property speculators and capitalist crooks continue with their greedy despicable ways and manipulation of the ‘free’ markets.

    So, I think it is just a little feel good kind of PR tinkering with no genuine effect on the housing crisis or the tax take.

    May be to qualify as ‘family’ home, the owner should have lived in it for at least ten years. Other wise, pay the CGT. Two years is too short and can be easily withstood/manipulated/dodged.

    What do you think?

    • greywarshark 15.1
      17 May 2015 at 3:32 pm

      I think a price cap on the family house would be a good idea. The median price for the area, and then tax on the rest. That would hit the high flyers, the highly geared purchasers. Those putting big money into their own residence to try and evade the tax they should be paying would be caught then.

      • Clemgeopin 15.1.1
        17 May 2015 at 9:02 pm

        That is too complicated to monitor. Also could be unfair because the median value is not the real value of the house. Those below that value benefit and those above get unfairly hit.

        If the CGT does not apply to all houses, Perhaps two additional conditions may be better:

        (1) A house to qualify as family house and not be subjected to CGT should be lived in by the owner for at least 10 years and 1 day.

        (2) No one can sell more than one house in ten years without paying CGT?

        What is wrong with that policy, if any?

        • Herodotus 15.1.1.1
          17 May 2015 at 9:36 pm

          Family dynamics change, a couple will find their apartment unsuitable by increasing by 2 to 3 children, this would require a new property with 2 to 3 bedrooms. The immediate area to provide parks schools etc that for a couple would not be of paramount concern. Conversely when the family changes to empty nesters a 3,4 or 5 bedroom property would not be suitable.
          But you may have not taken into account the changing nature of a family, then there is the additional possibility of retirees needing to move back in with their children and grand children.
          Just something that would counter your policy.

          • Clemgeopin 15.1.1.1.1
            17 May 2015 at 10:17 pm

            I get your point, but what if the family ‘dynamics’ you state change within 2 years and 1 day? Then what? Stay where they are till that period is over or sell and pay the CGT? If yes, then the same remedy applies if the period is 10 years. They aught to be aware of this before buying the house anyway.
            What do you say?

            • Herodotus 15.1.1.1.1.1
              17 May 2015 at 10:43 pm

              Pregnancy takes quite a few months, and a new family could cope within a small property for a 12 mths, should there be a major tax liability. Can you imagine the bad pr young family with new born will pay the tax, and a multi million $ property increasing by $1000/ day escapes the tax.
              You are also assuming that over that period of time the property appreciates. By the time this belated response is enacted , the property market could be at its peak or even coming of such a peak.
              Many should see this as negating “that national have done nothing,” and that they have acted when labour lacked the balls. All I can see was that the nats have outplayed the left.
              It’s not about doing something, it’s all about being believed that you are.

        • greywarbler 15.1.1.2
          18 May 2015 at 11:53 am

          @ Clemgeopin at 15.1.1
          It occurs to me that the idea that people should pay CGT on a family home whatever the value, would be a hit on the ordinary homeowner. If they are selling to go to another property, they may be just exchanging similar houses as they move to another area, or buying an extra bedroom to accommodate a growing family.

          The CGT tax should be at a fairly low level also not just regarded as tax on income either. If all housing was to be taxed then certainly it should be low, thinking of 1% level say, because of what I have just outlined. Property speculators, could be dealt with in a different way, that is fair to them as business people but who should have each of their houses regarded as separate investments so they can’t subsidise each other, and set losses off, or high interest and payment rates off against another property.

          A rise in valuation since a house was bought does not mean home owners are able to pocket their profit advantage, they will need all their net price, after paying off the present mortgage, to meet the cost of their next home. They may have put every weekend for a year into improving the house also, and why should government then swipe a considerable percentage of their effort to improve their lives. And if government steps in and whips out a sizable tax on that sale, then it is taking from them some of what they need to buy another equivalent or dearer house with more bedrooms. Changing houses then results in a tax punishment which will hurt low and middle income householders more than the benefit that the country and housing sector receives from tax.

          And the long-term occupation of ten years may not be appropriate for NZs who at one time were documented as changing location every three years. These uncertain days, with fragile business structures, time may be shorter.
          I think developers and builders shifting often to minimise tax may have to be an accepted practice. Perhaps a minimum low tax on all property sales of any value would ensure some useful revenue to the country, perhaps it could be a return to stamp duty. Then the CGT would be applied separately only to those properties with a marginal price over the median price bracket or falling within other criteria.

          I consider, in general, that setting a median price for a year for each area, would limit the effect on lower income families. People who have more expensive homes would pay some CGT above that median. It wouldn’t be difficult to understand or comprehend – the set median would be on line for anyone to check. Talking about simple and all-encompassing taxation measures as so many accounting practitioners do is attempting to mislead. Tax rates can never be simple and serve the people well. Taxes must be tailored appropriately to their required result, and be easily accessed and explained for information purposes.
          edited

  16. Picard101 16
    17 May 2015 at 2:52 pm

    We don’t need a cap gains tax, cap gains tax doesn’t work, etc…

    Today I’m introducing a cap gains tax.

    How the hell does john key still have any credibility?

  17. boyonlaptop 17
    17 May 2015 at 3:04 pm

    Still convinced Little was right, to shelve this policy then people?

    Although this is a step in the right direction and it is a win for the left to see National finally admitting a problem. They should still be attacking this as too little, too late.

    • Picard101 17.1
      17 May 2015 at 3:46 pm

      They are. Things like, not enough, only tinkering, it’s a start, finally admitting there is a problem are being said by labour and the greens.

  18. Reddelusion 18
    17 May 2015 at 3:16 pm

    Pragmatic and smart politics, left again left scrambling, locked in the belt way, academia, la la land with no answers where the populace will jump on board and back this policy, next un turn hopefully superannuation

    • Picard101 18.1
      17 May 2015 at 3:48 pm

      Ummm a policy taken from the left making national look even more bereft of any ideas.

    • Tracey 18.2
      17 May 2015 at 4:19 pm

      you agree cunliffe was correct then?

    • sabine 18.3
      17 May 2015 at 5:27 pm

      but but

      there is no housing crisis
      there is not shortage of houses
      there are no foreigners buying up houses
      there is no housing specualtion
      we are not selling every third property in auckland to the chinese
      we are not keeping a record on who buys the houses
      there is no housing crisis in auckland
      there is no housing crisis in New Zealand, lets sell state houses

      lets introduce a capital gains tax, cause we are national. 🙂

      loosers

      • Clemgeopin 18.3.1
        17 May 2015 at 9:34 pm

        * There is no poverty.
        * There are no children going hungry in NZ.
        * The assets will be bought by Mum and Dad investors.
        * There is no mass surveillance.
        * The public schools are failing. So we need charter schools.
        * Adult Community education night classes are a waste of time and the thirteen million dollars it needs is a waste that we can’t afford. Have an unasked for new flag instead for only a 30 million dollars-Plus amount.
        * We care for the ‘underclass’. Yes, we really do (at the end of the day).
        * The Green’s kid’s kiwi saver is a stupid idea. Can’t explain why, though).
        * Labour’s CGT was a bad idea. (but we will bring it in anyway and pretend it is lots different).
        * Extending paid parental leave is a crap policy. (Ok, may be we will expend it just a little to show we too care!)
        * People are returning from Aussie in droves because they think we have a Rock Star economy. (Yes, really they do, though they don’t really know our secret that what we have are ROCKS for the less wealthy and wealth for the STARS!)
        * We will produce 172,000 new jobs. ( Did you know that we produced 75,000 jobs in Northland. Yes, we said that at the by-election! Must be true!)
        * We will build hundreds of thousands of houses not far from Auckland, just about 2 to 4 hours away from CBD.
        * Labour’s ideas for housing, regional development, immigration, social welfare, employment, job creation, WFF, Kiwi Saver, Kiwi Bank etc are no good at all. (But we will copy them anyway)

        * We are working for New Zealand! (aukshully, between you and me, we mean working for the wealthy, Ha, ha, suckers! We are the best and Key is more loved than Jesus and Elvis combined even).

  19. SMILIN 19
    17 May 2015 at 4:06 pm

    Of course Key will have to introduce the tax regardless of politics
    votes wont matter to him because hes already done the damage that he was put there for -destruction of the Labour party -and he’ll probably be rolled before the next election
    Will he back date it to 3 yrs ago when the rout started ? because if he had any scruples he would and then we might see a surplus
    Its just something that keeps everything new in his eyes but the pain that his BS has caused will take more than a tax to fix

    ‘

  20. Atiawa 20
    17 May 2015 at 4:07 pm

    Had people (workers) in New Plymouth last election telling us they weren’t in favour of CGT. Some of them didn’t own a house let alone rentals. Aspirational? Dreamilogical? Optimistical? Stupifucktional?

  21. Brian Smith 21
    17 May 2015 at 4:19 pm

    Mmm.. just thinking outside the square. Imagine if you had advice that the market was going to go belly -up at the end of the year/next year (forcing thousands of people to sell their ‘portfolios’) and you were thinking “how can we screw the late entrants (the ‘green’ players, the uneducated players, the foreign investors) to the market by getting some tax dollars before they go down”? I know it’s a highly cynical view but the minds of these psychopaths in power warrant analysis and thought outside the traditional parameters attributable to normal human beings.

  22. Philip Ferguson 22
    17 May 2015 at 4:25 pm

    The thing about the Key-English regime is that, far from being any kind of hardened neo-liberal ideologues, they are pragmatic managers of capitalism.

    Sometimes they bend a bit to the right, sometimes a bit to the left. Whatever is needed to manage capital.

    It’s pretty clear that the market is neither ‘sorting out’ the housing situation in Auckland nor is it spontaneously capable of doing so. So some government intervention is on the way. The intervention is designed not to make it easier for the working class to buy houses; rather it’s designed to prevent the bubble reaching the point of explosion, which would create some severe economic problems.

    Key-English are all about managing the malaise of a second-rate economic system that simply can’t be left to its own devices without producing regular crises.

    ‘Rock star economy’ and the lost prophets: https://rdln.wordpress.com/2014/01/09/rock-star-economy-and-the-lost-prophets/

    The Key-English government in the context of capital accumulation in New Zealand today: https://rdln.wordpress.com/2014/12/12/the-key-english-government-in-the-context-of-capital-accumulation-in-new-zealand-today/

    Key’s ‘vision’: managing the malaise of NZ capitalism: https://rdln.wordpress.com/2013/01/31/keys-vision-managing-the-malaise-of-new-zealand-capitalism/

    The Mainzeal collapse: leaky homes, leaky loans and a leaky system: https://rdln.wordpress.com/2013/02/08/the-mainzeal-collapse-leaky-homes-and-a-leaky-system/

  23. Maui 23
    17 May 2015 at 5:05 pm

    It’s good the left can still influence policy from outside government.

  24. lefty 24
    17 May 2015 at 5:16 pm

    A capital gains tax is a good mechanism to make it look like you are taking the overheated Auckland housing market because it has been demonised as being a left policy for so long and it can make National appear pragmatic and caring.

    It is not going to make much difference though, no matter how it is structured. After all it hasn’t elsewhere.

    Neither John Key nor Labour would ever have supported it if it was going to be effective.

    Not when so many MP’s are busy making money in the housing market in their spare time.

    ,

  25. Ben 25
    17 May 2015 at 5:19 pm

    The fact that this has effectively trumped the latest crisis has nicely tied the Left up in a few knots. Yes it is late, but it appears to be maybe just enough to keep those who know that a CGT is a necessary evil happy as it not over the top. Labour having thought of it first doesn’t really matter now, and nobody likes ‘a told you so’.

    All is not lost as there is plenty of time for more crisis.

    • lprent 25.1
      17 May 2015 at 5:33 pm

      It won’t do much for the current “crisis”. I’d expect to see another round of frantic speculative buying between now and October 1st as investors get in before the 2 year limitation goes into effect.

  26. Herodotus 26
    17 May 2015 at 5:38 pm

    A sale is recognised with LINZ on the change of ownership, this can be months after a sale has become unconditional. A bit more admin heavy but when a property is listed for sale then this should be a recorded against the title, that IMO is when the sale process commences, not settlement.
    This to me is just a headline catcher, who (unless their situation changes) will now sell a property when any capital gain will be taxed, why not wait a few months or even a year and escape paying any tax, and remember for Aucklander’s this could be hundreds of thousands of $ CGT avoided.
    Just cannot wait to see how well the Govt has done in the media over the next few days. Remember they are working for whats best for NZ 😉

  27. logie97 27
    17 May 2015 at 5:58 pm

    I am sure I heard the Prime Minister on Radio New Zealand National just last week say that “a Capital Gains tax is spectacular in its failure”. I remember him saying it because it appeared to be another instance of his mangling of the English Language.

    • linda 27.1
      17 May 2015 at 6:55 pm

      i remember key saying there is no housing crises all is well its a supply problem

  28. McFlock 28
    17 May 2015 at 6:42 pm

    Two years seems a bit tight to me.
    I mean it might impact the specuators who flip properties in a week, but it seems to me to still be well within the “buy/sell but don’t let” area.

  29. dv 29
    17 May 2015 at 7:04 pm

    And Key said on the news its NOT a capital gain tax.

    Huh

    • Maui 29.1
      17 May 2015 at 8:06 pm

      Most of the time it’s not acting in it’s capacity as a Capital Gains Tax. It just sees itself as a regular tax…

  30. Mad Plumber 30
    17 May 2015 at 9:12 pm

    It’s a Capital Gains Tax but not as we know it.

  31. AsleepWhileWalking 31
    17 May 2015 at 10:10 pm

    It’s just a tax grab and (surprise!) won’t affect investors.

    CGT doesn’t do anything at all for our people who are struggling to find housing.

    I suggest a higher tax on all residential rental income sufficient to cover the ever increasing amounts of Accommodation Supplement that the government has to pay to keep people housed.

    Now, the LL’s will whine that rents will have to increase in order to cover the tax, this in turn will be met with increases in accommodation supplement, etc etc

    • Clemgeopin 31.1
      17 May 2015 at 11:43 pm

      If I was the Prime Minister (Be thankful I am not), I would make the rule that no one can own more than two houses at any one time. One to live in, one to rent.

      So that people can spend their money into productive investments, savings and businesses rather than bricks and mortar housing speculative madness.

      And also, I would build either as the government alone or as Public-Private-Council three way partnerships, more houses of different types, including state houses, upmarket houses, high rise apartments, rent to buys, cheap first homes etc as needed and build necessary infrastructures as needed, thus helping create trade jobs too, reducing stress, greed and inequality and increasing peace, fairness and happiness quotient in the people.

      Am I mad? Bob Jones would think so, I am sure. Do you?

      • Halfcrown 31.1.1
        18 May 2015 at 8:01 am

        “Am I mad? Bob Jones would think so, I am sure. Do you?”

        Two answers

        1. No

        2. Who gives a shit what Jones thinks.

  32. Kevin 32
    17 May 2015 at 10:48 pm

    Being the suspicious bastard that I am, and knowing that National goverments do shit like this because they know something we don’t, I am assuming this will be enacted for the next financial year? Therefore the Auckland housing bubble should be poised to to pass on substantial taxes in the near future.

  33. Paul 33
    18 May 2015 at 7:22 am

    War is peace.
    Freedom is slavery.
    Ignorance is strength.

    George Orwell

    A capital gains tax is not a capital gains tax

    John Key.

  34. Ross 34
    18 May 2015 at 7:23 am

    It seems strange that National would introduce a policy that it hates.

    I think the Reserve Bank and or Treasury must be pulling the strings here. They want to see heat taken out of the Auckland property market.

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