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10:58 am, October 2nd, 2024 - 13 comments
Categories: Christopher Luxon, making shit up, national, same old national, spin, you couldn't make this shit up -
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Blogging about politics right now is a bit like shooting fish in a barrel.
What topic do I choose?
What about the cuts to Te Reo resources for teachers?
Recently Erica Stanford decided to cut $30 million from Te Reo tuition on the basis that it was not value for money.
Her decision needs to be rechecked as it appears to be just another chance for National to gang up on Te Ao Maori.
Because the review she relied on appeared to say something completely different.
From Julia Gabel at the Herald:
An independent Government-commissioned review into a te reo Māori course that has just had its funding cut found the programme was in high demand, its providers were “exceptional” and engagement from participants was “outstanding”.”
Or how about Casey Costello?
Hot on news that she ignored official advice on the potential effects of cutting taxes on heated tobacco products and instead relied on “independent” advice that she is not releasing is news that Philip Morris’s device does not comply with recently introducted standards and cannot be sold. And she tried to get the introduction of the standards delayed by two years but Cabinet did not agree.
That $216 in tax cuts is not going to be available to Philip Morris any time soon. Maybe it should be used to help build the Dunedin Hospital.
But the news that usurps all others are two recent comments made by Christopher Luxon.
The background is that his Wellington apartment was purchased in 2020 for $795,000 and sold recently for $975,000. Under the Bright Line Test applicable at the time if he sold he would have to pay up to an estimated $70,000 in tax.
He paid no tax on his profit although to be fair any capital improvements would have affected the tax otherwise payable.
If he sold the property before 1 July 2024 then he would have had to pay tax. But because National changed the law and made the effect retrospective he does not have to.
Making the change retrospective I thought was bizarre. When Luxon bought the apartment he would have known the rules. This decision of itself saved him a whole lot of tax.
Given that background Luxon’s statement that he was wealthy and sorted is as tone deaf as when he said earlier that he took the accommodation allowance because he was entitled.
Perhaps the most jaw dropping comment he made yesterday was when he said “You just fake it until you make it. I have spent a whole career doing that“.
So during the course of one day Luxon asserted his privilege, suggested paying tax is for losers, asserted his wealth, he is better than the rest of us, and declared his lack of skills and abilities coupled with his uber confidence, hence why he has been faking it until he makes it.
He may be wealthy but I don’t think he is sorted. And flaunting his wealth at a time where thousands of public servants have lost their jobs and Health is lurching into an underfunded crisis is not something that will enamour him to the public at large.
Chris Luxon …paraphrased/updated : "Let them eat shit"
IMO, if there is to be a CGT, then it should apply to owner-occupied property as much as it should to rentals. For example, we built our house in 2014 for $636k. It is now valued in homes.co.nz at over 1.1 million. So, if I sold right now I would have made nearly 500k profit in 10 years. Why should that gain be tax free to me but not to a landlord who flicks off a rental?
The answer is that a CGT on property is in effect a tax on inflation more than anything else assuming that the property sale is followed by a property purchase of similar value. In that case, then there often hasn't actually been any meaningful profit made, especially given the churn of real estate and legal fees.
But in the case of the private house owner and the property investor there is no need to actually purchase another property. For example, I could decide to rent or move into a retirement home on the sale of my property. So, I don't see any fundamental difference between a private owner and a landlord in this respect.
If we are to have a CGT on property, then fine. But apply it equally against all forms of property, not just specific classes. And, there shouldn’t be a tax if the ‘profit’ is just a function of general property inflation more than anything else.
The reason why the CGT does not include the residential home, is because everyone needs a place to live – and to reduce equity in the home each time one moved house would restrict labour mobility.
35/36 nations that have a CGT but exclude the home get this.
Only the place without one, gets these sort of specious arguments.
The argument you use was created by DPF, so that those who own a home join landlords in opposing a CGT.
The idea that a person need not own a home, when working or in retirement, is a concept of a gentry, as landlord, class exploitation of the precariat.
The issue with excluding the family home, is that it encourages the buy-and-flip property speculators, who drive up property prices. They buy a 'family home', do it up (often minimally – a fresh paint job, and new bathroom fittings), and re-sell at a substantial profit within a couple of years. Then rinse and repeat.
I would have been happy with the family home being included in the 10-year-bright line test.
If you need to move cities for work, then you can rent until the 10 years is up (i.e. let your current home, and rent one in a different city).
The IRD does regard the practice of buy and flip as a taxable activity. And it has little impact on property values.
Why the support for inclusion of family homes?
Why go from the only nation without a CGT to the only one with the inclusion of the family home? It makes no sense.
I just explained why.
Evidence that buy and flip has little impact on property prices? It's certainly a driver of sales.
And the IRD may regard buy and flip as a taxable activity in theory, but in practice it's tax exempt (you have to deliberately admit to the IRD that your intention when you bought the property was to do it up and sell it — the numbers doing so would approach zero). 'Oh no. This was going to be our forever home, it's just that XYZ has happened, and we need to sell'
Further to SPC, if you now want to buy an equivalent property to live in, it will be at today's prices.
Exactly. And that is the point.
All that is happening when property prices increase is that the real value of money is dropping. If you have to pay the same money for an equivalent property then you really haven't made any money in real terms on the original sale.
Hence, if there is no real profit, why should there be any tax to be paid?
I'm starting to think Christopher Luxon is just a nice diversion for those with the agenda.
Yea, while Luxon is certainly tonedeaf , he seems to be having some distraction effect.
I had called him banal (vanilla could also describe) , but behind his (unintended?) clown act..there are the undoubted heavies, very intent on moving the rest of us towards quite a dark future.
Hes the front person for it, has scripted responses when caught off guard and a coalition agreement designed for 'not my problem, see other party'.
Ive little doubt its a strategy hardly any of those ministers had input to aside from bishop who ran the SM campaign and is oh so handy with the dark media arts.
They've all been well trained on the talking points to deflect, blame others etc and as the media asks nothing on we go.
Luxon seemed to be an anodyne placeholder. But, as I said before, National as a Party must be gritting their teeth at the monumental damage he is doing to their political brand. Breaking election promises is only the start of it. The comparison with Seymour's slickness and apparent effectiveness is dangerous for the Nats' vote.
And I bettcha the Nats will come out looking very egg-on-face-ish when their platforms of tax cuts, (with unstated user-pays-and-pays-again prices attached), “national roads of significant tolling’ and a failed lauraNorder toughie approach come to be evaluated at election time.
Discrediting a leader's personal life to discredit the whole party is silly and desperate.
Luxon is just the face of the party his supporters love and his opponents hate.
Luxon is a cross between his two dopelgangers Muldoon and Tod Muller .
Not like Muldoon who was pure hate and not like Muller who had a social concience.
Discrediting the messenger to discredit the message is as old as the hills.
Smear campaigning is a 365 days a year business + a very serious business it is.
Pitiful and childish but it work as the ignorant, fearful and prejudice always buy it.
Why appeal to intelligence fact and truth when lies and prejudice are more popular.