web analytics

Holes in the too-hard basket

Written By: - Date published: 9:15 pm, July 10th, 2011 - 6 comments
Categories: capital gains - Tags:

The Tax Working Group said in its report:

There is a major hole in the tax base for the taxation of capital, which is manifest, for example, in high investment and low taxable returns in the property market. (p. 21)

and:

New Zealand’s high personal and company tax rates are in marked contrast to the taxation of capital. Unlike most other countries, New Zealand does not generally tax capital gains on property, unless the property investment was undertaken with the intention of realising capital gain income. As a result, taxpayers have realised substantial capital gains on residential property investment in recent years without incurring tax liability. (p 25)

and:

People earning their income by salary and wage payments should be able to expect that they will be treated in a similar way to someone who earns the same level of income from property investment. This is not the case in New Zealand. (p 35)

and:

The most comprehensive option for base-broadening, with respect to the taxation of capital, is for New Zealand to introduce a comprehensive capital gains tax. (p 66)

but:

While the comprehensive nature of this option is seen as attractive and therefore its introduction is supported by some, most members of the TWG are concerned about the practical challenges and efficiency implications of introducing a CGT. These issues include the lock-in effects that can result from a realised CGT and the inherent complexity of a CGT. (p 67)

Oh dear. Majority decision. Too hard. If we are to believe the Herald’s political quiz, (10 out of 10 in 10 seconds), the Inland Revenue Department officials on the group were among those who think it is too hard.

Professor Craig Elliffe and Chye-ching Huang of Auckland University address this issue in a recent lecture to the Fabian Society in Auckland. They use the example of the introduction of a comprehensive tax in South Africa in 2001. Their papers can be found here. Surely if the South Africans can make it work, our officials can too.

6 comments on “Holes in the too-hard basket ”

  1. Colonial Viper 1

    Surely if the South Africans can make it work, our officials can too.

    Probably, if English and co. stopped cutting the most experienced and able heartwood out of our public sector that is.

  2. A fabulous column in the Sunday Star Times today on Capital Gains Tax too…

  3. Craig Glen Eden 3

    Im waiting for Key to flip flop as it now looks to all ( not just those pesky people at the standard) that National have no economic plan. The trouble for National now is, how can they flip flop without it looking like a belly flop.I think I know how it could be done just like closing the wage gap with Aussie, Nationals CGT “aspirational”.

  4. prism 4

    When we have the greatest use of computers and other tools that make accounting easier, we have these bunch of narrow-minded purists doing a groupthink on tax. It’s no wonder it is so hard to make positive changes in NZ – if there is a precedent of some smart aleck turning down something then it would be lacking proper respect for that person to go against that previous decision. That applies rightly for continuity in the law, but there is no reason we should get a flashmob running to the no corner on tax initiatives without looking at possibilities with their minds open.

    My latest musing is that we should introduce a 5 year term for new law or policies, monitor and discuss them after 3 years, adjust finer points to give them the fullest opportunity to work, and then at 5 years, give a thorough assessment. If they are showing poor returns on the stats, then we revert back to what we had, with adjustments of finer points to correct the egregious aspects for which they were originally abandoned. That could apply to tax also. There is nothing like trying something on the basis that it has value, and could be extremely useful and effective, with a get out of jail option if it isn’t.

  5. David 5

    What I think will happen Thurs. is that the same Crosby Textor arguments Abbott has been using against the carbon tax (a big tax on everything, the end of the Australian way of life) will be rolled out (with a little more finesse than last week) this week, (when they were, I think, basically muffed first up by John Key et al.

    They will have had a week to recalibrate them: but it will be this kind of all or nothing terrorising of the electorate, because no rational argument will do it.

  6. David 6

    From Antony Hubbard’s article in the SST on the cgt Sunday: http://www.stuff.co.nz/sunday-star-times/opinion/5261282/A-tax-for-people-in-glass-house

    What, then, is the moral of this story? There are many. Capital gains taxes are perfectly ordinary taxes used by most developed countries. They are not recipes for instant economic ruin – otherwise these wealthy countries would be poor. A capital gains tax does not mean everyday Kiwis would be crushed. Capital gains taxes should not lead to panic in an election year: there is nothing in them to panic about. In fact, the argument about capital gains taxes, once you get past the scary headlines, tends to be rather intricate. It requires some thought and knowledge.

    So will we have a rational debate about this?

    Don’t bet the house on it.

Recent Comments

Recent Posts

  • Tokelau Language Week reminds us to stay united and strong
    Staying strong in the face of challenges and being true to our heritage and languages are key to preserving our cultural identity and wellbeing, is the focus of the 2020 Tokelau Language Week. Minister for Pacific Peoples, Aupito William Sio, says this year’s theme, ‘Apoapo tau foe, i nā tāfea ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • NZ announces a third P-3 deployment in support of UN sanctions
    The Government has deployed a Royal New Zealand Air Force P-3K2 Orion (P-3) maritime patrol aircraft to support the implementation of United Nations Security Council (UNSC) resolutions imposing sanctions against North Korea, announced Minister of Foreign Affairs Winston Peters and Minister of Defence Ron Mark. “New Zealand has long supported ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Pacific trade and development agreement a reality
    Pacific regional trade and development agreement PACER Plus will enter into force in 60 days now that the required eight countries have ratified it. Trade and Export Growth Minister David Parker welcomed the announcement that the Cook Islands is the eighth nation to ratify this landmark agreement. “The agreement represents ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Securing a pipeline of teachers
    The Government is changing its approach to teacher recruitment as COVID-19 travel restrictions continue, by boosting a range of initiatives to get more Kiwis into teaching. “When we came into Government, we were faced with a teacher supply crisis,” Education Minister Chris Hipkins said. “Over the past three years, we ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Border exceptions for a small number of international students with visas
    The Government has established a new category that will allow 250 international PhD and postgraduate students to enter New Zealand and continue their studies, in the latest set of border exceptions. “The health, safety and wellbeing of people in New Zealand remains the Government’s top priority. Tight border restrictions remain ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • First COVID-19 vaccine purchase agreement signed
    The Government has signed an agreement to purchase 1.5 million COVID-19 vaccines – enough for 750,000 people – from Pfizer and BioNTech, subject to the vaccine successfully completing all clinical trials and passing regulatory approvals in New Zealand, say Research, Science and Innovation Minister Megan Woods and Health Minister Chris Hipkins. ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • International statement – End-to-end encryption and public safety
    We, the undersigned, support strong encryption, which plays a crucial role in protecting personal data, privacy, intellectual property, trade secrets and cyber security.  It also serves a vital purpose in repressive states to protect journalists, human rights defenders and other vulnerable people, as stated in the 2017 resolution of the ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ministry of Defence Biodefence Assessment released
    The Ministry of Defence has today released a Defence Assessment examining Defence’s role across the spectrum of biological hazards and threats facing New Zealand. Biodefence: Preparing for a New Era of Biological Hazards and Threats looks at how the NZDF supports other agencies’ biodefence activities, and considers the context of ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020
    New Approaches to Economic Challenges: Confronting Planetary Emergencies: OECD 9 October 2020 Hon David Parker’s response following Thomas Piketty and Esther Duflo. Good morning, good afternoon, and good evening, wherever in the world you might be. I first acknowledge the excellent thought provoking speeches of Thomas Piketty and Esther ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Kaipara Moana restoration takes next step
    A Memorandum of Understanding has been signed today at Waihāua Marae between the Crown, local iwi and councils to protect, restore and enhance the mauri of Kaipara Moana in Northland. Environment Minister David Parker signed the document on behalf of the Crown along with representatives from Ngā Maunga Whakahī, Ngāti ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • New Zealand and Uruguay unite on reducing livestock production emissions
    Agriculture Minister Damien O’Connor and Uruguayan Minister of Livestock, Agriculture and Fisheries Carlos María Uriarte have welcomed the launch of a three-year project that will underpin sustainable livestock production in Uruguay, Argentina, and Costa Rica.  The project called ‘Innovation for pasture management’ is led by Uruguay’s National Institute of Agricultural ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • 3100 jobs created through marae upgrades
    Hundreds of marae throughout the country will be upgraded through investments from the Provincial Growth Fund’s refocused post COVID-19 funding to create jobs and put money into the pockets of local tradespeople and businesses, Regional Economic Development Minister Shane Jones and Māori Development Minister Nanaia Mahuta have announced. “A total ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Health volunteers recognised in annual awards
    Health Minister Chris Hipkins has announced 9 teams and 14 individuals are the recipients of this year’s Minister of Health Volunteer Awards.  “The health volunteer awards celebrate and recognise the thousands of dedicated health sector volunteers who give many hours of their time to help other New Zealanders,” Mr Hipkins ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Community COVID-19 Fund supports Pacific recovery
    The Minister for Pacific Peoples, Aupito William Sio says a total of 264 groups and individuals have successfully applied for the Pacific Aotearoa Community COVID-19 Recovery Fund, that will support Pacific communities drive their own COVID-19 recovery strategies, initiatives, and actions. “I am keen to see this Fund support Pacific ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Community benefits from Māori apprenticeships
    Up to 50 Māori apprentices in Wellington will receive paid training to build houses for their local communities, thanks to a $2.75 million investment from the Māori Trades and Training Fund, announced Employment Minister Willie Jackson today. “This funding will enable Ngāti Toa Rangatira Incorporated to provide its Ngā Kaimahi ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Training fund supports Māori jobseekers
    Rapidly growing sectors will benefit from a $990,000 Māori Trades and Training Fund investment which will see Wellington jobseekers supported into work, announced Employment Minister Willie Jackson today. “This funding will enable Sapphire Consultants Ltd. to help up to 45 Māori jobseekers into paid training initiatives over two years through ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Ruakura Inland Port development vital infrastructure for Waikato
    The Government is investing $40 million to develop an inland port at Ruakura which will become a freight super-hub and a future business, research and residential development for the Waikato, Urban Development and Transport Minister Phil Twyford, and Māori Development Minister Nanaia Mahuta announced today. The funding has been has ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Appointments made to Defence Expert Review Group
    Defence Minister Ron Mark announced today the establishment of an Expert Review Group to review a number of aspects of the New Zealand Defence Force’s (NZDF) structure, information management and record-keeping processes.  The Expert Review Group’s work arises out of the first recommendation from the Report of the Government’s Inquiry ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • No active community cases of COVID-19
    There are no active community cases of COVID-19 remaining in the country after the last people from the recent outbreak have recovered from the virus, Health Minister Chris Hipkins said today. “This is a big milestone. New Zealanders have once again through their collective actions squashed the virus. The systems ...
    BeehiveBy beehive.govt.nz
    3 weeks ago