In defense of taxing the family home

Written By: - Date published: 7:53 pm, February 21st, 2019 - 129 comments
Categories: capital gains, tax - Tags: , , , , , ,

Everyone who’s talking politics right now is talking about what’s in the Tax Working Group’s recommendations, mostly the capital gains tax. Let’s talk about some things related to the recommendations, but not their proposal specifically, although it’s a decent start that I would wholeheartedly support, and we should be mopping the floor with National MPs who oppose it, especially by quoting their assets at them.

First though, let’s discuss a couple things in the proposal: Counting capital gains against the existing income tax brackets is inherently fair, make it progressive without giving you two sets of brackets to maintain, and treats capital income exactly the same as non-capital income. It earns a chef’s kiss.

Secondly, water taxes and other environmental taxes that we can then spend on repairing environmental damage or on conservation? Yes please, there’s nothing complicated to explain here, it is good, and necessary for us to continue as a tourist destination.

Back to the topic at hand, Bridges and his cronies are trying to paint a more comprehensive capital gains tax (remember, we already have multiple taxes on capital gains, including the Bright Line Test introduced by his own government) as an investment killer, which it is not. It is exactly the opposite: it is a speculation killer, and we should be asking real questions about the portfolio of anyone else spinning this line. Real investment does not involve buying something low and selling it for a higher price a few days later after it’s gained (back) value. Investment is usually about holding onto something because it’s useful or profitable to you just by owning it, like say, land. Taxing realized gain (that’s the more sensible of the two recommendations the Tax Working Group proposed, where we only tax the sale of capital goods) encourages people to hold onto shares, productive businesses, rental properties that are making money, and so on, so long as they can bear having their capital tied up in their investments.

It also evens up the ridiculous situation where someone working for a renovations company would have their customer paying GST to pay them, their boss paying company tax, and would pay income tax themselves on their salary, but could be renovating a home to sell for profit themselves on their own time and only pay GST on the goods and services they bought to do the job, effectively making a profit on their work tax-free.

But National is right about one thing. The exemptions proposed by the Tax Working Group leave ridiculous holes. We should close them. It’s wrong that a $5million dollar home, whether it belongs to an accountant, a union-busting director, a politician, or a business owner, somehow doesn’t get taxed because it’s a family home. Let’s tax it, and use that money to discount other taxes, or to nationalize the ambulance sector, or to partially fund NZ Super, or a million other things that will be worth the tradeoff.

They’re right that it’s ridiculous that selling an art collection would be free from a capital gains tax. Let’s tax it. Hell, let’s set a reasonable threshold, and tax the real realized gain on every asset over it.

Contra to the Labour Party’s silly tendency to issue bottom lines to placate centre-right “swing voters” who aren’t reassured by their bottom lines anyway, this should include the family home- what we should simply do is let you offset the value of any new home you buy if you would otherwise have not owned a home after the sale from the profit. (You’d probably want a cap, like say the 75th percentile in house price, or the average house price in Auckland, on how much you can offset, so that selling a mansion to buy a mansion would still see you paying tax) If you sell a $5million mansion and move into the suburbs, you should pay taxes on that. If you sell up in Auckland and move into the regions and make a few hundred thousand off it, you should pay taxes on that, too, even if you owned a modest home before. If you sell a modest family home and move into a more expensive one or one of the exact same price, you should pay no capital gains tax, as no actual gain was realized. If we need to offset any extra capital gained this way, that’s fine, we can cut other taxes or invest in other spending that’s good for everyone, particularly the least well off. (as closing the gap for them is also good for everyone, says basically every social scientist ever)

Also, contrary to the TWG, we should tax capital gain after inflation. It’s a bit ridiculous to say that something’s gained value because money has lost relative value. It makes the maths slightly harder, and means you need a higher tax rate to get the same revenue, but it’s simply a fairer system.

The point of changing the tax system should be to remove loopholes accountants can drive trucks through, and discourage speculation in exempt classes of investment. This means setting the rule in a way that’s as simple as possible- and including everything over a small price limit, say $5,000 or $10,000, is pretty simple, and would exclude most people’s private property.

National may think they’re onto a winner here in fighting a CGT, but I’m pretty certain they’ll have egg on their face if they want to argue against an income tax cut to try and defeat a capital gains tax that targets investment items for the already-wealthy. Those are terms even New Zealand First will be tempted by. The only things to argue about are the practicals, and those can easily be tighetened up in the case of exemptions. It might even cost us money net in its first year running due to having to value everything, but it should be worth it in the long-term.

129 comments on “In defense of taxing the family home”

  1. Andre 1

    Yep, 100% on everything you’ve said here, Matthew.

    Apply the capital gains tax to everything of tradeable value. Including the family home. In the late 90s I paid CGT on the small gain I realised on my home near Philadelphia, and it wasn’t onerous. If I’d bought another home within a reasonable time (forget what it was) I could have chosen to have rolled over my cost basis to the new home and deferred paying the CGT.

    Deal with not hassling ordinary people living ordinary lives having a few treasures of modest value by either having either a threshold sales price below which CGT doesn’t apply or exempting the first $XXXX of capital gains from tax.

    And FFS, yes, make some accommodation for inflation. Either explicitly in calculating the cost basis, or a reduced CGT rate (I favour the former, it’s fairer and not much more work). I suspect Cullen is trying to sneak in a hidden wealth tax, which in some ways is effectively what not accounting for inflation does. The bastard.

    • Andre 1.1

      To clarify, if Cullen’s trying to sneak in a hidden wealth tax, I think he’s a bastard for the sneaking and hidden bits. If he openly advocated an outright wealth tax, I’d probably applaud his courage while quibbling about the implementation details.

      • patricia bremner 1.1.1

        Andre there were other people… Cullen did not draft this alone, so why the bile?

        • Andre 1.1.1.1

          Because every year I have to deal with Cullen’s clusterfuck of a Foreign Investment Fund tax. Which feels like the unfairest worst-conceived spitefully malicious piece of tax legislation I have yet to deal with. And I’ve dealt with quite a few more tax jurisdictions than most people ever will.

    • KJT 1.2

      Taxes on other investments, over a long time span, like Kiwi saver, shares or super are not inflation adjusted.

      Don’t really see how capital gains is different from any other income.

      Also there is the issue with encouraging, productive, investment.

      • Andre 1.2.1

        Well, yes, there’s a good argument some other taxes should be levied on an after-inflation basis. Particularly fixed interest investments, where the interest is explicitly payment for use-of-money. But that’s a whole ‘nother can’o’worms than considering how to structure a proposed new tax.

        Note that a lot of Kiwisaver accounts are Portfolio Investment Entities, which have a lower tax rate than the taxpayer’s marginal tax rate, at least at the top end. IIRC, the top PIE tax rate is 28% for a taxpayer in the 33% bracket for ordinary income. So there’s a well established precedent here in NZ for different tax rates on different types of investments.

        • KJT 1.2.1.1

          If you exclude inflation most investments have buggerall return.

          Where is the tax going to come from.

          • Andre 1.2.1.1.1

            Couple of points:

            All the NZ and US properties I have (and had) an interest in have done way way better than inflation over any 5 year or longer period. Same for my non-property investments. Although in the US, you need to extend that time period to 10 years to account for Republican presidents goosing the stock market with tax cuts at the start of thier terms leading to economic problems later on.

            Taxing capital gains is primarily a matter of fairness much more than the actual revenue raised. So even if the revenue raised falls short of projection, the fact the it captures those very few who now make a good living thank you very much off of their untaxed capital gains would still make it worthwhile.

            • Kay 1.2.1.1.1.1

              “Taxing capital gains is primarily a matter of fairness much more than the actual revenue raised. So even if the revenue raised falls short of projection, the fact the it captures those very few who now make a good living thank you very much off of their untaxed capital gains would still make it worthwhile.”

              Thank you, Andre. Really, that’s what it should boil down to. FAIRNESS. The amount of hostility/defensiveness/lies being spewed from the usual suspects just confirms what the rest of us have known about them for years.

      • Bewildered 1.2.2

        The difference between capital gain and income is risk, the capital gain is simply the risk return, change that dynamic you change behaviours they could impact the productive sector and a negative to all, higher rents , less business etc Before you go off people still pay tax on the capital income, rent, dividends, interest etc

        • Matthew Whitehead 1.2.2.1

          Absolute rubbish. There is no long-term risk of prices going down in property in New Zealand right now.

          To offset risk, you get rent, ie. actual rent from tenants for property, whether a house, shop, office block, etc…, or dividends from stocks, interest from savings, etc… Classes of capital that don’t return rent also tend to have an inherent use, just one that’s less monetizable, like art, or a car, and you buy them for that use, not to on-sell for capital gain. (which is why most art or cars depreciate in value)

          Capital gains being tax-free is absolutely perverse and is not a fair exchange for risk. Hell, rent is arguably pretty unfair for a society that claims to believe in egalitarianism.

      • Bewildered 1.2.3

        The difference between capital gain and income is risk, the capital gain is simply the risk return, change that dynamic you change behaviours they could impact the productive sector and a negative to all, higher rents , less business etc Before you go off people still pay tax on the capital income, rent, dividends, interest etc

      • Matthew Whitehead 1.2.4

        Because the nature of a capital gains tax is that it apply to the sale price less the purchase price after a long time. If people are flipping things over say, a two year period, I could agree to them paying on the pre-inflation gain rather than the post-inflation gain. But if you hold a house for ten years, whether you put in your own labour or not, it’s worth adjusting for whether your house has gained value or money has simply lost it.

        If you want to be encouraging productive investment in terms of actually checking if investment is making a profit using your taxation, that’s a CGT on unrealized gains, which is terribly complicated, and basically the opposite of our current tax ethos.

        If you’re looking for a punitive wealth tax, I absolutely agree we should have one, but that’s a different debate and one we’re IMO less prepared for.

        • KJT 1.2.4.1

          That was Bill Gates rationale behind a CGT.

          He reckons it is the least avoidable way of taxing excessive wealth.

          • patricia bremner 1.2.4.1.1

            That explains the wrath. Bill Gates understood that a tax on the realised value would be extremely difficult to fudge.

            I think it is a mistake to exclude things. A base line established would be better. The cost of an average home for the area could be the cut off CGT applied on any excess.

            If you insure something at a value that should be the deemed value for cars paintings and jewelry, with a proviso it will have a book value if uninsured, again an excess of $50 000 could operate.

            This would allow families and small businesses to have a vehicle or two, etc.Tax on any amount realised above the $50 000.

            We need to realise that those for whom inflated values and skewed markets have made their assets valuable on paper will have the money to run attack advertisements against CGT. That small investment could save them substantial amounts of CGT if they win the case!!

            Most New Zealanders own one property with a mortgage on it, or rent and have Kiwisaver thanks to Michael Cullen. If we totted up our other wealth, we might have, a car furniture some tools and maybe a trailer and a tinnie, and a small rainy day account along with insurances. Jewelry is simple and does not have huge value as a rule.

            We may have a student loan we are repaying a credit card and store debt as well as the possible mortgage.

            Under the Tax Working Group that household would pay no Capital gains Tax, and could receive tax back as part of the rebalancing and fairness. However if there is no tax on the home there is a natural inclination to put nest egg money into that, to increase the homes value, rather than into more risky value added things like businesses or start-ups. That is why I think an excess should apply.

            I read somewhere 10% of Nzers own 60% of the wealth, with 20% owning only 4%. So 90% of people are as I described above, or very insecure indeed.
            They should be supporting a tax which makes the 10% pay tax on their accumulated wealth. Anyone who is against this tax has a vested interest in all probability. They have huge self interest. Remember that when you see their speils published by their friends in the press. They are happy to take that untaxed money when they sell.

            • KJT 1.2.4.1.1.1

              In fact we already have CGT.

              People are supposed to have paid it on houses bought as an ‘investment’.

              The reaction to actually enforcing it, shows how many have been, illegally, evading capital gains taxes.

    • AB 1.3

      Capital gain IS inflation. (Ignoring improvements)
      So offsetting for inflation is likely to see pressure to calculate the CPI in ways strongly weighted towards house price inflation.
      However I do think that saved income from labour, such as KiwiSaver contributions, should be inflation protected.

      • Andre 1.3.1

        No, capital gain is not inflation. Capital gain is influenced by inflation, and a whole bunch of other factors.

        Consider: In 2000 I sold a property I had a part-interest in for $270k in order to get a part-payment on another property for $415k, Neither the old property nor the new one has had significant renovations or other capital improvements, yet the old property now has a market estimate of $1.4M, ie it’s now worth 5.2 times what it was 19 years ago, while my new property now has a market estimate of $1.2M, ie it’s now worth 2.89 times what it was. That difference is purely a reflection of the relative market desireability changes between the two suburbs over those 19 years.

        Similarly for capital gains in company shares, some companies do well and have good price growth above general inflation and pay good dividends along the way, others not so much and may even go belly-up trashing the entire original investment.

        • AB 1.3.1.1

          No. If the desirability of the property has increased for reasons other than an increase in its “use value” (i.e improvements) then it IS inflation.
          It’s inflation of its exchange value through factors extrinsic to the house.

          On a business, I concede you are correct. The goodwill value when you sell a business is intrinsic to the business (essentially its reputation and how well it might do in future). The goodwill value might also be an indirect reflection of how hard you as the business owner (but in reality lots of other non-owners too) has worked.

          • Matthew Whitehead 1.3.1.1.1

            Inflation doesn’t measure economy-wide increases in value, AB. It measures the decrease in the value of money.

        • Pat 1.3.1.2

          capital gain is indeed inflation (less improvements)…the problem is that inflation is not uniform across all areas and we measure a weighted basket of items to establish an ‘official’ working rate….the outcome is determined by the factors, and the factors are open to variation.

          It is the discrepancies between inflation rates that investors seek….and that is profit

          • Andre 1.3.1.2.1

            Matthew says it best just above: inflation “measures the decrease in the value of money.” That is, inflation in the sense of the ‘official’ rate of inflation across the entire economy that will be used for inflation indexing, if it ever gets implemented.

            Capital gain can occur for a variety of reasons beyond a general rise in prices, even if “general” means something as specific as price rises in houses on a specific street. For instance, a zoning change that reduces minimum section sizes to 400 m^2 from a previous 600 m^2 will cause an 820 m^2 property to suddenly rise in price compared to its 780 m^2 neighbours. That’s capital gain, not inflation.

            • Pat 1.3.1.2.1.1

              you miss the point…there is no uniform inflation rate, CPI is a construct for political purposes.

              The critical real world factor is the relationship between inflations.

              Consider the following..

              In 1980 NZ the minimum wage was $2.03 and the median house price was $28,000…that meant (interest aside) approximately 14,000 labour was needed to pay for that item

              In 2015 the minimum wage was $14.75 and the median house price was $457,000 ….and around 31,000 hours labour were now needed.

              Both factors were subject to inflation but it was the variation in inflation rates that created the gain.

  2. R.P Mcmurphy 2

    100% with you on all that. however for us dunderheads a nice list of nationals mp’s and their real estate holdings would do for starters.

  3. Incognito 3

    Einstein said “everything should be made as simple as possible, but not simpler” and I’m convinced he was referring to taxes and tax reforms 😉

    I think there will always be exemptions for a genuine good reason but when something is emotionally charged and/or politically too hard it shouldn’t become a loophole that turns into a gaping festering wound for (NZ) society.

  4. KJT 4

    I think if CGT is introduced, after a relatively short time, the public will demand that million dollar, ‘family homes’ are included. After they see millionaires driving a bus through the tax system, with a million dollar ‘family home’ for each 5 year old.

    Eventually we will all see through the sob stories about “Bach owners’ and poor farmers, and note CGT impacts on million dollar beach mansions, Aucklanders selling up after making 300k in three years, and Queen Street farmers, farming capital gains. Not your Southland corrugated iron, crib. Or your modest three bedroom in Otara.

    • ianmac 4.1

      Agreed “After they see millionaires driving a bus through the tax system, with a million dollar ‘family home’ for each 5 year old.”

      Except we would never know. How much tax does Key pay? We would never know enough to be angry about it. Rich folk are very good at keeping away from daylight.

      • Ed1 4.1.1

        Only allow one “Family Home” for each taxpayer – the place in which you spend most of your time. If a child does not live in a property that they own, then it is not a family home. I think Australia have dealt with this problem for years in relation to estate taxes – it produced some of the very expensive homes in Sydney.

      • KJT 4.1.2

        Good argument for an open tax system, like Norway.

    • Matthew Whitehead 4.2

      That’s possible. It’s also possible that like the move to MMP killing off the desire for further electoral reform, we’ll be stuck with a half-measure.

      • KJT 4.2.1

        That is a concern. Like the half pie removal of the 90 day bill and so many other half hearted attempts at ameliorating Neo – Liberalism, by Labour.

        Listening to people who will never vote for them, anyway.

        • Wayne 4.2.1.1

          KJT,

          You are ignoring a fundamental aspect about voter behaviour. Obviously the major parties don’t really listen to the welded on voters from the other side. But they are very sensitive to the floating middle, which is up to 20% of the electorate.

          The latest polls show that. For most of last year National was around 5% ahead of Labour, now it is 5% behind. So at least 5% of voters have changed their minds, just on a straight two party swing. But votes also shift around between the smaller parties and the bigger parties.

          Oppositions often highlight the concerns of these swinging voters, after all they want them to switch.

          So if middle votes are luke warm about CGT or in fact are actually opposed that will have a huge effect on whether the policy is promoted, or not, and to what extent.

          I think Liam Dann got it right. He said Sir Michael Cullen put up a maximalist CGT, so that Labour could then prune it back. All indications are that Labour will do just that. Right at the moment no-one knows just how much pruning will be done.

          But I suspect that inflation will be able to be discounted, and that the rate will be more like 15%. In fact pretty much like the Australian CGT. I also expect there will be some sort of threshold. So capital gains below a certain amount won’t be caught. Maybe $200,000, or even $500,000 provided the asset has been held long enough. That way many small business won’t be affected, neither will be Kiwisaver. The exemption may require some form of formula, but it will need to be easily understood so it can be politically sold.

          CGT has to be part of a parties manifesto, there is no way it could be introduced if it has been ruled out during the campaign. And during the 2020 campaign, parties will not be able to fudge it.

          So I reckon Labour will go for a soft CGT, on the basis the middle voters can live with it. John Key showed in 2011 that you can campaign on an unpopular policy (partial privatisation of the electricity companies) provided voters think your government has been generally competent and effective. That is how John Key spent his political capital.

          All of this does not factor what NZF will do. Their support is basically opposed to CGT, at least as it affects middle New Zealand, as opposed to the seriously wealthy. If Winston thinks opposing CGT is his key to political survival that is what he will do.

          Labour would then have to campaign on CGT on the basis of governing with the Greens. A bit risky.

          Winston would say to the middle voters that they have to vote for him to stop Labour and the Greens implementing CGT. Essentially having the same role as he has now. The ability to stop anything that Labour and the Greens jointly support, but which he does not.

          • KJT 4.2.1.1.1

            The real strange part of this, is that we already have a CGT on second houses.

            People have been avoiding it, because of the loophole of” intention’.

            Labour should be stating the fact that National effectively bought in a CGT, on those who have been avoiding it before, the bright line test.

            Amazing how many people are now prepared to go public, and admit they have been evading tax all along.

            They have just admitted they were not running a rental, farm or other business, for a taxable income. They are speculating, for untaxed capital gains.

            The IRD should be taking names.

            Also. It is a fault in our, rotating dictatorship, laughing called democracy, that policies pursued are decided by a few “swinging” voters, and how much principle either party is prepared to abandon, not a majority.

            Even National saw the need to reduce the distortion from too many evading CGT, with the bright line test. If National MP’s were honest, instead of looking after their own interests, they would be advocating making the tax system fairer and more broad based, also.
            It is a dysfunctional feature in an economy, when speculation gives better returns than production.

  5. Ad 5

    Maybe in a few terms.

    Let’s see the whole Carbon Tax + CGT projected cumulative impact.

    This version has a light chance of being embedded enough for National to not reverse it.

    Anything stronger won’t.

  6. Formerly Ross 6

    It’s very hard to tax the family home, or introduce a comprehensive CGT, when you’re in Opposition. 🙂

  7. Adrian Thornton 7

    Good piece Matthew, thanks.
    I am not interested enough to follow all this tax news in serious detail, however I am interested in stable functioning communities within the country where I live.
    Trading domestic housing like second hand cars has absolutely undermined the cohesion of all our communities (anyone 50yo or older can probably attest to that) in so many ways and on so many levels it would be hard to know where to start to unpack the damage caused by this sick fetish.

    Lately I have watched a little local community were some fiends live on the coast
    (Haumoana) turn from a free and easy laid back and pretty tight beach community transform to a rich half gated, tight arsed feeling beach area with in five/seven years all because of house prices..it was sad and depressing to watch,

    If anyone is really serious about building safe, stable and coherent communities then they have to be serious about reversing the commodification of domestic housing, you can’t have one without the other it is as simple as that, no matter what sort of fluffy spin you try to put on it.

    • Matthew Whitehead 7.1

      To be fair, even my proposal of taxing net gain on your final housing sale after re-gaining a property doesn’t end the commodification of housing. The best way to do that would be to fine people for leaving houses empty. >:)

  8. BobandTurtle 8

    So I wonder how many of the multiple home owning Labour MPs are in favour of this proposal? I mean really in favour, not just because leadership instruct them to ‘support it’ – there are a number of champagne socialists who will be impacted if this ever comes into effect. The coalition are going to lose a lot of real support when the rubber hits the road and the Bernie Sanders of this world cannot afford to keep all of their 3 houses! Pa-lease, bleat or you want, your ideology and reality are two different things!

    • KJT 8.1

      I expect Labour, instead of defending the no brainer that is a CGT, will give in to the right wing chorus, as usual, and water it down to an extension of the “bright line test.

      • Matthew Whitehead 8.1.1

        if they extend the brightline to 100 years you basically have the minority report of the TWG <..>

        • KJT 8.1.1.1

          Yes.

          Funny that so called business people, dislike a tax on business, that favours those who run their business as a profitable going concern, over those who want to speculate on how much they can get on a sale.

          Does that mean to many New Zealand businesses are run as a “tax free capital gains farm, not as a long term concern.

  9. veutoviper 9

    Property owned by current MPs

    Last night I was having a look at the latest 2018 Parliamentary Register of Pecuniary Interests for all MPs in relation to another matter, and thought that I would post it here as, among other things (like overseas travel, gifts, donations etc) it shows by each MP the properties they each own. Useful information to get an idea where they may be coming from in respect of their views on CGT on property.

    So here is the 2018 Register to 31 January 2018 (plus a second document with amendments made after that Register was closed) where you can check what property each MP has declared.

    https://www.parliament.nz/media/4798/summary-report-2018-final.pdf

    https://www.parliament.nz/media/5354/summary-of-amendments-to-annual-returns-and-initial-returns-from-newly-elected-members-2018.pdf

    If you heard Guyon Espiner interview Amy Adams on Morning Report this morning, this is where he got the information about her eight (now six) properties which she became very defensive about.

    https://www.radionz.co.nz/national/programmes/morningreport/audio/2018683615/tax-proposals-an-attack-on-the-kiwi-way-of-life-national

    MPs have been required to declare the information in the Register since 2006 and this page provides links to the previous Registers.

    https://www.parliament.nz/en/mps-and-electorates/mps-financial-interests/mps-financial-interests/

    Information for the next 2019 Register is presumably now underway but this will not be completed and released for some months – eg about May.

    Although this article is two years old, it gives a quick idea of the property owned by National MPs as at that time.

    https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11853682

  10. Herodotus 10

    Also, contrary to the TWG, we should tax capital gain after inflation. It’s a bit ridiculous to say that something’s gained value because money has lost relative value. It makes the maths slightly harder, and means you need a higher tax rate to get the same revenue, but it’s simply a fairer system.

    Using this logic the same should apply to bank deposits ??
    I deposit some $ as I save up for a Kiwibuild, all the interest earned is taxed, yet the capital has decreased in real terms by the rate of inflation, and it has become more difficult to buy my first home.
    Using this argument should not bank deposits have the only the interest after deducting inflation as that value which is taxed ??

    • KJT 10.1

      The average long term rate of return, on most investment, is the same as the inflation rate.

      Which is why investors try and “beat the market”.

      If you exempt the housing ‘inflation rate’ there won’t be a CGT. Curbing the excessive housing inflation rate is one of the aims of a CGT. Is it not?

      If you only tax over the average weighted inflation rate, many ‘investments will not be taxed.

      If, as I think most want, the aim of a CGT is also a fair and balanced tax system, then it should be treated the same as tax on wages.

      • Herodotus 10.1.1

        Curbing the excessive housing inflation rate is one of the aims of a CGT. Is it not?
        Not from my reading CGT , CGT is to “rebalance” how tax is applied.
        “If you only tax over the average weighted inflation rate, many ‘investments will not be taxed.” so you are saying that many investment only “hold” their historic buying value. So we are taxing for a diminishing (in real terms) value of an asset. Yet there is pressure for tax rates to increase by cpi/inflation so as in real terms taxing income is maintained.
        To Craig below – “GST isn’t calculated net of inflation,” it is indirectly – prices increase in line with inflation (That is what inflation is) so as there are price increase by default GST is keeping up with inflation. e.g am item sells for $100 excl GST is $15.00 Inflation is 10% (Easy to calculate) new selling price $110.00 GST is $16.50 an increase of 10% so govt collects in real terms the same amount.

      • Wayne 10.1.2

        Long run returns typically exceed inflation. They are more likely to reflect the overall growth of GDP. The NZ economy over the long run grows at 1 to 2% per year.
        It is why most people are better off than their parents and grand parents, at least by the time they hit their 40’s.
        Look around most communities. Most people have way more “stuff” than 50 years ago. Travel and lifestyle choices are all much greater. Our civic amenities are much greater. That is all the result of economic growth.
        And all that is reflected in return on assst values.

        • KJT 10.1.2.1

          That is somewhat arguable.

          How much is ‘economic growth’ and how much is, simply, inflation.

          Most people I know, including tradesmen and small business owners, are demonstrably worse off, than we were before the 1980’s.

          You cannot get a business loan at reasonable rates because banks only want to lend on housing.

          “Family farmers” are so mired in debt, due to high land prices, they are committing suicide.

          The poorest are much worse off.

          As for civic amenities. Most were built before the Neo-liberal vandalism. And have been slowly run down since. As the people who bought them, in the great fire sale, have re-invested as little as they can. Moody hospitals anyone.

          If we have had all this increase in wealth, where has it gone?

          The fact that banking now makes more profit than farming, is a clue.

          A CGT appears to be a required part in making sure wealth is accrued to it’s rightful owners. The real hard working Kiwi’s who have contributed productive work. Not buyers and sellers of existing assets.

          The richest New Zealanders after the 90’s, were not entrepreneurs, workers and builders of businesses. They were asset strippers, speculators and thieves.
          They should pay tax. Some should be in jail.

          The right wing, trying to convince voters to remove taxes on speculative wealth accumulation, such as a CGT are. simply greedy trying to keep their unearned gravy train, going.

          • Wayne 10.1.2.1.1

            Just to take the public infrastructure built over the last 30 years.

            All the new hospitals are way better than what they used to be. And there are new hospitals in Auckland, North Shore, Wellington, Christchurch and now Dunedin. Waikato and Tauranga have just about been completely rebuilt.

            All the new university buildings are vastly better and flasher than those built previously. New school buildings are quite amazing.

            Te Papa, the Auckland Art Gallery, Aotea centre, Christchurch, Hamilton and Dunedin Arts Centres. Time for Tauranga to get a museum!

            Parliament rebuilt and expanded to a much higher quality than before. Many new court buildings.

            A huge expansion of motorways in the last 30 years. Also the CRL and complete rebuild of urban rail in both Auckland and Wellington.

            I reckon the total amount of new public infrastructure built in the last 30 years would probably be as large as what was built in the previous 100.

            In terms of private commercial development. In Auckland, wellington, Christchurch (earthquake in part) virtually all large buildings are less than 30 years old.

            In peoples lives. All the houses built in the last 30 years (probably 600,000, which is about a third of the total housing stock) are bigger than those built before. Most of the leaky buildings have been repaired to a higher standard.

            Every family (even low income homes) seems now to have two cars. It seems every street in Aukland, no matter the suburb, is chocked by the number of cars parked ion the street. And their houses have way more stuff in them.

            Yes, maybe 20% of the population have not seen the same effect of the increase in GDP in their personal lives. Those on low incomes and those on benefits (but not those on Super who have done OK).

            Overall the growth in GDP of the last 30 years (basically a doubling in real terms) is pretty apparent.

            • KJT 10.1.2.1.1.1

              You need to get out of your North Shore bubble, and have a look at Moerewa or Otangarei.

              It may have escaped your notice, but the population has doubled over the same time span.

              • Wayne

                Yes, Moerewa is bad in poverty terms. And I do go there from time to time for family events. But it is not representative of the the nation.

                The population has not doubled in the last 30 years. In fact it has grown about 50%.

                • Incognito

                  Yes, Moerewa is bad in poverty terms. […] But it is not representative of the the nation. [sic]

                  How can you see but be blind at the same time?

                  Moerewa doesn’t have to be “representative” because it is as much part of the nation as your neck of the woods, Wayne.

                  Despite all the indisputable economic growth and progress there are people and whole communities (if not classes) who find it harder and harder to live a decent dignified life. They struggle to keep their heads above water, financially, and they’re not getting ahead. In fact, they’re falling behind.

                  To say that they are “not representative” is an extremely weak, lazy, disingenuous and pathetic thing to say IMHO. Equally, it’s pathetic to bring up Sir John Key or Mike Hosking and their enormous untaxed windfalls from property sales as representative of a problem that we need to address.

                  The report of the TWG is about outcomes and impact for all of society, not just the ‘representative’ part(s)! I thought all MPs swear an oath saying as much!?

                  • Wayne

                    KJT’s point was that New Zealand had not had any material improvements in the last 30 years for the bulk of the people of New Zealand. He then proceeded to use Moerewa as proof. I suggested that Moerewa is the exception, not the norm.

                    But I also think that much needs to be done for the people of Moerewa, and in fact Shane Jones is trying to do just that.

                    None of which has much to do with capital gains. CGT is not the answer for the people of Moerewa.

                    • KJT

                      CGT, may give us some more cash to help Moerewa.
                      The cognitive disconnect is a bit scary, from a member of the Government directly responsible for the poverty in Moerewa, and elsewhere. That the “average” standard of living has gone up is not in dispute. However it has gone up in Australia, and Northern European countries much more, than New Zealand. And it has been unevenly spread. Working people can buy more flat screen TV’s. But they will never own a house. A few have done very well, but the majority are worse off, however Wayne wants to spin it.

                    • Incognito

                      🙂

    • Craig H 10.2

      GST isn’t calculated net of inflation, and we don’t adjust income tax rates or brackets for inflation, so inflation is effectively taxed in all other parts of the system.

  11. tsmithfield 11

    I agree with your article. I don’t have a problem in principle with some form of CGT, though I don’t think the current proposal will ever see the light of day.

    But in terms of fairness and simplicity, gains on all assets should be taxed.

    If the family home is exempt it just motivates the owners to put their money into making improvements to their family home and making tax-free capital gain on the improvements rather than investing elsewhere and being taxed. Thus, the tax could have the effect of increasing rather than decreasing house prices.

    A CGT is not without its risks btw. For instance, if one was introduced just prior to another GFC, then asset values would plummet rather than increase. That would leave the government a liability with respect to tax credits on capital losses. While these losses could only be applied against future capital profits, it might take years for the credits to be exhausted and for the government to start making money on the CGT.

    • Herodotus 11.1

      “While these losses could only be applied against future capital profits”
      How is that fair as any capital gains are taxed at your current level of income for that tax year. Yet losses are carried forward.If I earn $80k and make a CG of $80k tax paid on CG is $24k. If I loss $80k my net income for the year is Nil so there should be no tax paid. If there is a loss of $100k should not like a business the additional $20k loss is carried over to the following year. Unless this is the case then what has been proposed is NOT fair and here I thought that this document was to make the tax system Fair ???

  12. Craig H 12

    Whether to include the family home depends on whether CGT is aimed at increases in asset prices for everyone, or currently untaxed business income from the gain in value at the time of sale.

    If the former, then the family home should be included. If the latter, it should not be included unless it can be shown by behaviour that buying and selling the family home is actually being done as a business.

  13. Alan 13

    go on labour, do it, dare you…..love and kisses etc., the right wing

    • Observer Tokoroa 13.1

      Hello Mrs Alan

      please take care..

    • Matthew Whitehead 13.2

      I dare them to run against cutting taxes on working kiwis in exchange for taxing capital gain. It’d be absolutely hilarious, and it’s already exploding on them for even trying.

  14. Observer Tokoroa 14

    So – “Cullen is a Bastard” Quote -unQuote

    Clearly, the wealthy rats of National are the scum of New Zealand.

    Cullen, in fact has put Millions of Dollars into the Pockets of New Zealanders, while scum Like John Key and Bill English and the Wealthy at larg, have sucked it out of Ordinary low wage Kiwis.

    National and its wealthy adherents is the slime of Aotearoa. The Theiving Greedy Filth never built anything for anyone. not even a shed. Certainly Not even the Great Kiwi Saver.

    Cullen Did. He will go down as the Greatest Saver for New Zealanders. Kiwis will Rout any Filth attempted by Bridges and his Herald crooks.

  15. Observer Tokoroa 15

    Tax should be Simple

    I agree with Mathew Whitehead, that if you sell something that you own, A Tax should be paid.

    The Public is used to this. Everytime the family or single person goes shopping for food he dutifully pays GST. Upto 15% in Fact. A hefty amount. Particularly on low wage earners. John Key and Bill English loved that hike.

    Food, in the scheme of things is more immediately important than a Home. Pensioners who earn nothing, pay Tax fortnightly by Decree and Legislation of the Government.

    On this basis, Selling a Home that a person owns, should expect to Pay a Tax. Just as a person who buys a Banana – or a Hair blower in a Super Market.

    Whether the Tax demanded is !5% or 30% is to be yet to be discussed. But food is very expensive in New Zealand. Except of course for the Wealthy.

  16. Observer Tokoroa 16

    Yes Craig. It could be Stamp Duty. Or Fairness Tax.

    Whatever Craig, it would not be advisable to purchase anything from a National Sales Person. A Leaky home – for instance … An old Filthy Rental from Mrs Bennett.

    Even a Killer Beach

  17. Observer Tokoroa 17

    Herodotus

    When National came into Power nine years ago, Bill English thanked Labour for having excellent fiscal Management.

    So friend – take your Wiki whatisname to the Toilet. You have been misled badly.

  18. greywarshark 18

    Lay off the family home your mechanical purists. So some will play the system. Welcome to human life.

    • Matthew Whitehead 18.1

      Genuine question: why should making money off selling up a house you lived in be tax-free, though?

      We’re not taxing you for getting into a home. Hell, I even propose only taxing people for NET profit off moving homes if they only have one left. There’s nothing about this that makes it harder to get a family home.

      • greywarshark 18.1.1

        The problem is it’s unearned income by the state. You are the one who bought the house, looked after it, made it into a place that the country likes to show off as an example of the high standard of living it has reached, and then they tax you for this?

        And often you have to pay what you received to get another house because the inflation that brought your house value up applies across the board.

        And I don’t agree with the rites of The Economic Church of Holy-Moly Golden Calf Worship. Just because you can give me an economic argument for taxing the family home, doesn’t mean that your line trumps anything that I might think.

        • Andre 18.1.1.1

          It’s absolutely not unearned income by the state.

          The state provides almost all the background systems that make the capital gain possible. Rule of law, property rights, infrastructure services, stable government, healthy educated workforce…. Lose those things, and pretty quick it ain’t capital gain anymore, it’s capital loss.

          So it’s absolutely fair and reasonable that the government takes a cut of capital gains to put towards maintaining and improving the systems that make capital gains possible.

          • mikesh 18.1.1.1.1

            The government obtains its share through the income tax that we pay. Why should they consider it right and proper that they take a cut from our capital gains as well.

            • Andre 18.1.1.1.1.1

              The idea is to balance where the government gets its take from. So that it takes less from the ordinary income earned by people selling their time and labour, and makes up that reduction in take by starting to take a bit from the income generated by simply being able to hold a large capital asset for a length of time. This is income which is largely only enjoyed by the wealthiest among us and is currently tax-free.

            • KJT 18.1.1.1.1.2

              Because capital gains are income.

      • Formerly Ross 18.1.2

        why should making money off selling up a house you lived in be tax-free, though?

        I would’ve thought the answer was pretty simple. You sell a house and want to buy a similar house. Sold house sells for $500,000 less CGT of, say, $40k. So now you’re left with $460,000 and you’re wanting to buy a similar house for $500,000. You’re not buying a “better” house (however that’s defined), yet you need a another $40k. Unfair is the word that springs to mind.

        One more point, you mightn’t be making any money on the sale – you might have spent a considerable sum on improving the house, and the higher sale price reflects improvements – inflation not so much. Once again, taxing the seller may make the seller worse off when they come to buy again.

        • Andre 18.1.2.1

          Capital gains tax codes often include some kind of rollover provision, such as

          Small business rollover. The net capital gain resulting from the sale of an active asset can be reduced by the amount spent on a nominated replacement asset. This is only a deferral of the gain, it is crystallised if the replacement is sold or its use changes (but a new further rollover can then be made if desired).

          https://en.wikipedia.org/wiki/Capital_gains_tax_in_Australia

          A rental property would presumably be considered a small business and family homes in Australia are exempt from CGT.

          IIRC when I paid CGT on the sale of my home in the US, I would have had the option of rolling over the cost basis into a new home within a certain period of time, which defers the CGT. Since then the US has apparently moved to exempt CGT on the sale of family homes held longer than 2 years.

          Where CGT applies to homes, capital improvements are usually added to the cost basis. IIRC, in the US this included chattels such as carpets, curtains, appliances, even painting. Selling costs are also deducted from the taxed gain, and many items of routine maintenance were considered selling costs if done within a short time before putting a house on the market.

        • Incognito 18.1.2.2

          You buy a house for $367,000 and 5 years later you sell it for $500,000 less CGT of, say, $40k. So now you’re left with $460,000 and you’re wanting to buy a similar house for $500,000. You’re not buying a “better” house (however that’s defined), yet you need a another $40k. But you have increased your net asset value (wealth) by $93,000. Unfair is the word that springs to mind.

          • KJT 18.1.2.2.1

            Hence the suggested, “roll over” provision.
            However tax already applies if I invest in savings, instead of a house, then go to buy a house. Why should “investing” in a house be treated differently?

            • Incognito 18.1.2.2.1.1

              Just to be clear, the unfairness is in the fact that a homeowner can make a substantial profit (or a loss) while a tenant, for example, cannot. Because no owner wants to see their assets lose value or see (unrealised) profits shrink this puts upwards pressure on prices in an unregulated market (more lie a Ponzi scheme IMO). This is further helped by the FIRE industries. So, the upshot of all this is that rents rise and houses get further of reach of people that cannot easily afford them, incl. first-time buyers who are often young(er). I’d call that unfair, maybe not in intention, but certainly in outcome. Anything to redress this unfairness gets my attention and initial approval in principle although the devil is in the detail, as always.

              • KJT

                I see.

                As more of the middle class, like me, face having to get their kids into houses, farms or businesses, the more support their will be for a land price correction.

                The return to homes as a utility, not an investment, is going to require a multipronged approach.

                CGT is just a part.

                Building State rentals is another. Even Kiwi build may help.

                At some stage a great many people are going to lose out, when house prices drop.
                No Government wants to bite that bullet. Though they all know it has to happen, either deliberately, or when the economy falls over, after all the money is tied up in paying back loans for land.
                But unless we remove capitalism, unlikely at least short term, we cannot continue with an economy where we pay banks a fortune, just so we can buy land from each other.

                The storm of protest over what is a relatively minor addition to current tax law, shows how much of a battle it will be.

                • Incognito

                  Agreed.

                  shows how much of a battle it will be.

                  Unlike ordinary political battles this one won’t be fought on the usual battlefield (Parliament). Instead, it will largely take place in MSM and social media, which is where most political battles are fought nowadays partly because of the lazy incompetent Opposition but mainly because it’s where National and its propaganda machine have the advantage. Expect more dirty guerrilla warfare to protect at all cost the vested interests of the few. The self-induced hysteria, the frenzied frothing at the mouth is just the National Berserkers getting ready for battle.

  19. Observer Tokoroa 19

    Herodotus

    I suggest you look at New Zealand Government Expenditure and Income.

    Then you can entrap your hated Dr Cullen. But majority of Kiwis will laugh at you Young man.

    You need to protect your Ability. Okay

  20. Chris T 20

    Think it is fairly obvious Labour went for the most shocking worst case scenario to soften people up, for when they will tone it down to the max.

    Labour and the Greens will proudly say they have their weak CGT – pointless

    Winston will say he put his foot down and he is a hero for stopping them going all out.

    Problem for Labour is this doesn’t stop the backlash like last time, it probably won’t work and they will dump it again.

    • Matthew Whitehead 20.1

      There wasn’t a backlash last time. The idea gained popularity as Labour campaigned on it. The only bad news for Labour was when it Key made it look like Cunliffe didn’t know his own policy, which would hurt you even if your policy was giving free candy to babies.

    • KJT 20.2

      How much of a backlash was there when National introduced a CGT on some people that used to escape it. The ‘bright line” test?

      Most people appeared to think. Tough titty, diddum’s.

    • millsy 20.3

      The government needs to come out and say:

      CGT or US style healthcare. That is the choice. And it looks like you have made yours.

      • Chris T 20.3.1

        It is just exceedingly obvious that they are going in planning to water it down so much, all it will do is annoy people and cost more for the first 5-10 years than it makes.

        You also had Winston 2 days ago live on Country.co.nz, saying he wouldn’t let farmers be included.

        It is a going to be a joke.

        But a joke that National will screw the life out of, as they should.

        Because it is dumb

      • Wayne 20.3.2

        Except most people would know that such a statement would not be even remotely true.
        CGT never generates nearly enough revenue to make any real difference to govt spending.
        The Cullen report as presented will not become policy. Liam Dann had a very interesting article on this. Dr Cullen is politically smart. He knows that if he presents a maximalist CGT, he gives Labour the opportunity to water it down to something more acceptable, perhaps more like the Aussie CGT (or something even more modest)
        Of course even that might not happen. Winston May simply say “no”.
        Labour will then have to campaign on a CGT and hope that they and the Greens can be the government. Winston will then campaign the basis that voters need NZF to hold the balance of power to stop that.
        Of course Jacinda might think campaigning on CGT if Winston has stopped it may be too big a risk. It is pretty clear a CGT can’t be introduced by stealth, it has to be part of the campaign.
        John Key showed you can have a core element of the campaign that is not so popular (the electricity part privatisation in 2011) and still get comfortably reflected. It depends if voters think you have been generally competent and effective. The unpopular part can’t be too out there which is why it was only a partial privatisation.

        • KJT 20.3.2.1

          Why was Keys dozens of new taxes, sorry levies, not part of the campaign.

          Not to mention Labour and National, in the 80’s and 90’s failing to mention the destruction they were going to cause.
          The reason why we have MMP now.

  21. Andrea 21

    Tax the family home.

    When?

    Older citizen sells up. Wants to downsize. Has pension plus enough from the sale to buy a smaller home and put some aside in case of needing to pay extortionate sums to some over-priced housing for older citizens.

    Whack on the tax and they can’t afford the new home, or the later care. Or even a modest bequest. Ain’t it great?!

    Then what?

    Quotable Value proclaims the value of a property has gone up. The vultures at the council pretend that the income of the citizen has likewise gone up and sets rates accordingly. Tough luck if you’re on a fixed income…

    Only a few are harvesting gains from the property market. Hundreds of thousands of others aren’t in this ‘game’. They just want to live in a house without relentlessly rising costs from rent, rates, and other fleecings of the flock.

    And this so-called ‘working group’ hasn’t done much to look after the long-term prosperity of the flock – has it?

    More tax take for a bunch of amateurs in parliament to splash about on ‘policies’ and ‘buying votes/goodwill’.
    What makes that such a great idea? We already get very poor value for our tax dollars: just look at our health and education systems. And so many here want them to have MORE?! No turkey should vote for Thanksgiving…

    • millsy 21.1

      So you want US style healthcare then?

    • Craig H 21.2

      Rates are set on property values relative to other areas in the same city, not on property values relative to former property values.

    • KJT 21.3

      You have deteriorating health and education systems, because of years of unaffordable bribes/tax cuts for the well off.

      CGT is a partial return to making them pay their fair share, again.

  22. Rae 22

    I say let’s stop faffing around with this complicate tax or other and cut to the chase and introduce a financial transactions tax, set right, you could just about do away with all other taxes, especially GST, which in this digital age is no longer fit for purpose. You could have a few other targeted taxes that seek to encourage people to act in one manner or another, eg transport.
    The move to put a turnover tax in place on the multinats is a almost as FTT, so I say, let’s do it.

  23. Blazer 23

    I’m against giving free candy to babies.

    I don’t think it’s good political policy…at all.

  24. Observer Tokoroa 24

    The Wealthy Fretting

    You would think they are like Calves to the Abottior instead of being handsome men of lucky money and gain.

    Hear them howl. They expect to do nothing – and get paid thousands. They are a bunch of greedy ill informed humbugs supported by shoddy Accountants. Spoon fed by mommy and daddy and Billy English.

    If they don’t like Capital Gain Tax – they can get out of the Country as easy as buying a Ticket.

    After all, The wealthy in New Zealand are absolutely no loss to anyone.

    What is Fletchers now? What is Fonterra. What is fanny your Parnell Aunt.

    The Wealthy like Bill English have made sure that the large majority of up coming Kiwis will never afford a House. Makes you Sick.

    Poor lil Simom spluttering and sceaming – and the darling trolls bellowing.. YUCK YUCK YUCK

  25. cleangreen 25

    CGT would be acceptable if we saw rich listers pay their fair share but don’t as we know from Government records now.

    So if Sir Michael Cullen was to propose ‘to remove GST entirely when CGT comes into being and place a simple sales tax of 6% on all goods; – as most of the rest of our global trading partners do, – he would be so popular with NZ First and the country and win the next election.

  26. coge 26

    What if I told you that a CGT of residential property, as being proposed, will increase both rents and house prices?

    • Incognito 26.1

      Yeah, nah! Tell me the Lotto numbers for next week.

      • coge 26.1.1

        It’s true, operational costs and expenses including tax get passed onto the consumers. And as fewer properties will go on the market in future due to CGT considerations, the supply of available real estate will reduce. These two outcomes will further exacerbate the housing crisis, that Labour has promised to address.

        I can’t help with lotto numbers however.

        • Incognito 26.1.1.1

          Thank you for the reply.

          CGT is not an operational cost or expense. You do realise that house sales don’t incur GST, do you?

          If an investor holds on to their property investment portfolio instead of selling then they cannot realise the profit in CG at all – sooner or later they will have to sell or pass it on to their heirs. You seem to argue that they will therefore increase the rents. But this can only as far as the market can and will bear it. I suspect that heavily geared property portfolios will have to sell some stock and the remaining stock will thus have lower rent-to-loan ratios, i.e. relatively lower rents.

          I was really looking forward to those Lotto numbers though 😉

  27. greywarshark 27

    Are we looking at the taX system as a whole? Is the working idea truly that all tax should be paid on an equal basis.

    So that means that welfare beneficiaries can expect changes to their faulty taxation levels. They try to to drag themselves out of poverty and have been severely taxed when they start earning a sufficient amount to assist, but over the level that has been arbitrarily set by the authorities.

    Income over this level is charged a clawback that is a large extra tax after any paye. And of course there is 15% off everything they spend, which is a tax, and they are also getting a tax of PAYE from their earnings which would probably be a small amount, but if past practice is followed subsidies and grants being received are diminished dollar for dollar gross earnings, after which PAYE is deducted rom earnings. a certain allowable amount of earnings, but from which PAYE may be deducted.

    If they are working mothers forced to work earning enough to have bracket creep, they will sometimes being sending their children to kindy or school sick, and if work requires them to stay unexpectedly for longer hours, they may have no child sitter to take their place, or that person is unable to attend because of illness. The demand to work as long as they are now required is a blot on the NZ Government
    and standards of behaviour to its citizens. Nurturing parents, enabling them to get further education of craft and skills and improve their literacy and practical skills to NCEA levels, and obtain part-time work, as well as attend to their mothering role should be what is done. But it isn’t because there is core of ill-bred meanness in a lot of the sour, judgmental right-wingers both women and men.

  28. KJT 28

    I don’t think there would be much opposition to say, taxing the ten million dollar profit Key made on his “family home’ in Auckland.

    I think there should be CGT, on “family homes” over, say, the current Auckland average house price, at the introduction date.

  29. KJT 29

    Why the rich object to CGT

    http://www.inequality.org.nz/understand/rich-really-pay-tax/
    “None of these figures, of course, includes capital gains (income made from selling assets such as houses and shares), because we don’t for the most part either tax or record those capital gains’.

    If we did, since those capital gains will go largely to the richest tenth, the truth about tax in New Zealand is that the rich almost certainly pay less of their income in tax than the poor do”.

    Not only do the rich pay less of their income in tax, they also take more from our tax funded system than the poor, do. The rich use more of almost every tax funded service and infrastructure. From police, courts, roads, education, and business subsidies.
    The real bene bludgers.
    They could claim, once they were less of a charge in primary and secondary education, but now that they have demanded private schools receive the same funding as State schools.

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