It’s the kiwi way

Written By: - Date published: 8:41 am, February 22nd, 2019 - 74 comments
Categories: business, capital gains, capitalism, labour, national, nz first, Politics, tax - Tags:

Simon Bridges is the most tone deaf National leader since Donald Brash and will share one further similarity with him, he will never be Prime Minister.

Big call I know but I am prepared to make it now.

Essentially because his judgment is so awful.

Take for instance this tweet which matches his rhetoric on the issue:

It received the attention it deserved:

https://twitter.com/hurle_pool/status/1098397358054813696
https://twitter.com/nealejones/status/1098411081662230528

The burn was particularly strong in this one:

And the rich opinionated and irrational sector of the population made an appearance.

It is very sad that Simon should engage in doing his best to scare the bejeebers out of everyone, or at least his supporters. If he actually wanted to achieve something he would debate the detail.  Because I suspect there is going to be a big debate about if the CGT should apply to land only or to all capital.

Liam Dann has said this:

Is this Government going to bet it all on a comprehensive, once in a generation, tax revolution – one that affects nearly every New Zealander via KiwiSaver, small business and the family bach.

Or has it, in a political masterstroke, reset the dial on Capital Gains Tax to the extent that introducing a tougher regime targeting property investors now looks mild-mannered and relatively uncontroversial.

I’m inclined to think the latter.

Early days but comprehensive change will not be easy given the need to gain New Zealand First support and get past the next election.

I suspect that the Government may decide that a capital gains tax on everything is too difficult but of course a capital gains tax on land apart from the family home, easy to administer and quantify, should be introduced.  All that will be required is an extension to the current bright line test.  The system is in place.  In the future instead of having a period of time during which if land was sold tax would be paid there will now be a general expectation that tax will be paid on an increase in value unless it is the family home that has been sold.

And what do I think?

My father worked in a factory for most of his life, paid tax on his earnings and saved them for his retirement.  I have done something similar, worked at my law firm, and built up the good will in the expectation that I could eventually sell it and retire.

Seems to me completely fair that I should pay tax just as my father did.

74 comments on “It’s the kiwi way ”

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  1. Kat 1
    22 February 2019 at 8:48 am

    Simon Bridges should take the Finance ministers advice this morning and quit the hyperbole. Lets have a balanced and meaningful discussion.

    Oh look a flying elephant……..

    • Anthony Rimell 1.1
      22 February 2019 at 10:41 am

      “Oh look a flying elephant……..”

      Don’t you mean “Oh look, a flying sausage……”?

    • soddenleaf 1.2
      22 February 2019 at 2:27 pm

      Let’s get this straight, Lab-NZF-Greens will introduce new tax law that, should Nats win at the next election will have to repeal before it comes into effect. So nothing to see until its been enacted, second crossed fingers those effected adversely are too few and most don’t notice diddly change coz it wont have until into next term. So Bridges position isnt to pick the buts that they like, but to let the grand coalition of parties from left and right write the new tax system. Shockingly shortsighted at best, strategically dumb, but hey lots of people have brought into the narrative that a fair system exists now, with over priced homes, people sleeping in cars, family farms having to pay tax, the whole economy leveraged to extort non home owners and incentuvize non productive activities… yeah classic in national clueless economics.

  2. Muttonbird 2
    22 February 2019 at 9:02 am

    It’s a real gift to New Zealand that right at the time we are considering reforming the tax system we also have one of the most stupid, out of touch and doltish leaders of the opposition opposing those reforms.

    He attacked the TWG recommendations by saying the very wealthy will just “organise their affairs” in order to dodge it. That to me is such a weak position to be arguing from and totally ignores the concerns real people have about people ‘minimising their tax burden’.

    It reminds me of the talk from one of his mentors, Bill English, when he was caught ripping off the tax-payer when double-dipping on accomodation allowance. He too, without a trace of contrition, simply said he was ‘organising his affairs’.

  3. Robert Guyton 3
    22 February 2019 at 9:03 am

    medySci
    “A capital gains tax will mean people will have no incentive to follow their dreams, and then later sell that dream at a profit.”

    • Carol Pericfolini 3.1
      23 February 2019 at 8:57 am

      No it means a lot more people may be able to own a home, which is the biggest dream of most. Aspiring to own 80 is really not going to make you happy, but for someone living hand to mouth to save a deposit and being unable to buy a family home, one house would fulfill there dream.

    • John 3.2
      26 February 2019 at 2:31 pm

      I wonder how people get on with no incentive to follow their dreams in places like Australia, UK, Canada,USA and most western European nations where they have a capital gains tax. Do they all immigrate to NZ?

  4. veutoviper 4
    22 February 2019 at 9:03 am

    Damn, I should have waited and posted here.

    At comment 9 under the “In Defense of taxing the family home” I posted audio of Amy Adams being interviewed by Espiner on Morning Report this morning on the Kiwi way of life where she got quite angry that Espiner mentioned the eight properties listed under her name in the 2018 Register of Pecuniary Interests. Apparently that is now down to six properties – diddums.

    My earlier comment also includes links to the 2018 Register that includes listings for each current MP of the property holdings they have declared as at 31 Jan 2018. (22019 Register will not be released until probably May.)

    Here is Bridges’ listing for 2018

    ” Hon Simon Bridges (National, Tauranga)

    1 Company directorships and controlling interests
    EHJ Property Limited – property investment

    6 Real property
    Family home (jointly owned), Mātua, Tauranga
    Apartment (in St Catherines Superannuation Scheme), Parnell, Auckland
    Apartment (in St Catherines Superannuation Scheme), Central Wellington
    Commercial property (owned by EHJ Property Limited), Central Tauranga

    7 Superannuation schemes
    Milford Asset Management KiwiSaver
    St Catherines Superannuation Scheme

    10 Creditors

    Bank of New Zealand – mortgages’

    [Note the numbers are the numbers of the questions/headings in the Register – not the numbers of properties, super schemes etc.]

    Property wise Bridges seems quite ‘poor’ compared to some of his Nat colleagues – check out David Bennett, David Carter etc

    • Kat 4.1
      22 February 2019 at 9:14 am

      National Party’s raison d’être is to protect their interests and keep Labour out of govt……by any means fair or foul and any cost to anyone but themselves.

    • infused 4.2
      22 February 2019 at 11:19 am

      Why are you lefties using this rubbish to diminish the impact of these stupid taxes? Helen owned 7 houses, probably more now. I bet current Labour MPs do as well.

      Trying to use this saying they have a vested interest is bullshit. It’s like the Spinoff article on the oil and gas report asking ‘who is funding you’. It’s bullshit.

      The fact is, the majority of these new taxes have massive implications. The housing ones aren’t actually that much of a concern to me, even owning multiple properties. The only one that stands out is the rural one, where over 4ha (if I recall) gets fucked.

      The bigger ones are the business impacts, shares in NZ and Australia, kiwisaver etc.

      • KJT 4.2.1
        22 February 2019 at 11:22 am

        Shares and Kiwi saver earnings are already taxed at you PIE, or personal tax rate.
        Simon lied!

        A real CGT is only going to make a difference to those that have avoided tax on investment income, mostly from land.

        • infused 4.2.1.1
          22 February 2019 at 11:23 am

          And that has been my argument for years. There was already a tax for this. People just avoided paying it.

          • Andre 4.2.1.1.1
            22 February 2019 at 11:26 am

            Do you mean avoided or evaded? There’s a difference. In the words of the hairdo from Ohariu, one is “legitimate avoidance”, the other is illegal.

          • KJT 4.2.1.1.2
            23 February 2019 at 11:39 am

            Evaded!

            It is obvious from the storm of protest, that many of the houses, farms and businesses, bought by these people don’t want to pay CGT, on were bought as speculative investments, intending to sell for untaxed CGT, not going concern businesses, or personal houses to live in.

            So many people admitting to breaking the law.

            I hope IRD investigators’ are taking names.

            Maybe we should just enforce the existing CGT, with a few jail terms?

      • Psycho Milt 4.2.2
        22 February 2019 at 11:59 am

        Helen owned 7 houses, probably more now. I bet current Labour MPs do as well.

        Were any of them so outraged at the thought of being taxed on the capital gain they’d receive from those properties that they declared it an “assault on the Kiwi way of life?” Because, otherwise their properties are irrelevant.

        • Kat 4.2.2.1
          22 February 2019 at 2:55 pm

          That comment should have defused infused. Always room for a bit of psycho analysis.

          And whats that Bright-Line Test all about then…. not more “stupid taxes” is it.

      • Ed1 4.2.3
        22 February 2019 at 1:51 pm

        Why does introducing a tax on increases in value for rural land have a different impact than for residential land? (It is of course only on increases in value after 2021, so it will have very little impact for some years). If businesses pay a little more tax that just changes the level of imputation credits passed on to shareholders with dividends – or have I missed something?

        • Lloyd 4.2.3.1
          24 February 2019 at 4:07 pm

          Surely a capital gains tax will allow the aspirations of young kiwi farmers to buy land and run their own farms. If CGT drops the value of land sharemilkers will not be competing with investment companies for productive land. The average age of dairy farmers might stop rising.

  5. patricia bremner 5
    22 February 2019 at 9:21 am

    So Simon Is a Kiwi whose way of life will be changed by CTG. Funny that!! He must own a bit (Checked Parliamentary register) Compared to some he is moderately comfortable… Looking at Amy Adams!!

    Norm and I worked out that even if they put a tax on the family home when it is sold, we would not be personally affected.

    So what kind of bird does that make us? Tuis?? We thought “Gee” as they might start the tax at a different point, say 7 to 10 000. Wow we could be better off by 700 to a 1000 dollars each a year Wow!! Now that would change our lives!! No wonder Simon is so anti!! That attitude begins to make sense.

    Even if this tax was used to raise benefits pay essential services more, raise a climate change fund… it would make life more secure.

    Well done The Tax Working Group Well done indeed. We are having the necessary conversation at last.

    We need to let the Government know what we wee Tui/ Kiwis think lol, so the Kiwis like Simon with several nests don’t have all the say!!

  6. esoteric pineapples 6
    22 February 2019 at 9:23 am

    Tax free capital gains is to New Zealanders what guns are to Americans

    • greywarshark 6.1
      22 February 2019 at 4:27 pm

      ep – ns
      LOL

      • cleangreen 6.1.1
        22 February 2019 at 5:37 pm

        Well said EP
        “Tax free capital gains is to New Zealanders what guns are to Americans”

        We are very self centered greedy lot now since Egalitarianism died under neoliberal 1980’s.

  7. AB 7
    22 February 2019 at 9:32 am

    The guy with 80 homes who says CGT will hurt renters.
    Serious question – how come we have allowed this guy to have the capacity to hurt renters?

  8. Clive Macann 8
    22 February 2019 at 9:52 am

    Simon says: If CGT is introduced then people will head off to Australia in their droves. (or some similar words). Does he think Australia does not have a CGT?

  9. Stuart Munro 9
    22 February 2019 at 10:04 am

    I’m not sure Simon has worked out that having all the Gnat’s unsavoury friends identify themselves by writing columns on this issue is a vote loser yet.

    As for fighting it every step of the way, the Gnats haven’t been very supportive of any coalition policy to date, it’s almost as if Simon’s opposition is (gasp) ineffectual.

  10. Siobhan 10
    22 February 2019 at 10:17 am

    I had thought one of the ideas behind Capital Gains tax was to encourage investors to put their money into actual productive businesses rather than into an overvalued property market, not to mention a rental market that is so out of kilter with ‘market forces’ that we need to subsidise landlords via their customers, to the tune of $27 million a week in Accommodation Allowances.

    Surely Business would be behind this tax.

    Now is the time for our good friends with the wise heads at the Employers and Manufacturers Association to speak out….waiting…(not holding my breath)…but waiting….any moment now…

    • KJT 10.1
      22 February 2019 at 10:49 am

      Too many NZ businesses, are “Property investment”.

      Or start a pretend business with the intention of selling to a mug, for tax free gains, before it falls over.

  11. Andre 11
    22 February 2019 at 10:17 am

    I’ve said it before and I’ll say it again and again and again.

    New Zealand tax law says that if you buy an asset with the intention of selling it sometime in the future, you are liable for tax on any capital gain you make.

    However, when a property has been bought with the firm intention of resale you’ll have to pay tax on any profit from the sale. The intention to sell does not need to be the main reason for buying the property – it could be one of a number of reasons for buying.

    https://www.ird.govt.nz/property/property-selling/selling-property.html

    These muppets declaring their intention to increase rents because their investment properties will become liable for capital gains tax are implicitly also declaring that eventual sale was an important reason for the initial purchase of the property. Therefore they should be paying capital gains tax already under our current law. But that they are also declaring an intention to eventually evade the capital gains taxes they are properly liable for means that they should go straight onto the IRD’s big bad list of suspected tax evaders.

    • KJT 11.1
      22 February 2019 at 10:47 am

      I hope IRD , is taking names.

    • Craig H 11.2
      22 February 2019 at 12:18 pm

      Thank you! Totally agree.

    • Sacha 11.3
      22 February 2019 at 12:26 pm

      “they should go straight onto the IRD’s big bad list of suspected tax evaders”

      So they can be lovingly caressed with a wet bus ticket.

    • mikesh 11.4
      22 February 2019 at 1:23 pm

      I agree that CGT should not be a reason for increasing rents, but I think that the tax should not be charged where the gain is merely incidental to the purpose of the investment. This would obviously let homeowners off the hook since the purpose of their investment is to provide accommodation for themselves and their families. However the same thing should apply to landlords who are just trying to provide themselves with regular rental income.

      • Craig H 11.4.1
        22 February 2019 at 3:19 pm

        I fail to see how making a gain on the sale of an asset that was purchased for the purpose of renting it for income would be incidental to that purpose.

        People go into business to make money by any legal means, and consequently any money made by those means should be taxed the same way, whether income from normal operations or from a gain on the sale of assets.

        • mikesh 11.4.1.1
          22 February 2019 at 5:50 pm

          If you can’t see how capital gain may be incidental then I’m afraid I can’t help you. I guess you either see it or you don’t.

          A capital gain is just an increase in the value of an asset. It can’t be income because a mere increase in value is not something you can remove from the asset and spend at your local supermarket.

          • Craig H 11.4.1.1.1
            22 February 2019 at 6:59 pm

            It’s not incidental to operating a business because the primary purpose of a business is to make money, and making money as a gain on sale is as much making money as renting an asset out.

            It’s not income until the asset is sold, at which point the income can be calculated and taxed. Taxing theoretical income is a favoured idea of Gareth Morgan, but hasn’t made it into the TWG report.

            • mikesh 11.4.1.1.1.1
              22 February 2019 at 8:55 pm

              The purpose of a business is not simply to make money, but to make money by manufacturing a product or providing a service. Selling its business premises for profit is not part of that purpose (except in the case of business set up to specifically deal in property). The property from which it operates is a disposition of that business’s capital, and it is reasonable that it should be allowed to maintain its capital, and not have it reduced through having to pay capital gains tax when that property is sold e.g. as part of a relocation.

  12. ianmac 12
    22 February 2019 at 10:18 am

    Some say Labour have lost the initiative over the narrative.

    But think back to the cunning Key plan to soften up for the sale of the Electricity. 2 or 3 years of debate and criticism but right on plan, action the sale. By that time the People had got used the idea and the fuss had worn itself out.
    So the predictable hyperbole from National will in the long term play into Jacinda’s hands – I hope.

    • Enough is Enough 12.1
      22 February 2019 at 12:21 pm

      Yeah I agree this is straight out of the Key play book.

      The recommendations will be watered down a lot before the Government policy is announced.

      For example the marginal tax rate will not be applied. The Nats are crying loudly about that right now. Labour will pull the political masterstroke by ripping that criticism out from underneath them and introducing a rate of 15%.

  13. marty mars 13
    22 February 2019 at 10:38 am

    I agree about Simon- – he is incompetent and the best of them lol. That Twitter feed was ruthless lol. Everytime Simon opens his mouth the gnat vote drops yay.

  14. millsy 14
    22 February 2019 at 10:39 am

    To be honest. I prefer the ‘Kiwi way’ that existed before 1991.

    I say 1991 and not 1984 because that is when the cuts to all the welfare services and state housing kicked in.

  15. Tony Veitch [not etc.] 15
    22 February 2019 at 3:32 pm

    A good time for the Coalition members with property portfolios to grab the moral high ground by coming out in favour of a CGT – as opposed to those rich pricks in the National party who are being seen as protecting the interests of the wealthy.

    • indiana 15.1
      22 February 2019 at 4:22 pm

      I have to admit that I always have a giggle when I see comments like “protecting the interests of the wealthy” being attributed to solely a National party trait. Under Michael Cullen who introduced the concept of Loss Attributing Qualifying Companies – negative gearing in effect, taken up by many landlords and small business owners at the time – was Labour “protecting the interests of the wealthy then?

      When National came into power, that was one the first things removed that took away the ability of property investors from reducing their tax liability – that is perhaps why they never supported a CGT. Take away the mechanisms to reduce your taxable income, not introduce new ways to tax an income.

      • Incognito 15.1.1
        22 February 2019 at 10:07 pm

        I think many LAQCs became LTCs and any losses could still be claimed in most cases. Don’t make it sound more noble than necessary and as far as property investment and speculation was concerned it certainly didn’t dampen the party mood.

  16. Ankerrawshark 16
    22 February 2019 at 4:50 pm

    Point taken Indiana.

    I love the way Simon works so hard for the Labour Party….he and the guy with 80 rental properties who says he will increase rents if a cgt is brought in doing marvelous things to help NZders see the merit of the tax

  17. Sabine 17
    22 February 2019 at 4:57 pm

    well, someone has to stand up for the poor and maligned much misunderstood Property Investors.
    National, desperately seeking friends.

    *edited cause typing, its hard work

  18. Observer Tokoroa 18
    22 February 2019 at 5:11 pm

    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 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.

    In summary, if you Buy something you pay Tax
    If you sell something (trade) , you pay Tax.

    That’s Life. It is also Fair.

    • indiana 18.1
      22 February 2019 at 5:39 pm

      In Aus buyers pay stamp duty when buying a house or car, sellers pay nothing. They also have GST, but not on fresh fruit for example, so long as it is not packaged. I doubt very much that consumers buy loose apples as opposed to a bag of apple to avoid the GST. Is there any research that proves only wealthy (…and whatever definition there is for “wealthy”) people buy food.

      I’m a firm believer that the tax system in NZ is fair. How our government spends our taxes is not fair.

    • Sabine 18.2
      22 February 2019 at 5:40 pm

      thank you for pointing out the obvious.

  19. Drowsy M. Kram 19
    22 February 2019 at 8:24 pm

    If it’s the Kiwi way to own multiple houses, then why is there a housing shortage?

    Could it be that at least half of all Kiwis are not actually part of that Kiwi way of life?

    Let’s eliminate tax avoidance loopholes, and have custodial sentences for those that either evade tax or enable tax evasion. After all, that tax could be used to fund expensive cancer treatments (in the news of late), shore up gutted public health and education services, and foster community resilience.

    As such, I support this (summarised) proposal of the Tax Working Group:
    “Give Inland Revenue extra resources for administration and enforcement.”

  20. peterlepaysan 20
    22 February 2019 at 9:18 pm

    Maybe Simon uses the same tweet writers as Donald. They are equally stupid.

  21. Incognito 21
    22 February 2019 at 9:44 pm

    The thing with a good dog-whistle is that it doesn’t wake up sleeping dogs but is only heard by (hard) working dogs like farm dogs and (hot) dogs like schnoodles who get invited to summer BBQs by their accountancy firms for a nice wee sizzler courtesy of tenants and taxpayers. When Simon plays the dog-whistle the noise is so stupefying that even poor possums plummet down to earth from their lofty Pōhutukawas.

  22. georgecom 22
    22 February 2019 at 10:27 pm

    1. who is that invisible person standing in the middle of picture at the top?

    2. I have read comments from owners of multiple rental properties bemoaning how a CGT will cause a dearth of rental properties as owners sell up and exit rental ownership, and the losers will be those who cannot afford to buy a house.

    “Some investors, yet again the smaller ones, they get scared and they sell, so now you’re getting less and less properties that are available to rent, because people sell them, and it just makes it harder and harder for tenants.

    Ok, so will the owners of the rental properties just leave them empty? or burn them down? or will somehow the homes cease to exist? I suspect what will happen is that the homes will be sold. If the buyer is someone currently renting then, gosh, a rental home becomes available. So a rental is bought by say a family currently renting thus freeing up another rental property. So, the current housing stock doesn’t diminish, what we actually have is a churn of ownership and churn of renters between properties

    • Rapunzel 22.1
      23 February 2019 at 6:42 am

      I agree the “houses” do not “disappear”, hopefully some of the 30k in Auck that are said to be “empty” may come onto the market at the prices there ease.
      Will media ever challenge one of those saying there will be fewer rentals, not unless the “owners” make a point of living in more than one house.
      One of the problems does appear to be Air BNB or Book-a-Bach etc that seems to be something that keeps properties off the market for long-term accommodation though I know a “rental” owner in AUck with more than one property shying away from this so they go below the $70k cap for GST as “business” income. It seems in that case though they are also cheating the NZ tax payer via IRD with what is a comparatively “fair” rent but it is more or less being paid in cash and not through a written up tenenacy agreement.
      IRD needs more ability to monitor, at least we have a govt endeavouring to find a system that is fairer to all to tax “earnings”.

  23. Jetal 23
    22 February 2019 at 11:21 pm

    Doesn’t the goodwill of a law firm walk out the door when the partner retires? Clients are free to go wherever they like so I hope you have a plan B for your retirement.

  24. Cinny 24
    23 February 2019 at 9:42 am

    simon keeps putting out new tweets re CGT….And he keeps getting slayed.

    It sure is inspiring to see so many switched on kiwi’s calling him out on his crap.

    https://twitter.com/simonjbridges/status/1099019492280037376

    “Is it the Kiwi way to raise GST? Asking for a friend.”

  25. Observer Tokoroa 25
    23 February 2019 at 11:47 am

    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 screaming – and the darling trolls bellowing.. YUCK YUCK YUCK

    Unfortunately it is the “Kiwi Way” to allow $Billions to the existing wealthy and nothing to the rest of New Zealanders who do the Work. It is down right Inequality and it stinks to High Heaven.

    Biil English Tried to Bribe the wealthy by outrageos Tax cuts. Simom seems to want to do the same.

    Simom must be Trampled upon. He is A Marie Antoinette.

  26. vto 26
    24 February 2019 at 1:12 pm

    Those who are anti-CGT are selfish..

    I say… if its good enough for them, it good enough for us

    and that means no income gains tax either.

    With a paper-run worker paying tax and a low-wage earner paying tax, watching other walk away with millions as a result of work-less capital gains tax-free makes us …….

    put it this way…..

    the two things aren’t even on the same planet…

    the anti-CGT have their heads on fucking Mars or something

    what a bunch of wankers

    they are happy to have us actually working and paying tax, while they do no work and pay no tax (capital appreciation is rarely a result of work)

    Ban income tax!!

  27. vto 27
    24 February 2019 at 1:16 pm

    I say no more income gains tax either !!

    No more income tax

    No more income tax

    No more income tax

    It is an assault on the only workers in the land

  28. vto 28
    24 February 2019 at 1:17 pm

    if there is to be no capital gains tax then neither should there be any income gains tax

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