Labour capital gains tax rumours

Written By: - Date published: 6:06 am, July 6th, 2011 - 330 comments
Categories: Economy, election 2011, labour - Tags:

The buzz around the traps is that Labour will be announcing a capital gains tax next week. The journos are already calling it a bold move and John Key is ranting hysterically. That Labour’s winning the media battle is great but, more importantly, this is a much needed policy: it is fair, it is good for the economy, and it will pay for good policies.

Phil Goff wouldn’t confirm or deny yesterday but Guyon Espiner and Duncan Garner appeared to have had briefings. It seems like it’s a pretty sure thing that Labour will announce a capital gains tax policy.

The fairness argument is well-known. If I go out and work hard all year for the average fulltime wage, I get $48,000 a year gross and pay $8,400 tax. If I have a business and it makes $48,000 profit in a year, it pays $13,400 tax. If my only income is interest and dividends and I get $48,000 a year, I pay $7,400. If I have some investment properties and their capital value appreciates by $48,000 in a year and I sell up, I pay no tax. (yes, if it can be proven that you are in the business of selling houses, not in the business of renting them, you pay tax on profits. But its very easy to avoid that test.)

A capital gains tax fixes that unfairness.

The current tax imbalance leads to people favouring investing in houses over productive investments. We have low productivity in New Zealand because we have low capital investment by firms and we have low capital investment by firms because capital is so expensive because so many people with cash bet it on the housing market rather than putting it into a real company. That doesn’t just make our economy less productive, it also makes us more indebted. We’ve got businesses like Charlie’s selling offshore because they can’t get the capital they need to grow at a decent price here and we’ve got people up to to their eyeballs in debt to the foreign-owned banks to buy houses and farms betting on capital gain.

Now, landlords will say ‘I supply five houses for people to live in and employ plumbers etc’ – as if people would just be living in caves otherwise, but the reality is that property investors don’t do much to increase the supply of houses, they just push up the price. That locks others out of the housing market and makes them life-long renters. Look at the way the rate of home ownership has plummeted in the past 25 years as people with money to invest shied away from stocks into housing. How many people below 30 do you know who own their own homes? How does that compare to 30 years ago?

Key is spouting some nonsense about a capital gains tax being too complicated. How does every other OECD country manage it then? Or is New Zealand too dumb to do what every other country does? Some ambition for New Zealand from Key.

National’s other line, of course is ‘tax and spend’ but let’s examine that. Here’s Labour’s major policies so far: a tax-free bracket on the first $5,000. GST off fresh fruit and vegetables. Ending pollution subsidies for agriculture. Using that money to pay for R&D tax credits. Not selling state assets. No more pennywise, poundfoolish spending cuts, protecting vital public services. Abolishing Fire at Will. $15 an hour minimum wage.

Hmm. Not much in the way of spending there so far. Mostly tax changes. It looks like a capital gains tax would principally be about paying for the $5,000 tax free bracket and replacing the revenue from asset sales (which, of course, in the long-run is less than the lost dividends but not immediately). In other words: closing off a loophole that allows a few (200,000 of 3 million adults) wealthy individuals to make large untaxed profits, so that everyone can get a tax cut of $525 a year and not lose public ownership of our power companies. Pretty sensible if you ask me.

A quick google shows a lot of the business commentators and economists agree, even the rightwing ones (even Farrar!). And why shouldn’t they? Aren’t rightwingers meant to be against loopholes that mean hardworking Kiwis have to pay higher taxes to subsidise wealthy people who avoid paying theirs?

This is actually a transformative policy that the Greens and just about every economist has been calling for for years. Good on Labour. If this is the policy they’re looking to announce it’ll be the centrepiece of a bold alternative to National’s platform of cuts and firesales.

Just because National didn’t have the courage to do this, they shouldn’t whine when Labour does.

330 comments on “Labour capital gains tax rumours”

  1. higherstandard 1

    Finally some sensible policy – I’m 100% in support of a capital gains tax on property.

    Hopefully the details will be simply testable and enforceable.

    • Monty 1.1

      Labour can introduce any policy they like – they have no chance of winning the election. So like all Labour’s other “policies” this is made of straw.

      So tell me lefties, When Labour lose the election will you accept this as a rejection of their policy base and then set about coming up with policies that don’t further harm the middle classes who are already paying the lions share of Labour’s socialist policies.

      This is an envy tax by another name. People like myself will lock up our assets and I will never pay a single penny of CGT.

      Please explain to me if a family bach also is impacted by CGT. Can I live in the family house, sell that, move into a rental property for a couple of years, and then sell that – does that mean I pay CGT.

      And explain how they hope to raise $3.8b as reported in the Herald? Oh dear the CGT looks dead in the water before the announcement is even made.

      • r0b 1.1.1

        Breath through your nose Monty.  In.  Out.  In.  Out.  You’ll be OK, honest, calm down.

      • mickysavage 1.1.2

        Oh Monty ever the optimist.
         
        Let us all base all arguments on what may or may not happen in 5 months.
         
        Merits are unimportant.
         
        I guess it is an “envy tax”.  The rest of us are envious that the wealthy pay so little tax yet have amassed so much.  To that should be added the word “bemused” at how some are so insistent they should accumulate more and more.
         
        I am not sure but the bach may be caught.  So if you make a huge gain and then sell after 10 years 15% of the capital gain will be paid in tax.  Seems fair to me.

      • higherstandard 1.1.3

        How is it an envy tax Monty ?

        • Tigger 1.1.3.1

          How many investment properties do you own Monty?

          By the way, I own three.

          Definitely detecting panic in Monty’s post – this possibility must have rattled the poor wee chap.

      • toad 1.1.4

        Monty, no-one can say if your family bach would be caught under Labour’s CGT proposal as no details have been released.  Under the Green CGT proposal it would certainly be caught, and rightly so.

      • Frank Macskasy 1.1.5

        Monty… more scaremongering. To address some of your points;

        This is an envy tax by another name.

        But Monty – isn’t that what they say about all taxes? That has been the whinge of rightwingers since the Serpent said to Eve, “have I got a deal for you!”.

        People like myself will lock up our assets and I will never pay a single penny of CGT.

        Really? You’ll never, ever sell your rental properties? Your tenants will be very happy.

        But bear in mind that the beneficiaries of your Will may have different idreas.

        Please explain to me if a family bach also is impacted by CGT.

        Some of these “baches” are not the modest little cottages that once dotted coastlines like this: http://tinyurl.com/3e8mo28 . They are more like this: http://tinyurl.com/45y9nep

        There are huge investments and gains made from the “family bach” and it’s about time that those who transacted such properties contributed their fair share.

        Can I live in the family house, sell that, move into a rental property for a couple of years, and then sell that – does that mean I pay CGT…

        You can do what you like, Monty. If you want to play silly-buggers in such a childish manner then that is entirely up to you.

        It never ceases to amaze me that people like you make full use of the services that a First World country like NZ provides – but whinge and carry on when you have to pay for it. Newsflash, Monty: there is no such thing as a free lunch. You want to use our roads, you pay for it. You want to send your children to school or use our hospitals, you pay for it. You want police to protect your assets that you carp on about – pay for it.

        Otherwise, find a country that (a) has First World living standards and (b) no taxation. I doubt you’ll find a single one.

        • Rusty Shackleford 1.1.5.1

          I love it. Not a substantive reaction to Monty’s comment in the bunch. As he said, those big bad richies will just avoid the CGT like they do every other tax. They have the best lawyers and accountants and there is nothing you can do about it.

          Frankly, I think it is patriotic and rational to avoid taxes. If you don’t subscribe to the policies a govt enacts (of which both sides have plenty of nutty policies) is it not tyranny to be expected to submit to the wishes of a small majority (in many cases not even a majority).

          The only answer is to cut taxes in all sectors, at the same time scaling back services and allowing the market to pick up the slack. Afterall, tax cuts aren’t a cost to the economy. That cash goes back into the pockets of the people who rightly earned it. It will also eliminate the the disparity between investments in different areas (as the article seems to assume raising a CGT will do).

          The cognitive dissonance of statists is astounding. “We must tax people! But politicians mustn’t take advantage of the system!”

          The National Party attitude

          • Vicky32 1.1.5.1.1

            Frankly, I think it is patriotic and rational to avoid taxes.

            While it may be rational, (if the goal is self-interest), and I get that, but how is it patriotic?
             
             

            • Rusty Shackleford 1.1.5.1.1.1

              You’re right. It’s probably hard to argue that tax avoidance is patriotic. I guess it depends on your definition of patriotic. Does it refer to the people of ones country or the govt? Would the people of Nazi Germany be patriotic if they avoided taxes? In that it would benefit the people but not the govt. I don’t really know the answer. I was just trying to make an inflammatory remark.

              • Vicky32

                I was just trying to make an inflammatory remark.

                Well, you certainly succeeded, but what an admission! Don’t you get that the people and the government are (or ought to be) the same thing?
                No, the people of Nazi Germany would not be patriotic if they avoided taxes. They were the people of Nazi Germany, not the hostages. Contrary to what people now seem to think, the whole Holocaust thing came as a surprise to most people alive  at the time – I remember my mother telling me about going to see cinema newsreels in 1945 about the opening up of concentration camps. You appear to be saying that the average German ought to have withheld his/her taxes in order to undermine the Nazi war effort. But why would they? They knew no more than we do now – less, than we know now about American atrocities in Iraq and Afghanistan. The majority of them just wanted to survive the Nazis and get on with their lives. (I’ve studied German history, and I had and have had German friends in my parents and grandparents generation, so I know what the average punter knew at the time!)

        • Rusty Shackleford 1.1.5.2

          Frank, taxation is immoral as it is extracted under the pretense of force.
          http://www.vforvoluntary.com/

          All those services would still be provided even if the govt didn’t monopolize them. They even were provided by the market in the past.

          • Colonial Viper 1.1.5.2.1

            Frank, taxation is immoral as it is extracted under the pretense of force.

            So, human civilisation has been immoral since before Roman times then?

            You really are full of it.

            • Rusty Shackleford 1.1.5.2.1.1

              Civilization sprung up in spite of govt not because of it. All of the material wealth we enjoy (the fridges, cars, cell phones, houses etc) was invented and built by private entrepreneurs. Govt has done little to improve the well being of people. We need them for some things, but we don’t need them to dictate how we spend what we earn.

              • Colonial Viper

                You’re an idiot who loves fiction but can’t remember the good times before London had council sewers and rubbish collectors obviously.

                • Rusty Shackleford

                  Remind me again who owned the Thames and let it get into such a state?

                  • felix

                    Capitalists.

                    • Colonial Viper

                      Like I said, you are an idiot.

                      Throw your slop out the window mate.

                    • Rusty Shackleford

                      Which ones?

                    • Rusty Shackleford

                      CV, you have nothing. I’ve consistently shown how your ideology is both hypocritical and internally inconsistent. You find it impossible to defend your premises or even converse on a level above that of a 10 year old. This being the case, you resort to name calling. If The Standard had any integrity they would have banned you long ago for having nothing to contribute to the conversation.

                    • Colonial Viper

                      Speaking of 10 year olds, why don’t you send your 10 year old to go work in the coal mines.

                      You know, because governments never did anything useful for society.

                      You really are an idiot.

                      While you’re at it your life would be better if you could keep a few slaves eh?

                      Because government never did anything useful for society. Idiot.

                    • Rusty Shackleford

                      The use of child labor was abating long before any child labor laws were passed. Rising living standards caused child labor to become uneconomical ie. kids were better served going to school than work. Govt just jumped in front of the parade as it was passing through town and claimed to be leading it.

                    • Colonial Viper

                      Meh.

                      ie. kids were better served going to school than work.

                      And who provided the schools for those coal mining children? Because government never did anything useful for society, you know.

                    • Rusty Shackleford

                      Well…… the first schools were privately run. Once again the govt jumps in front of the parade. Education would still be provided even if the govt wasn’t providing it (they can pay for it in the mean time, education is the thin end of the wedge, really). “Oh, but the poor!” I can see you are about to wail. The poor can afford cars, cell phones and refrigerators all on the free-ish market. Education is no different. In fact, high quality education is available free of charge.
                      http://www.khanacademy.org/

                    • Colonial Viper

                      The poor can afford cars, cell phones and refrigerators all on the free-ish market.

                      Your definition of poor is probably different to mine

                      And sure that education is free if you have broadband internet. Which is being subsidised heavily by the NZ Government.

                      But government never did anything useful for society right Rusty?

                    • Rusty Shackleford

                      As I pointed out, broadband internet isn’t that efficient. The market may have come up with a better alternative. State houses may have exacerbated this inefficiency by spacing out houses at large distances (which also makes them more expensive). The market may have favored apartments (or something else entirely)which tend to be cheaper and better for the environment. They are also easier to convey infrastructure to.

                      We can never know, for the reasons that Bastiat points out.

                    • “Once again the government jumps in front of the parade.”

                      Yes Rusty, just as it did when it used armies to enclose the commons and to protect private property rights more generally. It should have waited and, who knows, there may not have been a need to have that inefficient economic technology called property rights. 

                    • Rusty Shackleford

                      I’m not opposed to property rights. I don’t think protecting them is coercion as in your example of squatters.

                    • Colonial Viper

                      Rusty is pro some forms of coercion and use of state sponsored, tax payer funded force!

                      Nice to know 🙂

                    • Rusty Shackleford

                      CV, you are in no position to lecture me about logical inconsistencies. You harp about poor people on the one hand but advocate for inflation on the other. you also defend the notion that warfare “stimulates” the economy.

                      Back on topic. Private security firms can be used to evict trespassers. Police paid for through taxes are unnecessary in this case. The owner of the land could even evict the trespassers himself if he felt like it.

              • The Voice of Reason

                Use the internet much, Rusty? Invented by the US government’s military arm fifty odd years ago. Ever been to a working class suburb? Seen the State houses? Ever wondered why they where called that?
                 
                Gosh, facts are so very difficult to deal with, eh? Best you stick to the misanthropic world of make believe, oh Randy one.

                • Rusty Shackleford

                  The internet? So, what? It’s one thing to think of something, entirely different to actually implement it. Actually, they probably cocked it up and mis-allocated resources. The method of conveyance is extremely inefficient. Laying cables in the ground is costly and not economical in sparsely populated areas. An entrepreneur would have had an eye for implementation and probably would have invented some mode of communication that didn’t require putting cable in the ground. Instead those resources were mis-used by the govt. http://www.econlib.org/library/Bastiat/basEss1.html

                  State houses? Again you are seeing something and not thinking about what else could have been built using those resources. You have a lot to learn from Frederic Bastiat.

                  • Colonial Viper

                    The internet? So, what? It’s one thing to think of something, entirely different to actually implement it.

                    Rusty’s counterfactual world of the view

                    Ignores small facts like the critical networking breakthroughs and the first versions of the internet were pioneered and implemented at various US and UK universities first.

                    You know, universities which were funded by government.

                    But hey, government never did anything useful for society.

                    • Rusty Shackleford

                      As I pointed out, those resources may have been mis-allocated. Govt funding caused it to be done thus. Therefore we can’t know how the market would have implemented it.
                      http://www.econlib.org/library/Bastiat/basEss1.html

                    • Colonial Viper

                      Therefore we can’t know how the market would have implemented it.

                      You still don’t get that we don’t live in your little counterfactual parallel universe of ‘what might have beens if the Doctor hadn’t interfered’, and that governments HAVE done great things for modern civilisation 🙂

                      Like the roads, trains and internet you use in Korea 🙂

                      Also preventing hordes of hungry North Koreans eating your lunch 🙂

                    • Rusty Shackleford

                      Well, the North Koreans part is right, at least.

                  • rosy

                    State houses? Again you are seeing something and not thinking about what else could have been built using those resources

                    Tents? My mother and her family lived in one in the 1940s in Hamilton along with dozens of other families until the state provided housing at a price that the capitalists would not.

              • Rusty, the state does far more than extract taxes through coercion. For example, it also upholds property rights over land and thus prevents people making use of vacant land, buildings, etc. in a cooperative way. Try squatting and you’ll soon find out what the coercive power of the state involves – and you won’t get sent numerous, polite letters from the police before it happens.

                In a society completely based on voluntary cooperation there would, of course, be no need to have the state backing up property rights. Individuals would work out – through experience and cooperation – a way of making use of land and other ‘property’ without the need to institute laws backed up by a coercive state. Wouldn’t they?

                If not, why is this voluntary cooperation model impotent to defend property rights but a perfectly fine way of preventing ‘Oliver’ (in your link) and his family sinking into poverty, starvation, etc.?

                I take it, therefore, that you are just as opposed to property rights as you are to taxation since both require the coercive action of the state to extract obedience to ‘majority rules’ about how we should act? (Or, don’t you have that much faith in voluntary cooperation?)

          • KJT 1.1.5.2.2

            Really!

          • Frank Macskasy 1.1.5.2.3

            Rusty – try living in a country with no taxation, and see how much infra-structure they have.

            Somalia comes to mind.

            • Rusty Shackleford 1.1.5.2.3.1

              Somalia is better now than when it had a govt. Somalia also has some of the best telecommunications infrastructure in Africa.

              Why do statists use all the same tired cliches?

              • Colonial Viper

                Rusty you are a moron

                Who uses Korean phones, broadband and roads heavily subsidised by the government

                But government never did anything useful for society eh Rusty?

                But now it sounds like Rusty is MOVING to SOMALIA!

                Go Rusty!

                Somalia is better now than when it had a govt.

                lolzwut

                • Jim Nald

                  Please don’t tell John Key that or he will campaign on closing the gap with Somalia.

                • Rusty Shackleford

                  I use a Taiwanese phone on a network built by Finns and Japanese. I ride on trains built by Dutch, German and French people. The fact that the govt extracted cash in order to build these things doesn’t mean they wouldn’t otherwise have been built. Seen/unseen. Parades. All that. I can point it out till I’m blue in the face but the best you can come up with is to shout SOMALIA!!!!! real loud.

                    • Rusty Shackleford

                      That’s pretty gross. Are you comparing free citizens to house pets?

                  • Colonial Viper

                    Rusty you’re relying on counterfactuals of what might have happened.

                    Not what did happen.

                    But of course, despite you happily using all these phone networks and trains (which the private sector was delighted that public money would underwrite the infrastructure for) government never did anything good for society, right?

                    but the best you can come up with is to shout SOMALIA!!!!! real loud.

                    You brought up Somalia you moron, not me.

                    (Actually Frank did, sorry)

                    • Rusty Shackleford

                      I’m fully aware the phone and rail companies took cash. Why wouldn’t they? I’m saying the cash simply shouldn’t be available. We will still have communications and transport, they will just look a little different.

              • Frank Macskasy

                ‘Somalia is better now than when it had a govt. Somalia also has some of the best telecommunications infrastructure in Africa. ”

                You.

                Have.

                Got.

                To.

                Be.

                F*****g.

                Kidding.

                Us.

                So when are you moving there?

                • Rusty Shackleford

                  Falsify the statements I made or shut the fuck up.

                  • Frank Macskasy

                    No need to ‘falsify’ your statements.

                    You did that quite nicely already.

                    • The Voice of Reason

                      Oh, lord, It’s hard to type and wipe away tears of laughter at the same time. Possibly almost as hard as it is for Rusty to type and extract his foot from his mouth at the same time.
                       
                       

              • Vicky32

                Somalia is better now than when it had a govt

                I am not into being crude, but nevertheless, WTF? How do you make that out!

                • Rusty Shackleford

                  This is about the most up to date analysis on welfare in Somalia, at the moment. Unfortunately, outside states have agitated to impose a govt on Somalia in the interim. Which has led to escalating violence.
                  http://www.peterleeson.com/better_off_stateless.pdf

                  This is quite a good summary of that paper (plus some more references).

                  • Colonial Viper

                    you’re just weird.

                    Especially when you don’t explain that an absence of government power focussing on the public good will simply lead to corporate or militia power filling the vacuum for their own private good.

                    • Rusty Shackleford

                      Well in Somalia’s case that is exactly what has happened. Businesses do have to pay what amounts to protection money to local militias. However the amount the miltias extract is much less than what the govt used to. This has led to a decrease in violence (almost all of which was imposed by the “scientific” socialist govt).

                    • Colonial Viper

                      The militias then use those extorted funds to buy speed boats, RPGs and AK47’s with which to hijack oil company supertankers with.

                      Yeah I see how this is working out real good mate, but government never did anything good for a society, right?

                      At least as you say the people in Somalia have a lower effective tax rate now lolz even if the oil companies and shipping companies get hit by some extra ‘levies’ 😀

                    • Colonial Viper

                      Do you have direct evidence that the same militias who were extracting protection money were the ones attacking ships?

                      Of course I do, it’s in a locked suitcase under my bed, come and get it.

                    • Rusty Shackleford

                      Do you have direct evidence that the same militias who were extracting protection money were the ones attacking ships?

                      Frankly, it seems like an improvement to me. Rich shippers who have the means to protect themselves get extorted a little, but rarely killed. On the other hand you had dirt poor Somalis, who had no means to protect themselves, being extorted and killed on a large scale.

                  • Frank Macskasy

                    Your arguments about Somalia remind me of a Cold War-era joke, involving Eastern Europe:

                    Q: What is the shortest list in the world?

                    A: People trying to tunnel their way IN to East Germany.

                    I submit, Rusty, that your claim that Somalia is a taxation/minimalist government nirvana is along the same lines. Funny how few people – including Libertarianz like your good self – are lining up to migrate to that godforesaken place.

                    Why is that?

                    • Rusty Shackleford

                      I never said Somalia was awesome and that I would want to live there. All I said was it isn’t a very good stick to beat libertarians with because Somalia is a better place to live now than when it had a govt. Further, the attempts (mostly by factions supported by outside states) to impose a govt have led to escalating violence.

          • JonL 1.1.5.2.4

            “The only answer is to cut taxes in all sectors, at the same time scaling back services and allowing the market to pick up the slack. ”

            Just like it has the last 30 yrs? – only more so?

            The eternal cry of the greedy and selfish……..

            • Rusty Shackleford 1.1.5.2.4.1

              Has the size of govt decreased over the course of the past 30 years? ie. tax take as a % of GDP. I honestly don’t know the answer to this question.

              • Colonial Viper

                Tax take as a % of GDP is a poor measure, one reason being because GDP is a poor measure, the other thing being that GDP is a victim of business cycles.

      • Tell me Monty are you recieving messages from “Beyond. ? Seeing as the election is still 5 months away I cannot understand how you know the result. Perhaps you believe the stupid polls we see every week in the National friendly press? You should have a good look at past election predictions . Perhaps then you will realise that only the thick heads or religious nuts predict the future.

      • Deadly_NZ 1.1.7

        Jezus Monty if you take your hand out of your trousers you may actually be able to see again. They do say it causes blindness.

  2. tc 2

    Brave move and bound to be challenging after a few of the attack lines I saw being rolled out by the nat fan club on tvnz7 last night……including the obviously loaded questions from the auto cue reader.

  3. Good stuff Eddie.

    I understand that in terms of priorities retention of the power companies in public ownership is the first priority and there is a financial hole that needs to be covered somehow. David Cunliffe has confirmed the $5,000 tax free zone although this will be introduced as finances allow.

    There was a spokesperson from the Real Estate Institute claiming that this is bad as “many ordinary kiwis” rely on rental properties for superannuation, funny that I thought there was superannuation paid by the Government to all retired people. The idea that the state needs to be in good financial condition to make sure these benefits continue did not feature in her comments.

    Good stuff though. It is good to see that the choice between Labour and National is stark.

    • Battleheed 3.1

      This is a stupid policy. Landlords will push rents up to cover their costs. Poor people will be paying more in rents because of this. Labour should think more about the people it’s supposed to care about.

      • higherstandard 3.1.1

        oh look, someone too ashamed to post the comment under their usual handle.

      • Colonial Viper 3.1.2

        Landlords will push rents up to cover their costs.

        Since when was an appreciating asset which is giving an owner capital gains in the pocket a “cost”??? :confused:

        • Battleheed 3.1.2.1

          these are capitalists viper, they invest money to make a profit. If their profit goes down because of a cgt they will find ways to screw their tenants out of more money. Every time the government intervenes in the property market tenants lose. Labour is hypocratical to say it cares about the cost of living when it wants to increase rents.

          • mickysavage 3.1.2.1.1

            BH
             
            This will be raised as an issue but the reality is that the tax will only be paid when the asset is realised, not before.  Those fortunate enough to own property will pay 15% of the realised gain to the Government.
             
            They do not have to increase current rentals to pay for it.  They just get a bit less at the end of the road.
             
            Rents do not have to increase.  They are set by market conditions, not by the amount of tax paid at the end when the asset is sold.

            • davidc 3.1.2.1.1.1

              MS
              You are wrong, rent will need to go up… and it will be by a lot.
              Investors renting out a $300K house who are borrowing at (soon to be) 8% have a cost of $24K plus rates, insurances, letting costs, down time and depreciation and wear and tear.. so costs above $32K/yr. Rent at $350/wk = $18K.
              Now if they have an untaxed 2% gain its still a dumb game at an untaxed gain of 4% it starts to look ok.
              If the gain is taxed there is a huge hole and it can only be filled by the tennant there is nowhere else for the money to come from.

              • Colonial Viper

                If the gain is taxed there is a huge hole and it can only be filled by the tennant there is nowhere else for the money to come from.

                Sorry mate making your budgeted ROI on your investment portfolio is not a right, get used to it.

                • Jim Nald

                  On second thoughts, perhaps the government should be providing support and subsidy to landlords making their speculations and gambles on the housing stock?
                  What’s good for landlords is fantastic for the economy and future generations.

                • davidc

                  Well without some return why do it? and if there is no point then the house will get sold and rental pool will reduce and rents will go up as has been stated on this blog many times purchase of a house is unaffordable to a lot of people. But I suppose ownership is not a right and must be earned.

                  IMHO domestic rentals are a mugs game, low return with lots of work and risk. I have no idea why 200,000 NZers do it!

                  • Lanthanide

                    You know what happens when the “rental pool reduces”, right?

                    Those houses don’t get bulldozed. They get sold to owner-occupiers. Owner-occupiers are no longer renting, so the demand for rentals decreases at the same rate as the supply of rentals.

                  • McFlock

                    Um – if rental houses get sold because of a lower return, wouldn’t that increase the supply of houses on the market, lowering property prices and thereby making home ownership viable for a number of current renters?

                    I can see how that would be a tragedy. /sarc

                  • KJT

                    Because of the untaxed capital gains. You dork!

                    • Colonial Viper

                      Righties really have no idea do they?

                      We actually want NZ’s housing stock to move out of concentrated ownership by investors.

                      And also have investors move into being professional landlords i.e. building new dwellings for rental income stream, not for capital gains.

                      Very boring and long term without the speculative flash and dash of the 2000’s. Exactly what this country needs now.

                • Battleheed

                  Too true viper, it’s not a right to make money from investment, but if the landlords can’t make money from an investment then they won’t invest. Then who misses out? The people of west and south auckland who can’t afford to buy their own homes. Most landlords subsidise the rent of houses now in expecting capital gains. If they get hammered on capital gains then they will raise rent to cover the costs.

                  • Vicky32

                    Most landlords subsidise the rent of houses now

                    Really? I didn’t know (and don’t believe) that…

                    • RedLogix

                      If the house is reasonably modern, ie, built within the last 10-20 yrs and is of a reasonable standard.. then it is very likely to be true.

                      Not all landlords are scum-sucking bastards… and some even vote Labour.

                    • Akldnut

                      Yeah I vote labour – I haven’t raised the rent in the 6 years of ownership and have subsidised the tennats from day one in a heritage listed building near Party Central.

                    • Colonial Viper

                      As I understand it, the issue occurs when the capital value of property grows rapidly and rental income does not kept pace.

                      Same principal re: farm earnings as well.

                      What then happens is that property owners start farming for capital gains instead of for income.

                      The market needs to be structured so that property investors can make a reasonable income from being professional landlords, while ensuring that there is sufficient affordable housing on the market (for both renters and people looking for homes to buy and live in).

                      No idea what needs to be done to do this of course, but that’s the idea.

                      The people who bought into a bunch of houses, mortgaged up, and then expected to flip the houses on in a couple of years time, pay the mortgages off and come out the other end with a tidy tax free capital gain are the ones who have been hurt last few years, and whom will hate this CGT.

                  • “Subsidise” is the wrong word.  They pay more to the bank so they get a tax rebate on the deficit and then hope to really do well when the house is sold.

                    It is a problem for the tax system and the tenant and the state in that too much money is borrowed overseas.

                    It is NOT a subsidy. 

              • Augustus

                Not to mention that if you have been counting on untaxed capital gains upon sale as part of an investment, you are acting illegal by not declaring such for income tax purposes.
                If it is your intention to re-sell the property at any stage for a gain, that is a busines activity and attracts income tax. If it is not your intention to re-sell, than how can you count on capital gain as part of your investment? And if is your intention, you are a fraudster anyway. So what’s your argument? Don’t take my easy tax-dodge away?

              • KJT

                Good argument for a lot more State housing.
                And a bigger CGT.
                I cannot see why CGT should be less than income tax on wages.

          • Zaphod Beeblebrox 3.1.2.1.2

            Same with the removal of depreciation and the GST increase on rates- hope you were as scathing then.

            • davidc 3.1.2.1.2.1

              Removal of deprecation was less than 1% increase in cost.. GST on rates is approx .05% increase… your point?

          • William 3.1.2.1.3

            You’re suggesting that capitalist landlords are not currently maximising the rent they charge merely because they will make a capital gain in the future. Yeah right!
            As you point out, they invest their money for profit. Their profit will remain the same (and could increase if a cgt reduces property prices and therefore their future property purchases are cheaper), but their capital gain will be reduced by a cgt. Bring it on.

          • higherstandard 3.1.2.1.4

            And you’re hypocritical because you’re posting under a different handle to try and distance yourself from the strawmen you keep putting up – all you’re interested in is protecting your investment properties and avoiding tax.

          • Deadly_NZ 3.1.2.1.5

            Oh joy the Spinning Kiddies are too scared to comment under their real login names. Tossers

      • Frank Macskasy 3.1.3

        Sorry, “Battleheed” – but your comment was scaremongering. And not very effective at that.

        Why would a landlord push up rents when the tax doesn’t impact on his income/profit stream until the property is sold ???

        This scaremongering is Chicken Little stuff – an attempt by some to discredit what is actually a very common tax overseas.

        And looking up, the sky still hasn’t fallen.

        • RedLogix 3.1.3.1

          Well it will depend on the details of the policy. If it the tax is incurred on an accrual basis, ie payable each year, then yes it will likely raise rents.

          If it is payable on a realised basis, ie when sold, then the effect will be delayed… but occur all the same.

    • Monty 3.2

      if you want to try and survive only on the pension then be my guest – but most people want something more in retirement, and we have been planning for a comfortable retirement since our 20’s. Property investment is a common vehicle for acheiving that. But of course the CGT will never be paid on those properties as they are very long term investments.

      So what are the maths on raising the $3.8b again?

      • Colonial Viper 3.2.1

        Labour doesn’t design it’s tax policies around you, you egocentric Righty.

        • RedLogix 3.2.1.1

          Well given that the ‘grandfathering’ date could not be before 2012, it will only apply to residential rentals which comprise about 33% of the housing market, and not farms, shares and the like, which are usually held long-term by most investors saving for their retirement (and not turned over on average every five years) then the portion of all capital gains being taxed is actually quite small.

          And given the current very flat markets.. you have to think that the revenue raised by this tax will be pretty much zero.

          • lprent 3.2.1.1.1

            …you have to think that the revenue raised by this tax will be pretty much zero

            Entirely likely in the short and even the medium term. But what it will help with is reducing the property bubble cycle that keeps starving every other area of investment in NZ. In other words it reduces the attractiveness of property investments compared to investing in something that actually makes a profit rather than just a capital gain.

            • RedLogix 3.2.1.1.1.1

              Yes I know that’s the theory Lynn, but frankly it would only work out in practise like that if the alternative investments were more attractive. Which given the track record of our stock market and finance industry… is extremely unlikely.

              What I think will happen is that the depending on the details of the CGT is that rents will rise to cover any anticipated losses and it will likely finish up hitting Labour’s core constituency hardest.

              Personally I’m not too fussed either way with a CGT… but I really don’t see what Goff is proposing, with the majority of capital gains exempted, as achieving anything like the radical change needed.

              I just see it as more or less pointless fiddling.

              • lprent

                It is a chicken and egg problem. Businesses in NZ are incredibly starved of capital especially during the critical startup phases. They continue to be starved of capital until they eventually do what they all do – sell to an overseas buyer so they can get capital to expand into offshore markets. I’m not talking theory here – I am talking about the businesses I’ve worked in.

                But you can’t build better alternate investments without going through higher risks periods on capital. Incidentally that is usually not capital raised through stock markets.They get to those much later in the piece, and by that stage they’re usually owned offshore so they list offshore. One of the main reasons that there isn’t much locally to invest in safely.

                As it stands right now, people who have or who can raise capital can get good largely untaxed returns at low risk in the property market. They don’t have to do anything apart from sit on the property. Any rational investor will buy property. A CGT will tend to slow the rate of profit made in this way because the margins will be thinner. Some will try to pass their prospective costs on to renters, but that will also cause market reaction. Too high and it becomes rational to build housing for rental profit.

                But the important thing is that the risk to the property investor will increase because the time to get the same return will increase. Overall other forms of investment with presently higher risks compared the return will become more attractive than they are now. Investors will overall take higher risks than they currently have for the returns. Over decades that will slowly move investment patterns – and that is what is required.

                It is just a pity it wasn’t done decades ago

                • Lanthanide

                  It was done decades ago, in 1973. National repealed it in 1979.

                  • lprent

                    I was not aware of it – I was 19 or 20 at the time. I will look it up.

                    That would not surprise me. It was a government that viewed anything put in by Labour for the long term as something that should be replaced by a short term fix that will cause obvious long term problems.

      • Deadly_NZ 3.2.2

        Probably better than Blinglish Already spending the 6 billion that he has not even had the mandate to sell the assets to get the 6 billion in the first place. Jesus these fucking nats that cant fuckin count. Monty put your computer back in the box, send it back with a covering note that you are too stupid to own such a wonderful piece of technology. And that all you really need to buy is a basic calculator!.

  4. BLiP 4

    Great to see Labour finally coming on-board with the Green’s capital-gains tax.

    • The Voice of Reason 4.1

      Yep, makes a Labour led Government even more likely, BLiP. Hopefully the Greens will take the opportunity to be part of the leadership, rather than just offer confidence and supply. It’s the logical next step in the maturing of the party.

      • toad 4.1.1

        I think the Greens would dearly love to hold senior Ministerial portfolios – transport, energy, environment, social development and an associate finance role spring to mind – but only if sufficient policy gains can be made.  Otherwise a smaller coalition partner ends up where the Maori Party is today if it has to swallow too many dead rats in attaining the baubles of office.
        Labour finally appearing to be coming around to the Green position on capital gains tax and on introducing an income tax free bracket gives cause for hope.

        • The Voice of Reason 4.1.1.1

          Yeah, being the junior partner has a hell of a lot of risks, but at some point a party must take the opportunity to govern, rather than just be an in house lobby group. I’d have no problem with allocating the Greens any of the portfolios you mention, btw. Particularly the environment. I’d like to be able to swim in our streams again, even if it does annoy Fonterra!

        • KJT 4.1.1.2

          To me, Having power is not important. What is important is getting good policy adopted. If Labour have the sense to start adopting Green policies, then we are winning.

  5. sdm 5

    A few questions

    1) When you tax something, the flip side is often to allow a loss to be carried forward to mitigate any future gains. Will Labour do this with the introduction of a CGT?

    2) How will Labour compensate people for an increase in rents, given that the primary motivation will switch to yeild. Yes there may be some downward pressure on house price, but one would think a better return would be sort by investors

    3) Would such a tax be retrospective, or only apply to future acquisitions?

    I am not against the idea per se, but would like more details of the ramifications of such a new tax.

    • Colonial Viper 5.1

      2) How will Labour compensate people for an increase in rents, given that the primary motivation will switch to yeild

      You’ve misunderstood the likely effects.

      Landlords and developers switching to yield instead of capital appreciation will mean more good rentals coming on stream, not fewer, because rental income on new houses will become the main source of income, as opposed to buying and holding and waiting for existing properties to go up in price.

      • Drakula 5.1.1

        “How will Labour compensate people for the increase in rents etc. etc – —

        If a future government (Labour/Green) should spend the revenue collected on Capital Gains Tax (CGT) on state housing and other sorts of accommodation like single persons apartments/flats etc the competition should drive down the market prices on rental accommodation.

        Landlords won’t be so laizais-fair or cavelier about providing expensive and shoddy dwellings.

        I think the emphesis here is what is CGT revenue spent on? That is very important because if it is used in other areas then it will not address the problem of property bubbles.

        Oversease investors should pay more CGT that domestic investors because that is where the real problems are.

    • Frank Macskasy 5.2

      SDM – 2) How will Labour compensate people for an increase in rents, given that the primary motivation will switch to yeild.

      As I wrote above, there is no reason why rents would have to increase. A CGT would not impact on a landlords income stream, and would only effect his/her sale-price at the end of his/her ownership. The rental paid, prior, is unaffected.

      After all, landlords seem to have weathered the rise in GST – which does have an immediate effect on income streams. And National supporters seem unconcerned with that tax increase.

    • Vicky32 5.3

      3) Would such a tax be retrospective, or only apply to future acquisitions?

      AFAIK, it will not be retrospective, or so I heard on Morning Report today…

  6. logie97 6

    Auckland Chamber of Commerce’s Barnett opines that it will hit the rental market.
    Apparently the supply of rental houses will dry up?????
    WTF. The houses that are currently being rented out will suddenly become empty or actually disappear off the face of the earth????

    Here’s hoping the system captures properties being hidden in Family Trusts as well…

    • Yep

      Everyone run for the hills, armageddon is coming …

      Of course what may happen is demand will go down, prices will ease, more people will own their own home and NZ Inc will borrow less from Aussie banks to buy the same houses off each other.

      Also the tax base will increase and we can keep our power shares in public ownership.

      And the downside is?

      • Colonial Viper 6.1.1

        Well the downside rumour is that there will be no general asset and land tax. But there’s still time 🙂

        • queenstfarmer 6.1.1.1

          Would be a shame if they aren’t considering a land tax. A sensible CGT would be OK but a land tax would (ok, could) be much simpler.

      • Jim Nald 6.1.2

        I tell you, I tell you, I tell you, the sky will fall, the blue blue sky will fall.

        • Herodotus 6.1.2.1

          Sorry Mickey (as someone who I am told has a link in law). What is stopping this scenario on Say Lab win this year. To cover paying tax on a large capital gain. Of selling the property on 31st Oct from Coy A to Coy B. Both have same ownsership structure, or from Family trust A to B. Then the basis of the cost for CGT to be based is on the 31st Oct price. So the govt has missed out on the tax? And don’t believe that there are many out there who will be scheming to avoid this.

          • mickysavage 6.1.2.1.1

            I am sure H that some of Queen Street’s best minds will be taxed (excuse the pun) to work out how to avoid this socialist asset grab.
             
            I was a law clerk in 1984 just before the fourth Labour Government was elected and remember going to the IRD with literally hundreds of family trust deeds the week before the election.
             
            No doubt techniques will be tried.  My experience is that increasing IRD staff is perhaps the best way to increase the tax take although any CGT will widen the tax basis and alter taxpayer activity in a beneficial way.

            • Herodotus 6.1.2.1.1.1

              So as stated no issue with this policy and at the reported 15% it is not too excessive, just concerned that much of the windfall that is potentially there now will be negated.
              Still would love to see the IRD funding be increased (On ZB last night) that the IRD payback (and the countries) is $8 in tax for every $1 invested into the IRD. And to attack all those who speculated in the 03-07 period. And as time marches on the 7 year period for tax ercords is fast going by when these records can be destoryed. There is a gold mine already awaiting to be tapped under the current laws.
              Nice to see that you have picked up on Sir Johns phrasing of “will widen the tax basis”, which is not a bad thing, perhaps Lab could ambush this phrase for its own use and how Nat did not go far enough !!! 😉
              I would love to be a partner in a tax law firm in the next few months … bonus time !!

          • Chris 6.1.2.1.2

            You would assume the law would be written to say that when taking the cost used to calculate the capital gain it will be the same as the cost used to calculate the depreciation rate, which is already written to stop people doing this (and therefore claiming a larger depreciation expense each year).

            If you don’t know this law which wouldn’t be surprising since not many people do, it says if you sell to an associated entity the cost base to be used is the original cost of the asset (for the original entity not the new cost price). Basically the only way to get out of this if you are selling a building is to write and ask the commissioner of the inland revenue to accept the new cost base for which you need to prove the transaction is real and ownership has fully passed – you can’t sell it and then rent it back to yourself for instance.

            Let me know if I haven’t explained that well.

      • Herodotus 6.1.3

        The down side – could be that it is very hard to plan govt inflowson a year by year basis that will be derrived from this.
        There to me appears to be plenty of scope for a large value of historic capital gain to be lost to the govt (Should Lab win) by the transition of this policy. But after the implementation date sure things will settle down- yet I think that the talk of how much is potentially available now is extremely questionable.
        Also at what value is to be placed on the “cost” side. Would it be from a specified date say govt valn for 2007, date of legislation being enacted? If so we are in a housing slump with stagnet prices, there is not a great value of capital gains there. Is it at the date of purchase/built (i.e retrospective). What doccumentation support would be required – sure there are records regarding raw land and land and house packages from LINZ. There are many cases of land being purchased and the dwelling at a later date being constructed (design and build)- this construction cost is not registered (there is a estimated construction cost with council permits now but this is for a basis of calculating the consent cost, and is manipulated down to reduce the council cost burden on builders).

        • Colonial Viper 6.1.3.1

          yet I think that the talk of how much is potentially available now is extremely questionable.

          True. Although Labour looks at how deficits are funded over an entire busines cycle, not just quarter to quarter like National does. The CGT is designed to be there when the economy picks up strongly again.

  7. Lazy Susan 7

    TVNZ described it last night as “Labour’s risky tax strategy”. It’s not risky it’s brilliant and has many supporters on the right amongst the business community. This policy is just hard to attack and along with upping top tax rate will frame the election around National’s hope and pray plan for the economy.

    Captain Panic Pants was all a fluster and dismissed it as “too compicated”. Bit like running a country eh John? – just too complicated! Best you get out and leave it to somone up to the task.

  8. tsmithfield 8

    I actually think this is the right thing for Labour to do. Given that they are a long way behind in the polls, they need to change things up to differentiate themselves from the government to give themselves a chance. More “me to” type policies won’t get them anywhere.

    Having said that, a CGT does involve a lot of political risk that the government will be able to target.

    Firstly, the government will be able to raise the argument that a CGT, even if applied only to certain classes of property owners, will have a negative effect on general property values by discouraging property investment, thus decreasing the overall demand for property. This might affect the equity ordinary people have in their homes, and could put many ordinary house owners in negative equity.

    Secondly, if a CGT has a negative effect on property values, it might be a long time before there is any capital gain to tax. Also, assuming that capital losses will also be claimable, any reduction in property values as a result of the CGT might result in a liability rather than a gain to the government.

    Thirdly, investors tend to hold property for the long-term, and may hold it even longer if the gains are to be taxed.

    So, I think there are plenty of ways a CGT can be attacked. So while I agree it is strategically a good move, it is also very risky and may not come off.

    • Colonial Viper 8.1

      This might affect the equity ordinary people have in their homes, and could put many ordinary house owners in negative equity.

      Sad Truth: housing unaffordibility has rocketed in the last 10 years and banks have been willing to lend far too much too fuel the housing price bubble. House prices have to fall back towards the long term price trend i.e. another 20% price fall in real terms.

    • Zaphod Beeblebrox 8.2

      I’d argue that the inability to claim depreciation (which adds to the tax landlords have to pay from year one, isn’t indexed to inflation and is at the marginal tax rate of the landlord not 15%) is many magnitudes of order higher. Do the maths and you will see.

      Or what about the extra 2.5% GST they had to pay on rates when GST was increased?

      Did not hear Nats trotting all these arguments out after depreciation was canned in the 2010 budget did you? Whats is the difference? Where was the scare campaign then?

    • Cheers TS

      Are you going to vote for us? 

  9. ropata 9

    Landlords always want to increase rent, CGT won’t change that. It doesn’t have to be onerous or affect livelihoods of retired landlords; presumably the tax is only realised on the sale of the property. A balanced CGT should reduce speculative behaviour.

    I had a couple of friends in CHC who owned 40 houses, they weren’t retirees they were just smart operators (but highly leveraged) taking advantage of a low tax investment. Pretty cool if you can get capital-poor suckers to pay the mortgage for ya.

    The Aussie banks were happy too.

  10. kriswgtn 10

    I think its great.Well done
    I also think that those landlords who manage to escape paying tax ( and yeah I know of quite a few) by collecting cash rents- something needs to be done about these evaders as well

    Our last landlord in Wgtn collected cash rents for over 14 years from all his properties.

  11. peter 11

    About bloody time , Lets encourage people to invest in areas that are actually good for the Country and future generations.

  12. Peter 12

    In the greater scheme of things most tax is paid by wage and salary earners through GST and PAYE, something else needs to be added into the mix.

    Labour has nothing to lose, as an outside bet. As NACT keep heading to the Right there is plenty of scope for viable step change alternatives as we have been promised for sometime.

  13. tsmithfield 13

    Further to my post above:

    Those most likely to be affected by decreased house values due to a CGT are voters in the range that Labour is targeting. This is because these house owners are likely to own homes of the value that investors would be interested in. If a CGT reduces the demand for investment in this price-range of property, then house owners in this range could be very adversely affected in terms of their equity.

    I can imagine an effective National line would be: Vote Labour lose $50000.

    Also, the government depends on the private sector to provide affordable housing to those who can’t afford to buy. This reduces the strain on the state housing system. If private investment in rental properties reduces as a result of the CGT, this will force up rents (law of supply and demand), adversely affecting many potential Labour voters.

    • Colonial Viper 13.1

      I can imagine an effective National line would be: Vote Labour lose $50000.

      You’re an idiot to think that most New Zealanders have $500K of assets on hand to lose $50K of.

      Well maybe the top 2% of New Zealanders do, but they can afford it.

      This is because these house owners are likely to own homes of the value that investors would be interested in.

      You seem to have missed the idea behind the tax: reduce INVESTOR CLASS interest in buying houses, so that ordinary people can afford them again.

      • tsmithfield 13.1.1

        “You seem to have missed the idea behind the tax: reduce INVESTOR CLASS interest in buying houses, so that ordinary people can afford them again.”

        You can’t argue affordability without also accepting the loss of equity argument.

        If houses become more affordable then there will be many house owners who lose equity. This is two sides of the same coin. If Labour argues that a certain price range of housing will become more affodable for the poor, then by the same argument, house owners within that price range will lose equity.

        Given that there are a lot of voters who own houses within that price range, the thought of losing equity will be a major turn-off for voting Labour. This provides a very easy line of attack for National, regardless of the ideological merits of a CGT, do you not agree?

        • Zaphod Beeblebrox 13.1.1.1

          Even you would agree though that lower house prices in the future is not a bad thing. Sure, short term political cost and long term economic benefit!

        • Colonial Viper 13.1.1.2

          Housing prices have to decline. Yes that means equity will be wiped out but that’s what happens when you buy during an asset price bubble.

          Houses which is more than 5x or 6x in cost to the median wage is well unaffordable to the majority of working people.

          • tsmithfield 13.1.1.2.1

            Zaphod: “Even you would agree though that lower house prices in the future is not a bad thing. Sure, short term political cost and long term economic benefit!”

            CV: “Houses which is more than 5x or 6x in cost to the median wage is well unaffordable to the majority of working people.”

            I agree it is good for people wanting to get into the housing market for prices to be lower. But it is bad for current house owners. Since people have a high degree of self-interest, and there are a lot of people who own houses, a CGT could be a very hard sell.

            CV: “Housing prices have to decline. Yes that means equity will be wiped out but that’s what happens when you buy during an asset price bubble.”

            So, what you are saying is that investors will experience a capital loss, rather than a capital gain. If they are able to claim this loss, which is usually the case with tax, then the government could face a substantial reduction in income, in the short-term at least. Do you agree?

            • Zaphod Beeblebrox 13.1.1.2.1.1

              I was with you until I got to the last paragraph. Why do you think the taxpayer will be obligated to subsidize bad investment decisions? (SCF and AMI excepted of course)

              • tsmithfield

                For the same reason they will be entitled to make a gain from good investment decisions.

                • tsmithfield

                  Also, if my company makes a loss, I can carry that forward to the next year to reduce tax liability going forward. Surely the same would apply to a CGT.

            • Colonial Viper 13.1.1.2.1.2

              then the government could face a substantial reduction in income, in the short-term at least. Do you agree?

              Only if people sell their houses at a loss.

              Which they are typically loathe too, so generally try to hang on to them.

              Mate current house owners can see their kids and grandkids struggling to get into housing, even if the younger generation are professional earners on $70K or $80K p.a. (especially AKL of course). Anyone on $50K p.a. up in AKL has got no show.

              Anyone who is aware of their family’s interests, as opposed to pure selfish interest, can see that this problem needs dealing to.

            • Vicky32 13.1.1.2.1.3

              But it is bad for current house owners. Since people have a high degree of self-interest, and there are a lot of people who own houses, a CGT could be a very hard sell.

              From what I have heard, the family home will not be affected! I assure you that if I owned a family home, I would never sell it – I have a son and daughter in law to leave it to. (As my grandfather did – he could never have known that it would leave family ownership, but meh.)

          • KJT 13.1.1.2.2

            Equity will be lower, but for most of us who only have the family home, and are, buying and selling on the same market it will not make much difference. Except we will need to borrow less to upgrade.

            Great. I may yet be able to sell the family home to some young family and still afford a retirement house at the beach.

  14. Hilary 14

    At the moment many landlords are largely subsidised by the taxpayer through the accommodation supplement. If rents go down the taxpayer wins as less public money is privatised through that state payment to landlords.

    • sean maitland 14.1

      People getting accomodation supplements are most likely to live in state housing. Stop making stuff up.

      A capital gains tax is only going to cause rents to go up.

      • Hilary 14.1.1

        Most people getting accommodation supplements are most definitely living in private accommodation. Only a small proportion of beneficiaries are lucky to have a state house.

        • Vicky32 14.1.1.1

          Only a small proportion of beneficiaries are lucky to have a state house.

          And they (we) don’t get an accomodation supplement!

      • Colonial Viper 14.1.2

        A capital gains tax is only going to cause rents to go up.

        Looks like you are making stuff up now 🙂

        Landlords will have to start putting their capital into good rentals instead of houses that they wait for capital appreciation on.

      • Lanthanide 14.1.3

        My friend who had a degree in statistics couldn’t find a job for quite a long time after he graduated in 2008ish. He was renting the same house as me at the time, and getting accommodation supplements from the government to prop up his part time wage he got from working in a call centre. His share of the rent was only $130/week, but with his meagre income this met the criteria for government assistance. He’s since moved to Auckland and got a flash job (and I’m sure pays much more in rent per week now).

        I would say the majority of accommodation supplements go to those living in private houses: those in state houses already have rent set to a level they can afford.

        • JS 14.1.3.1

          For once I agree with Mathew Hooten. On RNZ he called this a ‘landlord’s tax’. Also said would only affect 15% of the population (I presume he means negatively affect – which means the other 85% would benefit positively),.

  15. Jim Nald 15

    Deborah Coddington fights for the vulnerable, underdog and the poor – her super rich friends?
    Deborah, on Morning Report a few minutes ago, likens CGT to CP.

    CP = child prostitution

    • Colonial Viper 15.1

      More like adult prostitution.

      You know like a CGT being applied on Hilary Calvert’s brothel.

  16. sdm 16

    To be clear, this is a tax cut for traders is it not?

    • Colonial Viper 16.1

      You’ve got it in one! Yeah of course it is LOL

    • Lanthanide 16.2

      No. If you speculate/trade as a business, you’ll still pay income tax, as it is how you get your income.

      Everyone else who isn’t a property trader and buys a house for 10 years and then eventually sells it will be paying 15% tax, instead of 0%.

  17. sean maitland 17

    @Eddie – you are a fool if you think a CGT will cause everyone to invest in companies.

    All it will mean is that people either hold on to their properties, meaning house ownership rates will not change (defeating Phil Goff’s reason for the CGT), or they will invest it off-shore (as there is sweet-fa to invest in in NZ), or simply spend it up front which is a complete waste of the money when compared to it being tied up in assets and capital.

    Nice ideology, but rather pathetic and short-sighted. This will not have the effect that Phil Goff thinks it will.

    “Hey, lets tax middle income NZers even more to pay for our socialist utopia!”

    • toad 17.1

      No, Sean, middle income New Zealanders would be taxed less because of the tax free bracket (first $10K in Green policy or first $5K in Labour’s).  Middle income New Zealanders usually don’t have investment properties.  The 200,000 who do have investment properties are wealthy New Zealanders (or foreigners) by and large.

    • Colonial Viper 17.2

      “Hey, lets tax middle income NZers even more to pay for our socialist utopia!”

      Are you not aware that “middle income New Zealanders” earn $29,000 p.a.? And that a CGT on investment properties will have minimal impact on them as they don’t have investment properties?

    • Colonial Viper 17.3

      “Hey, lets tax middle income NZers even more to pay for our socialist utopia!”

      Yes.

      Because capitalist utopia sucks for >95% of people i.e. the bottom 95%.

    • Frank Macskasy 17.4

      No, Sean. Wrong in all respects.

      Is there any more scare-mongering?

      * Cows won’t produce milk anymore?

      * Sun won’t rise tomorrow?

      * Middle class NZ will abandon their homes and go live under bridges?

      * The world will come to an end?

      So far, critics of CGT have produced no credible argument against the tax. In effect, they are demonstrating why it’s actually a sound fiscal policy.

      As for “socialist utopia” – you give yourself away with that throwaway remark, Sean…

  18. Tiger Mountain 18

    • $15 minimum wage-tick
    • Capital gains tax-tick



    Three more significant policies clearly differentiating the LP from National could do it if they sell them hard and just stare down Key. National transfers wealth upstairs, Labours job should be the reverse.

  19. Beardedgit 19

    Should be 30% not 15%, that would be closer to marginal rates and so fairer. It is unlikely to raise much $$ in the short term as house prices will probably remain depressed for all of the next parliamentary term and CGT will not be retrospective.

    • tsmithfield 19.1

      You are right that it won’t raise anything in the short term. In fact, if capital losses can be claimed, the result of depressed house prices could be investors claiming for capital losses, reducing their tax liability. Not really that helpful for raising tax revenue.

      Also, people who trade property for speculative gain are already taxed for the capital gain under current laws. I think IRD get inquisitive in this respect with investment properties sold within ten years of purchase. So, the CGT will be targeting long-term investors. If the tax is not retrospective, as seems likely, then it could take a very long time to reap any tax benefit.

      Lets say investor X buys a house at a bargain due to depressed house values as a result of the introduction of a CGT. If that investor sells the house for gain in the short-term, the investor would have been caught under existing laws anyway. The government would have to wait for quite a number of years before they could gain revenue above what the current law specifies.

      • Colonial Viper 19.1.1

        If that investor sells the house for gain in the short-term, the investor would have been caught under existing laws anyway.

        In theory – but the link in the post makes it clear that most have been avoiding that.

        • tsmithfield 19.1.1.1

          So, what you are saying is that the government could make considerable gain by policing existing laws better. Correct?

          • Zaphod Beeblebrox 19.1.1.1.1

            Hence the reason the policy is proposed! Saves on court costs.

    • Blighty 19.2

      I think the reason for 15% is it allows for the fact that some capital gain will be nominal, not real.

      Of course, you’re taxed on nominal interest in the bank…

  20. nadis 20

    I agree this is bold by Labour but unless it is accompanied by serious tax reform it is half arsed. Our tax system is well administered by IRD, but there are some structural faults in the system itself and a CGT on investment properties would probably make that worse. If a CGT is properly thought through and is applied to all asset classes and combined with a raising of the tax free threshold for everyone (not just working for Families recipients) and a flattening of the tax bands then that would be very good for our productive economy.

    Unfortunately when you bring in a specific new tax on just one type of investment all you do is create distortions that people spend time and money trying to exploit. I do a lot of work in tax and if the policy is as hinted at there are obvious loopholes which will be impossible to plug. And any estimate of revenue to be raised will likely be orders of magnitude above what actually happens.

    I am generally scathing of most economic policies advanced by Labour, but I actually applaud them here for trying to address this. Unfortunately it looks like they wont do the CGT properly and the policy will collapse in a pile of inconsistencies, unfairness (versus treatment of other assets) and conflicting statements as Goff/Cunliffe/etc try to explain it. Which is a shame as by raising it, Labour have shown some character but I think we all know the execution will be dismal. I truly wish for this to be treated as a bi-partisan issue but that will never happen as long as politicians run the country.

    • Augustus 20.1

      Who said the proposed CGT is to be only on investment properties? I didn’t hear anyone say it was to be limited to those. CGT should be on other asset classes as well, most definitely on shares.

      Just recently, Telecom shares for instance were worth some $ 1.85. Now that they got together with their mates and got a broadband contract, it’s $ 2.45, in the space of 3 months or so. Every Telecom shareholder is 30 % better of, including not too few politicians I would wager.

      The same rule applies to shares as does to investment properties, if you buy them for the purpose of reselling at any time, you’re supposed to pay income tax. I have never, ever, heard of anyone who has been investigated, let alone convicted, of non-declaration of such gains. Speculators who are not professional share traders, who buy shares for capital gain do absolutely nothing for our economy but enrich themselves, they should pay CGT at least.

    • Vicky32 20.2

      I truly wish for this to be treated as a bi-partisan issue but that will never happen as long as politicians run the country.

      That’s a truly odd statement! Who, by you, should be running the country in lieu of “politicians?” A Chairman of the Board of Directors?

  21. davidc 21

    Well one thing is for sure and that is that accountants will be loving this idea!
    200,000 investors will now need a newly devised tax structure put in place when they buy a new property.

    That is of course after they use the obvious and easy ways of avoiding paying a CGT like having the son/daughter buy the property as residence, “splitting up” with the wife so its Her residence etc etc.

    • Jim Nald 21.1

      How might gift duties be used .. or misused?
      And how might they be reviewed or changed to meet policy objectives?

  22. Frank Macskasy 22

    The amount of scaremongering on this is quite laughable.

    Even Mathew Hooton on National Radio admitted that a CGT seemed to make sense.

  23. ianmac 23

    How about CGT on the sale of farms? And businesses?

    • Jim Nald 23.1

      Yeah, otherwise the CGT policy does not go far enough to balance out the current distortions and perverse incentives.

      • KJT 23.1.1

        Should be on ALL capital gains apart from family homes. Including farmland, business shares and other assets.
        I think only family homes under say, twice the national average house price, should be exempted.
        That should be simple enough even for Key and Brash to understand.

        Good on Labour for finally showing some gumption.

  24. Frank Macskasy 24

    “National’s other line, of course is ‘tax and spend’ but let’s examine that.”

    Indeed.

    National could be described as “borrow and spend”.

  25. Tel 25

    CGT FINALLY!

    It’s pleasing to see a political party show some intestinal fortitude and push this policy. I’m in the building industry and have been calling for the last two decades to anyone who’ll listen that NZ needs a CGT. It will finally add some long overdue stability to our boom and bust building sector by disincentivising rip shit and bust investment and construction practices. The CGT will provide more incentive for people to maintain and care for our existing housing stock, instead of painting over problems and flicking it off for a quick buck. It will also flush out slum lords who are buying up leakers for rentals. The outcome for the quality of NZ homes has just taken an important forward step, and I’m certain will have more positive spin offs for quality than the LBP scheme will ever do.

    Good on you Phil.

    • ropata 25.1

      +1 Tel,
      NZ is a weird anomaly, most other western democracies have CGT. If anything a CGT will help the chances of more people having their own home.

      There’s a large bloc of NACToid voters who are afraid that CGT will depreciate their nest egg, Labour must be careful to promote the message that it’s only a tax on speculative investment properties not the family home.

  26. freedom 26

    This announcement led to another stroll through the 2011 summary of Pecuniary interests for MPs.
    I am confident it is of little wonder to the majority of New Zealanders ( ie those trying to build a life and who are not blinded by the lust for unsustainable wealth) that any meaningful re-design of Investment to Tax relationships will never ever happen whilst the people in the House own more Houses, Farms, Businesses and Trusts than most New Zealanders would consider reasonable, or at least necessary to provide a comfortable life, even if the life you wanted was one of extravagance and elitism.

    There is a definite slant up to the right when comparing the scale of investment between the major parties, but they are all dining in the same banquet hall and not one of them wants Jo Public to flick the lights on. So they toss sinewy scraps of reform into the hallway, laughing as the starving dogs of public opinion wet themselves believing they have been noticed. Maybe i’m just skeptical of the rich.

    • Jim Nald 26.1

      NZers should be ambitiously and aspirationally setting themselves up for a career like John Carter’s.
      He has done well, thanks to the devotion and indebtedness of taxpayers.
      See Zetetic’s post today.

      • freedom 26.1.1

        i considered posting my comments above onto both threads, but i am not a fan of double-dipping

        • Jim Nald 26.1.1.1

          Your comments would be read, regardless of where they are posted 🙂
          Guess you are not a good mate of double dipton then.

          • freedom 26.1.1.1.1

            all the greed and avarice they swill galls me not near as much as the votes they betray.

            Can we all say CERA, CERA democracy once was free
            know its not for you or me
            que CERA CERRA

  27. grumpy 27

    Nothing wrong with a CGT, the Aussies have had one for ages.

    Of course, if you have “capital gains” you also have “capital losses”, so , in the Australian situation, a property investor in the Christchurch Red Zone would be able to offset his losses against taxable income, also investors in failed finance companies could offset their losses.

    All that happens is rents go up so that the investors cannot lose out.

    • freedom 27.1

      but Grumpy and the others who want it both ways…..
      if the traumatic destruction signalled from the right is wrought by a CGT this means there will be fewer and fewer people who are investing in the gluttony of property markets, then there are logically fewer people needing to raise rents to recoup ‘losses’ so even the tax take doesn’t drop as much as the scaremongers suggest.

      face it, CGT only hurts those who have excess.

      One point i would like to add to the CGT proposal is the TAX event allows a person to own two properties, so holiday homes, and rentals for relatives etc are given a general fair protection. When the second property is used as an income earning/ mortgage offset rental then there are already plenty of taxes etc to cover the grey area. But once a third, fifth, fiftenth property is owned by a person, trust or other organisation then CGT all the way to early childhood education.

  28. randal 28

    even the dompost commented that john keys was ranting hysterically at question time yesterday.
    perhaps he had too much, uh you know what, when he was in India?

    • Colonial Viper 28.1

      Curry? 😈

    • freedom 28.2

      In a perfect world we would have a daily highlights reel broadcast nationwide during the news,
      of course this would also ensure no politician is ever re-elected

      begging the question, Is this a bad thing?

    • ianmac 28.3

      Notice that he wandered out of the House halfway through Q6. Maybe whatever he was on had worn off by then. Curries aint what the used to be are they John?

  29. Daveski 29

    Can any one of those celebrating this possible policy (which may have some upsides) please explain why Labour did not introduce a CGT:
    1. when in office
    2. when the property market was over-inflated and investors were indeed making supernormal profits.

    If it is such a good idea now, it must have been a brilliant idea then.

    Can we bring out the flip flop tag??

    • Well Daveski
       
      1.  Labour probably should have but they were running surplusses so in terms of fiscal need the justification was not there.  They did bring one in back in 1973 and the tories repealed it.
       
      2.  Again they should have but the politics would have been fraught.
       
      3.  You can bring out any tag you want but what about debating the merits?

      • Battleheed 29.1.1

        What happened in 73 when Labour introduced a capital gains tax? Landlords stopped investing, there was a shortage of housing and rentals went through the roof. Who missed out? The poor who couldn’t afford to buy a house. Unless labour are going to introduce a flood of social housing to improve house affordability, this will be bad for poor people.

      • Daveski 29.1.2

        The merits of a CGT? In theory, there is a lot to like altho as others have pointed out, it failed to stop housing bubbles in places where CGT existed.

        Your arguments against introducing when it could have helped most are the weakest I’ve seen you espouse. I would have been in favour of it when the housing market was out of control but to introduce at a time when investors are bleeding seems wrong to me.

        Again, why stop at capital gains for housing – what about shares?

        I suspect that what we will see is rents will increase as a response to the lower ROI which is hardly meritorious.

        In terms of point 3 tho, much was made prior to the last election about flip flops. Indeed this was a common if not the most common attack on the Nats (it may have held some credibility too). However, it would be lacking credibility to deny that Labour is increasingly guilty of the same yet there is silence or muted justification now.

        • Blighty 29.1.2.1

          our housing bubble was one of the two biggest in the world.

          The Tax Working Group put that down to the lack of a capital gains tax.

          • Daveski 29.1.2.1.1

            Which again raises the question why Labour didn’t do it when it could have (perhaps should have) and hence why linking it to the flip flop campaign is a valid question.

          • prism 29.1.2.1.2

            Blighty – What country was first for the size of housing bubble? Let them step up and we’ll fight them for the honour to be top. Was it the USA or Ireland or who?

            We are so competitive in the things that are trivial like rugby. We can’t fight our way out of a paper bag really. Can we flex our brains instead of our muscles and get rid of NACT and their succubus that the dashing white sergeants are dishing up to us?!

        • Colonial Viper 29.1.2.2

          We need a general asset and land tax.

      • queenstfarmer 29.1.3

        Labour probably should have but they were running surplusses

        That’s not an excuse, nor an acheivement at all. Any Govt can instantly run a surplus by say putting tax up to 80%.

        I agree with your point 2. It would be unfair to blame any previous Govt for not touching a “third rail” policy. It would also be unfair to blame an incumbent Govt for not racing to embrace the idea.

        Hopefully though, now that Labour has bravely put the issue on the table, I hope that there can be a sensible debate about the merits.

    • CGT is a good idea 29.2

      1. This issue is wierdly cultural for New Zealand. Its dangerous for a government that won without proposing cgt for 3 terms to propose it in the fourth.
      2. Labour didnt need to bring it out then, they do now. Labour has to win on the issues because Phil Goff is so uncharismatic.

    • felix 29.3

      Daveski:

      “please explain why Labour did not introduce a CGT … when in office”

      I think you’ll find that they are proposing to introduce it when in office. Very hard to introduce it when in opposition, you see.

      Silly goose.

    • KJT 29.4

      Certainly.

      “No asset sales in the first term”.

      “We will be prudent financial managers of the economy”.

      “No more policies that have not been properly costed”.

      “Wages will catch up to Australia”.

      “No more Nanny State”. May not be a flip flop this time. We have a big brother repressive surveillance State instead.

      Labour has learn’t by their mistakes obviously.

      National is repeating Muldoons borrowing for election bribes, tax cuts and benefits for cronies, and all the other failed policies of the last 35 years.

      True. labour could have bought in a CGT, but imagine the screams then!

    • Frank Macskasy 29.5

      Daveski, you asked “Can any one of those celebrating this possible policy (which may have some upsides) please explain why Labour did not introduce a CGT… when in office”?

      Probably because Labour weren’t in hoc to $16 billion, and borrowing $380 million a week. (They actually paid off sovereign debt.)

      Probably because Labour didn’t cut taxes for the wealthy, leaving a shortfall for government income.

      And probably because Labour didn’t have to cope with the worst recession in decades – which, while no fault of National, they have not handled very well.

      If we want First World social services and infra-structure, we have to pay for it. There ain’t no such thing as a free lunch…

      … and why the feck am I, a lefty, having to explain basic economic principles???

      • Daveski 29.5.1

        Frank

        I think your reply is more persuasive than the others which have focussed on the political issues of introducing a CGT. I can see an argument for introducing CGT to reduce the attraction of investing in housing (as opposed to something more productive). My point which you have overlooked is that the obvious time to do so was at the peak of the housing boom. Instead, Labour was happy to claim the credit for the good times but appears to be now discrediting its own actions.

        The basic economic principles would also state that the market will react to this in at least possible ways. One by not selling which reduces the tax haul. Two by tax minimisation or avoidance (the accountants and lawyers will be thanking Labour should it ever be introduced). Three by either not investing in housing or increasing rents – both of which will impact those you would likely claim to champion.

        • lprent 29.5.1.1

          My point which you have overlooked is that the obvious time to do so was at the peak of the housing boom.

          That would be the best economic time to do it – yes. However the best political time to do it is when home owner voters are not hanging out for capital gains in a rising market.

          Ummm what type of housing market do we have now? Flat or even slightly down. The best political market to introduce a CGT.

  30. CGT is a good idea 30

    CGT is a good idea but I disagree with the OP that it will free up a lot of capital for more productive investment. People like investing in property because they have some measure of preservation of the asset – they dont have that in shares. Property will likely always preferable to lay investors. There may be a shift from property investment but i dont think it will be massive.

    • Colonial Viper 30.1

      Dude we dont need investment in the sharemarket (particularly in existing SOEs!), we need investment in high tech high wage companies which are going to employ skilled workers on good pay.

      (Although IPOs are a good way for those companies to raise capital…)

  31. Lanthanide 31

    All we need is for Brash to come out in support of Labour’s CGT. That would make Key look right stupid.

  32. prism 32

    Oh woe is me, CGT and the sky is falling. Look out ducky.

  33. Chris 33

    Typical moronic socialist intervention – we can’t think of anything else new so lets keep taxing the ‘rich’, lets tax the hard working and successful kiwis of NZ. A really great way to incentivise people. Oh ! I forget that’s right according to Cullen they are just ‘pricks’ any way. Socialism again show again how morally and financial corrupt it is. A failed ideology that won’t go away and it won’t as long as you keep people dependent on it and blind from the truth.

    • Colonial Viper 33.1

      Wow…Key and English are proposing an asset sales programme from the 1980’s and you are accusing other people of not having new thinking.

      LOLZ

      lets tax the hard working and successful kiwis of NZ.

      Yes let’s because those who earn over $100K pa and own >$1M in assets can afford to pay a little more to help provide the services and benefits that society needs, since they are the ones who get the most from society.

      • KJT 33.1.1

        The hard working and successful people are mostly on under 100k, if they havn’t left for Australia. Bludgers, speculators and parasites seem to be always with us no matter what we do.

        It is fair that those who take the most from society should give some back.

        We need to take money off them so it can be re-invested in something more useful than playing with money market derivatives and pushing land prices up.

        Never forget that the time of greatest prosperity for the USA was when they had a 90% millionaires tax.

        • Rusty Shackleford 33.1.1.1

          Correlation doesn’t equal causation. The prosperity wasn’t caused by the high taxes. And a little question for you. Did the high taxes equal high tax receipts? If not, how could the tax be anything other than envious and punitive?

          • KJT 33.1.1.1.1

            Yes the US did have high tax receipts at the time. It was re-invested in infrastructure.
            Infrastructure which is now being allowed to run down to nothing after 30 years of tax cuts. the market is certainly not providing roads, power, education and medical care except for a few.

            The prosperity was a result of the high taxes. It meant money was put back into the productive economy instead of accumulating, in a few hands, who mostly use it to gamble with. Notice we just had to bail a lot of them out. Or did that not happen in your alternative universe.

            How is taking back some of the wealth which was made by the efforts of all of us, but accrued by a few thieves, envious and punitive.

            http://kjt-kt.blogspot.com/2011/06/politics-of-envy.html
            “think that we should call this ‘legitimate grievance’ rather than ‘petty jealousy’. The phrase ‘politics of envy’ is very ugly indeed. I hope in the future this phrase is deemed unacceptable in the way that racist or homophobic terms are now deemed unacceptable””.

            • Rusty Shackleford 33.1.1.1.1.1

              Did the high tax receipts persist? Tax receipts jumped when Reagan CUT taxes.

              High taxes cannot cause prosperity. The stock of capital (by which new wealth is created) is not created by govt. This is impossible by definition as the govt has no wealth of its own with which to build capital. The stock of capital is not made larger by central planning. It is only moved from one place to another.

              Those corporate entities who blew up the economy should not have been bailed out. A limited govt would have had no means to do so, therefore they either would have gone broke or (more likely) never have leveraged themselves into untenable positions in the first place.

              If you covet another persons positions, you are envious. It doesn’t matter if you think you can spend his money better than he can. It is envy and jealousy. Using this tendency for political gain can naturally be referred to as “politics of envy”.

              • KJT

                More alternative history from the Rustyverse.

              • Colonial Viper

                It is envy and jealousy. Using this tendency for political gain can naturally be referred to as “politics of envy”.

                The politics of envy and greed are part of the same coin mate.

                That’s why the Right Wing has a sickness for more land than one person can tend, for more houses than one person can live in, for more money than one person can spend in a year.

                All this while their neighbours are hungry, are cold, and down to their last $40.

              • Colonial Viper

                A limited govt would have had no means to do so, therefore they either would have gone broke or (more likely) never have leveraged themselves into untenable positions in the first place.

                You’ve confused ways, means and ends.

                And you’ve ignored the villains of the piece, the capitalist banksters.

              • KJT

                Tax take decreased when taxes were decreased as you would expect. Same thing has happened here recently. NACT has had to BORROW to cover their tax cuts.

                Monetary capital does not create wealth. Work creates wealth!

                IT IS NOT THEIR POSSESSIONS. IT IS OUR WEALTH THEY HAVE STOLEN.

                http://kjt-kt.blogspot.com/2011/02/how-banking-destroys-economy.html

                Funny how capitalists always need a socialist intervention to rescue them.

                Or they do such a shit job of building up businesses they have to repetedly grab ours.

                The wealthy are so envious of the little they have left us they are trying to grab that too.

  34. davidc 34

    there are about 60,000 houses sold a year and roughly a third are investments so…
    20,000 x $350,000 x 2.5% (average long term gain) = $175 mil/yr at 15% is $27 mil a year in tax.
    I hope Labour have a better idea how to raise a few billion dollars!

    • Colonial Viper 34.1

      You’re hopeless at this. You better add in all land and buildings sold, commercial and residential.

      • davidc 34.1.1

        well the above is all the residential investments .. I welcome figures from you to show where there are current untaxed property transactions in the order of 600 billion dollars per year to get to the reqd tax take.
        Go for it Einstein.

      • Chris 34.1.2

        Not all land and buildings sold will be captured under this. As already mentioned it would not include family homes or whatever, plus property investors who sell their property are already taxed on their capital gains so would not be captured under this I am willing to bet.

    • Frank Macskasy 34.2

      Well Davidc, if the tax-take is going to be as “low” as you’re suggesting, then property investors/speculators have nothing to fear, eh?

      You know, it’s alway bugged me; why does a Property Developer, who builds ten new houses, and sells them, have to pay tax on his income, plus ACC, plus gst, plus a whole slew of government and local body charges…

      … whilst a speculator/investor buys those SAME ten houses and pays little or no tax at all; eventually sells those same ten houses; and pays – nothing in tax.

      Yet, it’s the Property Developer who – despite not always having a good rep – is the poor bugger who works his guts out; takes risks; and actually ADDS to the housing stock.

      Whilst the speculator/investor/parasite, pays sweet f**k all, whilst sitting on his hands.

      Please enlighten us: how is that fair?

      • davidc 34.2.1

        Its not fair nor is it legal, and I agree that untaxed trading should be clamped down on.

        Do you think that someone who habitually avoids tax on traded property will all of a sudden change his spots and declare the income just because you change the name of the tax? I think not.

        • Frank Macskasy 34.2.1.1

          “Do you think that someone who habitually avoids tax on traded property will all of a sudden change his spots and declare the income just because you change the name of the tax? I think not.”

          It’s pretty hard to hide income after selling a $500,000 property. One can most certainly try – but I think the IRD are fairly clued up when it comes to that sort of thing.

          Anyway, since when did we not try to address illegal behaviour?

          • Jim Nald 34.2.1.1.1

            Maybe we should take lessons from the likes of Whitechapel.

          • davidc 34.2.1.1.2

            Frank, well your scenario has someone not paying tax on 10 transactions, why havent they been caught? if indeed IRD is that clued up?

            2003 – 2007 years were rife with evasion…why was nothing done?

        • MarkM 34.2.1.2

          davidc
          Your wasting your time arguing the merits of Labours supposed $4.5 b a year CGT.
          Most of their supporters either dont care or simply dont understand the numbers.

          For Labour to bring in that sort of money requires $1.5 trillion dollars a year of sales at annual average growth of 2% if CGT is 15%

          If investment sales were at that figure there would be a lot of wealthy Real Estate agents

          • Frank Macskasy 34.2.1.2.1

            As I mentioned above: if the CGT won’t yield much, then property investors have little to fear, right?

          • toad 34.2.1.2.2

            I suspect the $4.5 billion that is being bandied about is the revenue that the Greens CGT proposal would eventually bring in.  That’s not just on investment properties, it’s also on farms, shares, gold, art works, holiday homes… everything apart from the family home.
            And it would be charged at the same rate as income tax.

    • So let me understand this DavidC.
       
      Your estimate of the effects of a policy that has not been formally announced and the details of which are unclear and which may include a CGT on farms is that it may not amount to that much?
       
      Don’t you think we should wait for the details to come out?

      • davidc 34.3.1

        so earlier when you praised Eddie for his thoughts you didnt say.”Don’t you think we should wait for the details to come out?” or becausae I am not spouting the Lefty line I should shut the fuck up and just go away?

  35. freedom 36

    I suspect if every current Tax law was dropped and a single flat tax of 10% was put on every Corporation, every trust, every income, every investment, every transaction etc, then the tax take would probably triple overnight because every scheming thieving duplicitous act of Tax evasion is brought into the balance.

    Certainly some would be adversely affected. Not just the big Co’s who may reconsider doing business here, and if they did leave the employment/production hole would be filled by Kiwis and their thousand ideas that are held back by International Overlords Inc. The adverse affects i bring attention to particularly affect the charities, but then again with the gigantic gains in Tax take the society will have less need of the charities as their Tax coffers now offer education, health and welfare for all that need it and the resources for R&D swell to overflowing as vast swarms of citizens return to NZ giddy in the knowledge that their skills and abilities will be renumerated fairly, allowing investment to thrive and the desire to turn NZ into a Dairy Farm would thankfully die a long overdue death. Meanwhile back in reality …. here is a picture of a goat reading a book
    http://money.msn.co.nz/img/budget10/20may_article-bill-english-budget.jpg

    ( and yes to be fair, although I owe a little tax on my joke of an income from the last couple of years it is still less than what John Carter cost us for a single year’s strorage of a private motor vehicle
    and i intend to pay my share of the Tax i owe. I challenge every Member of Parliament to honestly say the same)

  36. Pete 37

    A state tax of 5% on the full price of the property at sale (rather than just on capital gain) didn’t deter Key from buying his holiday home in Hawaii. Nor did the additional 10% in federal capital gains taxes he would incur at sale.

  37. tc 38

    look around RWNJ’s, knee jerkers and various scaremongers who knell at the neo liberal altar of their idol Sideshow John and that pot of gold he collected gambling with other folks money…..not much’s changed really.

    CGT is the obvious next step and from last recollection didn’t cause the collapse of any of the developed economies who introduced it, even the Nat’s own working group recommended it in order to broaden the base and catch Oz, yeah remember that 08 promise from sideshow !

    Pity the political, media and social landscape here isn’t developed or mature enough to accept this but then maturity and facts get in the way of this gov’t and the MSM induced spin.

  38. Herodotus 39

    I hope and pray that Labs think tank does not agree with the NZ Herald $4b p.a. sourced from this tax. Does anyone have any links how this working group came to this amount – They must have been testing Kronic. Anyone involved in the property market should be aware of the constraints hat exist for price gains. The market is at best stagnant- and there is a chance that the market is still overvalued-We all missed a great chance to implement this 5 years ago – still a good idea even if late is still a good idea. 😉
    “A recent Tax Working Group report indicated a capital gains tax of the sort Labour is proposing would raise more than $4 billion a year. ”
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10736641

    • Colonial Viper 39.1

      $4B does sound like an overestimation in this housing market. However, this is a CGT, and applies to more than just residential housing.

  39. zug zug 40

    I went to a UMR focus group (the one labour uses im told) and they asked us a lot of political and economic questions.

    One of the main topics they were exceedingly interested in was capital gains tax, we discussed this at length.

    They wanted to know if we supported the idea at all, most people in the focus group did.

    We were then asked lots of questions about how it could be introduced fairly, for example no capital gains tax on your only family home but for investment property only.

    We were asked what sort of rate would be fair also.

    The facilitator played devils advocate and raised all the usual Rightie arguments, I systematically destroyed these and in the end the whole focus group was in agreement that we are long overdue for captial gains tax as almost all developed countries have them already.

    So yeah, I have strongly suspected for a month or so now that Labour will test the waters on this issue publicly.

    One of the main reasons I went to the focus group was because I thought UMR was labour’s group and I wanted to show my support for the left perspective so hopefully labour could finally grow a pair and be a real progressive party, you know to give the goffice the courage to actually go against the status quo.

    By turning up and fighting from the left corner I managed to convince the swing voters that capital gains was a sweet idea, and that Goff should man up and do it. Maybe just maybe the results of this focus group counteracted the results of the previous group who were mostly against it according to the facilitator.

    • Colonial Viper 40.1

      That’s very darn nice.

      I wanted to show my support for the left perspective so hopefully labour could finally grow a pair and be a real progressive party, you know to give the goffice the courage to actually go against the status quo.

      This too 🙂

      • PW 40.1.1

        It’s also concerning that Labour is still, after many policy rounds and endless pushing from members, relying on the vagaries of focus group polling with the huge influence of facilitators to choose it’s policies. The goffice has to do better – this time it worked out OK, what about all the other missed chances due to straw in the wind policy making?

        • lprent 40.1.1.1

          Nope. But it is part of the mix.

          Just think, Helen used to have to put up with me opining while I was fixing her computers. And so did other poliicians. All of that politeness that I lavish here used to and still does go to those grateful Labour politicians.

          Politicians aren’t exactly insulated from their communities. In fact it is usually hard to keep them from rushing in to do some handshaking and baby kissing when there is work to be done. Most of it consists of having people ellng them what should be done. Focus groups are a way of testing those many ideas under conditions that test the ideas.

          I suspect that we get a few lines tested in the media and these blogs as well for flaws. Probably why there are these early ‘leaks’

    • Zaphod Beeblebrox 40.2

      Actually I think you will find that a lot of those in the focus group who were agreeing with you would have been ‘righties’ (for want of a better word).

      The only people who don’t like the idea are the NFF, the Auckland Business Establishment and National MPs who between them own a lot of property assets and I’m guessing dont pay a lot of tax.

    • sean maitland 40.3

      Ok, systematically speaking, how will a CGT cause people to invest in (so called) productive businesses like is being bandied around here, when that will be taxed at a higher rate than the CG tax on property?

      What about the inevitable surge in house prices when investors stop selling them?

      Convince me like you convinced the group……

      • Colonial Viper 40.3.1

        What about the inevitable surge in house prices when investors stop selling them?

        I guess those investors will be focussed on provision of long term rental properties then, instead of flipping their houses for capital gains 😀

      • Vicky32 40.3.2

        Sean, I had to read your post many, many times, because of your persistent use of the word “like”, when you ought to have used “as”… and I am a native English speaker! (Maybe I need to be a native speaker of American?) Sorry, when your grammar adversely affects your readability, it’s time to be subjected to some education on the subject…

        • sean 40.3.2.1

          Lol, at least thats a better response than the deafening silence of Zaphod Beeblebrox! A truly stellar job at convincing me, just as (there you go) I assume he did on the people in the group he was at.

  40. FYI – seen this folks?

    PRESS RELEASE: SUE HENRY SPOKESPERSON HOUSING LOBBY

    “The Housing Lobby supports the Labour Party’s proposed Capital Gains Tax”.

    6 July 2011

    “ I believe that there is massive public support for Labour’s proposed Capital Gains Tax,” says Sue Henry, Spokesperson for the Housing Lobby.

    “The speculative market has falsely over-inflated property values for years shifting out house buyers and pushing up rents.”

    “There is no benefit to New Zealand when the taxpayer subsidised capital gain on multiple properties goes off shore, in most cases, with foreign overseas investors.”

    “It was disturbing to see advertisements in newspapers from a variety of Asian countries promoting New Zealand as a ‘gold mine’ from which to make a quick, tax-free profit, with NO stamp duty, NO capital gains, and NO limits on foreign property investment.”

    “It’s about time the party was over for these greedy property speculators.”

    It’s long overdue for the ‘taboo’ to be lifted on this issue.

    “The Housing Lobby fully supports the introduction of a capital gains tax with an exemption on the family home,” concluded Ms Henry.

    Sue Henry

    Spokesperson

    Housing Lobby

  41. Tangled up in blue 42

    Key has already proven already that the numbers don’t add up. . . even before Labour has confirmed the details of its tax policy!

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10736671

    Key said a 15 per cent capital gains tax on individual’s investment property would raise $700 million a year, after 15 years. That wouldn’t raise enough for Labour’s promises.
    Citing media speculation that a capital gains tax would raise $4.5 billion annually, he said that the Tax Working Group came up with that figure but it was at 30 per cent and not just on investment properties but shares, business properties, farms, baches.
    Looking at the way Australia had implemented it, it had taken 15 years to fully achieve.
    “So for the next three years if they don’t sell assets as they are arguing they wont, if they do have a $5000 tax-free threshhold as they arguing they will and they do take gst off fruit and vegetables, they are $12 billion in the hole for the first three years of that theoretical government with no cash coming in at all.

    • Blighty 42.1

      so, he hasn’t proven anything. Because he doesn’t know what Labour’s policy is or what its other policies are, apart from those already announced.

      • D14 42.1.1

        And this analysis from the guy who says his policies will produce 15k jobs in 4 years!,

        • Colonial Viper 42.1.1.1

          Well, the Budget said that there would be 170,000 new jobs in the next year, not the Government.

          Believe it or not.

    • lprent 42.2

      Yep, it takes some time to become productive. But that just means we should have done it a decade or so ago.

      The revenue isn’t the issue with a CGT, at least it isn’t with me and many others. What is at issue is the unproductive investment pattern because we don’t have a CGT.

      • Tangled up in blue 42.2.1

        Ok. So won’t be seeing Labour selling this as an alternative to asset sales as a way to fund fixing CHCH and paying off debt?

        • lprent 42.2.1.1

          I’m not really interested. Basically a CGT is worth doing purely on it’s own merits for the change it will slowly cause in investment patterns.

          As for paying debt including ChCh, the best way is to remove the utterly daft tax cuts. As it stands right now, the National government is creating massive debt in pursuit of a unproven ideology. Just as they did into 1970s, 80’s and 90’s all for various reasons. They are wastrel spendthrifts. Somehow, I think that their tax cuts will not grow the economy, nor will their service cuts – they have not in the past when they tried it. Just as their magical job and wealth creation projects failed in such projects as think big or a cycleway.

      • sean 42.2.2

        Ok, so assuming that a CGT, if correctly implemented, levelled the playing field, so that there is no benefit to investing in property – where is all the money going to be invested when we are bereft of good companies to invest in?

        IMO its still going to go into either property or will be invested internationally.

        • lprent 42.2.2.1

          Chicken and egg argument.

          The main reason that we have so few companies to invest in here is because most get strangled before or soon after birth through lack of investment capital. The problem is that currently property is a pretty high return investment with minimal risk because the returns are not taxed like every other investment is provided you’re willing to jump through a few hoops to use the tax loopholes. A CGT will change the risk/return ratio – which is what it is intended to do.

          But it is up to investors to put their money where they get the best return for the level of risk. All a CGT does is partially balance the field in a way that will eventually increase the number of companies to invest in and to give the range of investments at different risk/return levels. In the short term, the lack of good alternatives will mean that investors will probably have to accept higher risks. Of course they could reduce their risks by getting involved in the companies.

          In other words – the short answer is that investors will have to do more work. They have been lazing along on a tax loophole for too long.

    • KJT 42.3

      Still 2 billion less than Nationals hole.

    • KJT 42.4

      As compared to NACT. 17 billion in the hole and counting.

  42. infused 43

    I some how thing this won’t do very much. I’d still buy a second house; I just wouldn’t sell it. Isn’t goffs whole argument for this built on affordable housing?

    Yeah no.

    • Blighty 43.1

      If you wouldn’t ever sell, then you can’t be buying for capital gain. Which is all well and good. It’s the vampire-market which runs on capital gain that needs to be stopped. You clearly would be stopped from being a landlord for capital gain but would still buy a rental, others would decide the returns are better in investing in the productive economy.

      • RedLogix 43.1.1

        You clearly would be stopped from being a landlord for capital gain but would still buy a rental, others would decide the returns are better in investing in the productive economy.

        And I think most landlords have already switched from concentrating on capital gain to yield… ie they’re looking to see the miserably low returns in the order of 2-5% in the last decade get closer to the 7-10% returns that are the norm historically.

        In other words there will be pressure for rents to go up.

        You would only switch to an alternative investment if you think it’s going to be better, but with the appalling track record of NZ’s stock market and finance industry… I’m certainly not going to.

        • Colonial Viper 43.1.1.1

          Pressure for rents to go up as job security goes down, wages stay flat and big city commutes become even more intolerable. As the pay gap with Australia widens and as petrol stays over $2/L. Having more and more trouble finding decent accomodation at affordable prices while reading in the paper that record numbers of Kiwis are heading across the ditch and that hundreds of public sector jobs are disappearing month by month.

          I wonder what will happen.

          • sean 43.1.1.1.1

            Despite the number of Kiwis going to Oz, population is still increasing, and new places are not being built due to the high costs. Auckland and Wellington are going to be getting a decent proportion of the people escaping Christchurch also. More pressure on rental housing.

    • Colonial Viper 43.2

      I’d still buy a second house; I just wouldn’t sell it. Isn’t goffs whole argument for this built on affordable housing?

      Unless you buy a thousand houses at a time what you do with your investment house matters zip to the marketplace.

    • KJT 43.3

      Well in my case, if I had to pay a capital gains tax, and get a lower selling price, I would keep the original house and rent it out. Making another rental available.
      It could result in more, cheaper, rentals being available.

      I do not see why family homes in the million dollar range should be exempt. CGT should be payable on family homes on, say, twice the mean house price in NZ.

      Have to wait and see.

  43. felix 44

    Was listening to Parliafunkadelicment today. National are putting on a big brave face but it’s clear that they’re shit-scared of CGT.

    Shit scared.

    • Colonial Viper 44.1

      Now why might that be I wonder. The Opposition is proposing to raise taxes in an election year.

      You would have thought that Key and English would be jumping for joy at the ‘opportunity’ this gives them.

      Unless they really really thought that LAB wouldn’t be serious and ballsy this election year. Or perhaps National is fighting internal politics currently, and fending this off is the last thing that it needs.

  44. Vicky32 45

    I have just been listening to 3 News coverage – just as slanted as One News last night, all about why it won’t work… Yes, they’re terrified!

  45. Chris 46

    Again Goff mismanages this totally. This story was ‘leaked’ the other day and now we have Goff strutting the corridors with his funny walk saying nothing and he will ‘release details next Thursday’. Meanwhile the media and Key are doing a great job of selling the negative aspect of a CGT of which there are many – increase rental prices , compliance costs, the fact that the last 2x reviews decided against a CGT etc. This CGT is a gutless ‘half hearted’ CGT. Goff again shows his clear lack of management skills and displays Labours lack of election planning and crises management.

    • Colonial Viper 47.1

      Lovely bit of fictional writing there.

      You forgot it was John Key who said no GST increases and then actually increased GST 🙂

    • The Voice of Reason 47.2

      Ha ha, nice try Pengu. An unsubstantiated claim in an obscure website. Even Farrar wouldn’t give that the time of day. Try Whaleoil, he’s not so discerning.

      • lprent 47.2.1

        Gullible or credulous are the words that spring to mind when discussing blubberboys habit of believing whatever anyone tells him. But of course he has his standards. He wants to hear it from several sources. Which is why it is always adviseable to have several ISP connections.

        Another word is ‘stupid’

    • queenstfarmer 47.3

      On this issue I’d say so what if there is a flip flop (by a party or a leader). The fact is this has been such a third rail issue that pretty much everyone who matters will have been against it at some stage. Good on Labour for putting it on the table, so at least there can be public debate on it.

  46. Hilary 48

    All those commentators in the media saying this is a terrible thing should be asked to disclose whether and how many investment properties they personally own. I bet only those with them actually oppose a CGT and that is only a small minority of the population.

    • davidc 48.1

      approx 200,000 people/families own domestic investment properties (that isnt counting farmers, comercial owners, forestry or anything else) its hardly a trivial proportion on the population.

      • Colonial Viper 48.1.1

        4,200,000 = The Many

        200,000 = The Few

        • davidc 48.1.1.1

          200,000 owners probably represents 350,000 voters.
          Lets see come 26 November how that “few” vote.

          • The Voice of Reason 48.1.1.1.1

            They’ll mostly vote same as last time. National. So what?
             
            Labour want to convince the ones that didn’t vote at all last time to give Goff a go. The registered non-voters who just went ‘meh’. The election relies on Labour inclined voters actually going to the polling booth on the day and without even releasing the policy yet, Labour have the whole country talking about them. What the hell was Key thinking? He’s just given Goff a free pass to tweak the policy in the next few days to soften the aspects that people don’t like and polish the parts that already meet public approval.
             
              
            Maybe throw in some deposit assistance for young aspirationals looking to buy their first home, funded out of the CGT. That’d make it worth popping down to the booth for a hell of a lot of people and even Mom and Pop property investors would probably appreciate their own offspring benefitting.

            • Colonial Viper 48.1.1.1.1.1

              No need to give the NATs coaching lessons mate. They read this blog too you know.

              • The Voice of Reason

                Quite right, CV! They are looking bereft of ideas, eh. Almost clueless.

                • Colonial Viper

                  Yep, clueless and panicking.

                  Maybe throw in some deposit assistance for young aspirationals looking to buy their first home

                  In Oz the ‘First Home Buyers Assistance Grants’ schemes were often referred to as the ‘First Home Sellers Assistance Grant’.

                  All too often vendors just jacked up their prices by the value of the grant. In other words it ended up fueling the property price bubble over there with tax payers money.

                  IMO the best way to get people into their own homes is to ensure that workers are fairly paid, and that the govt is adding significantly to the stock of quality inexpensive housing available (long term rentals and for sale).

                  • The Voice of Reason

                    Yeah, I can see the pitfalls, but I’m sure there’s a way of balancing it out. Maybe keep the vendor ignorant of the mortgage arrangements till after it’s gone unconditional? Anyhoo, the point is that Goff is in the game if he can pitch it right. How kewl is that?

                    • Colonial Viper

                      I reckon Goff – and the entire Labour front bench – is only just starting to hit form now 🙂

                      Goff should deploy and play his entire A team against Key.

                      Aspects of the campaign will remain presidential, yes…but choose elements of it to change too 🙂

          • Frank Macskasy 48.1.1.1.2

            Well, Davidc, you can remove my name from your list of 200,000. I own an investment property and I certainly will be voting Labour.

            And it won’t stop me from acquiring other properties as I deem fit.

            A CGT is fair and levels the tax playing-field. If some people don’t like it – tough.

        • True Blue 48.1.1.2

          Dick Brain, there are not 4.2millon registered voters in NZ.

  47. felix 49

    Amazingly English said today that the reason National rejected the idea of a CGT is that it won’t do much in the short term due to the flatness of the housing market.

    Which I find incredible, as isn’t that the perfect time to introduce it? So as to ease into it without anyone getting slammed with a big new tax bill overnight?

    But nah, typical National, no long-term thinking.

    • Colonial Viper 49.1

      Anything past November is long term thinking for this Government.

    • davidc 49.2

      In the 9 years of Clark govt the NZ housing stock went up in value by $280,000,000,000

      Dont you that think that would have been nice to get 15% of?

      but na…lets do it now when it earns nothing.

      • felix 49.2.1

        So are all your ideas based on doing exactly what Helen Clark’s govt did?

        Or just all your ideas about CGT?

        • davidc 49.2.1.1

          Well if CGT was brought in today it may take 50 years to bring in that same amount.
          But I do understand that having a desire to pay tax, own a house or investment is not part of the Lefty creed.

          wait…self edit…Clark owned 4 or 5 houses?.

          • felix 49.2.1.1.1

            Sorry, but I’ve read your comments a couple of times and I still can’t see what your argument against a CGT is.

            You’re going to have to spell it out for me.

          • lprent 49.2.1.1.2

            Yeah and I have a MBA and have worked in private industry for my entire life. Of course that doesn’t fit your idiotic prejudices either.

            If you want to be a idiot wanker who jerks off with stereotypes that bear absolutely no relationship to reality, then I will start doing the same to you. However mine will be directed at you personally. I’ll be looking at the more moronic traits that I think may be in your nature because I am inventing them from spurious predjudices – just like you do.

            For instance I suspect that you are a disgusting pervert. You name suggests that to me. You care to comment on that accusation?

            I could just moderate you – but I haven’t played with a old fashioned 2008 troll in quite some time. This is an opportunity to keep my over reaction commenting shiny.

          • Frank Macskasy 49.2.1.1.3

            “wait…self edit…Clark owned 4 or 5 houses?.”

            So what?

            Do you think politicians should be exempt?

            Or are you trying to make some wierd point that, under closer scrutiny, might appear to be an own-goal?

            If politicians owned 4,5, 100 investment homes, they’d be liable to pay the CGT irrespective of who they are or whichever Party they belong to.

            As it should be.

  48. Jenny 50

    .
    New Zealand Herald

    Labour is understood to have considered and ruled out a land tax and a financial transactions tax.

    NZPA

    I hope the Party can release Labour’s reasoning behind rejection of the later.

  49. Jum 51

    Having witnessed all the kneejerk reactions from various profit-oriented groups opposing the capital gains tax I certainly approve of it.

    Not to mention the selfish, greedy people like Monty promising to hide their money away, admitting that is what they have always done, which proves the wealthy never pay tax so have no right to any of the 14 billion dollars of tax cuts. Take the tax cuts from the wealthy as that is not returning some of their tax – that is a free handout to them. They’re the real bludgers off the taxpayer/ratepayer. Put the money into new infrastructure instead of selling off SOE’s that are not any government’s property – government is merely the guardian.

    If a financial transactions tax gets the money back from the wealthy, that steal from New Zealanders on a daily basis, then I think that is a fair way to deal with the paper shuffling/money laundering going on in the background by the moneytraders/white collar criminals. With a moneytrader in charge of the government with expertise in derivatives and speculating earlier on the NZ dollar when he can make money risking this country’s financial safety does not suggest New Zealanders are in any way secure.

    Globally there are banker trolls, with no loyalty even to their place of birth, being placed in countries to oversee the collapse of financial security and strategic structures which can then be of benefit, financially, to those who seek to increase their power and their profits.

    New Zealand is one of those important assets that are being opened up to plunder.

    • felix 51.1

      I’d just about support a CGT solely on the basis that it makes the Nats and their apologists so angry.

      Call me shallow but history shows that approach has a pretty good hit rate.

      • lprent 51.1.1

        Not all of their supporters – just some of them. There are also a lot who are saying it is an idea whose day has come.

        Interesting eh….

    • Colonial Viper 51.2

      Put the money into new infrastructure instead of selling off SOE’s that are not any government’s property – government is merely the steward

      A minor edit there as that is an idea I quite like 🙂

  50. Frank Macskasy 52

    I guess we can sum things up by suggesting to opponants of a Capital Gains Tax that they can always invest in an OECD country that doesn’t have any such tax.

    The only thing is – most do. And for very good reason.

    A CGT will level the taxation playing field considerably and give businesses a better opportunity to seek investment capital.

    Those who oppose a CGT seem to fall into two categories;

    1. National/ACT supporters who don’t like taxes, or are frightened that Labour has cottoned on to a policy that might appeal to voters,

    2. Those with vested interests who oppose taxes because it impacts on their profits.

    The best thing about Labour’s policy is that voters now have a clear choice as to which direction New Zealand should go, economically;

    National: to sell state assets. This is unsustainable. Once a state asset is sold, it cannot be sold again.

    Labour: a CGT. This is sustainable over the long term.

    One question remains: has National stated that they will repeal a CGT?

  51. Chris 53

    Fucking Capitalism. If only there was more love in society and people finally realised that having a big pile of money at the end of it really isn’t the be all and end all…

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