Written By: - Date published: 1:21 pm, March 2nd, 2019 - 67 comments
Categories: capital gains, Deep stuff, Gerry Brownlee, national, Politics, same old national, spin, Steven Joyce, tax, you couldn't make this shit up - Tags:
The Government is taking time to consider its response to the Tax Working Group’s proposed capital gains tax. As it should. These decisions are not easy ones and potentially government ending ones.
But the hiatus in providing a response had let the opposition say all sorts of stuff. Much of what has been said is as credible of Stephen Joyce’s claim of a $11.5 billion hole in Labour’s draft budget figures but the claims are being sent far and wide.
Damien Venuto at the Herald has been analysing what has been happening. Although I disagree with his conclusion that the debate has actually skewered public perception, because there is remarkably strong support for a CGT, he is correct that National and its allies have been attempting to make the debate into something that it is not.
His article says this:
The release the Tax Working Group’s recommendations prompted a rapid flurry of responses from interest groups railing against the proposed capital gains tax.
Business NZ, The Employers and Manufacturers Association, the Canterbury Employers Chamber of Commerce and the Property Investors Federation were just some of the organisations to fire out releases before the ink had even dried on freshly printed copies of the report.
These carefully crafted responses quickly made their way into headlines, skewing the debate sharply in favour of those opposed to a capital gains tax.
In the initial rush for angles and opinions, views in support of the capital gains tax proved difficult to find amid the roaring chorus of “no”.
The lobby groups had ample time to prepare for something that had been strongly hinted at in the preceding months – and wasted no time in striking when those hints came to fruition.
And National has been engaging in US republican style hyperbole in its attempt to denigrate the proposal.
Like this attempt to suggest that ordinary workers with Kiwisaver accounts were going to be hit:
That is a big scary number.
There is this detail on how the figure is calculated on National’s website:
The estimated $64,000 reduction in value assumes a 45-year working life and is based on 15 per cent of a ‘balanced’ KiwiSaver fund being in Australasian shares, which would be taxed on an accrual basis on total annual gains. It also assumes the minimum employer and employee contribution rates.
I presume they have assumed the tax is paid by the provider each year and the rate of return is thereby diminished.
The calculations seem herculean. Year one the account would be worth $4,100. If 15% was invested in shares and there was a 4% return the return would be $24.60. Tax would be a third of this. I appreciate it is accumulated and there is wage inflation but the figure still seems high.
Of course, and I am presuming this because National has not released the details of its calculations, no account has been made for other TWG recommendations which include increased support for Kiwisaver and the suggested reduction to the bottom income tax threshold so that workers do get a tax cut or suggestions that the CGT should be tax neutral.
And I can confidently assert that no allowance is being made for the fact that a CGT will improve Sophie’s chances of buying a house, even in Auckland.
It is really rich that the party that hobbled Kiwisaver contributions and weakened its effectiveness should be complaining about steps that may reduce the value of Kiwisaver accounts.
But you get the picture.
The tactic clearly is to come up with a number and keep repeating it and repeating it and repeating it.
But the way I see it this claim is as credible as Steven Joyce’s $11.5 billion dollar hole or Gerry Brownlees’s clanger of a mistake concerning the cost of income tax bracket shift.