web analytics

Rushed policy is bad policy

Written By: - Date published: 7:10 am, May 19th, 2015 - 24 comments
Categories: capital gains, housing, national, tax - Tags: , , ,

When Labour presented its capital gains tax policy it spent months in development. It consulted widely and presented a robust policy that won the media battle (despite National’s usual hysterics). In contrast, The Nats have rushed and bungled the process (all the while assuring us that there is no housing crisis!). National’s definitely not a capital gains tax that just happens to be a tax on capital gains is being made up on the hoof:

Capital gains tax policy rushed through development

It’s emerged the Government’s new policy stance on property taxes has only just been developed. … Minister of Revenue Todd McClay confirms they were developed recently. “We’ve been working through a number of things through a period of time. The current one is for a 4-5 week period.

Green Party Co-Leader Metiria Turei … says it shows the Government’s desperate to take measures to cool the housing market. “A month ago John Key was saying that a capital gains tax was off the table. Now he’s done a massive u turn.

As is usually the case with rushed policy, they have made a mess of it:

New property rules too little too late

From a tax policy perspective the rule appears so narrow as to be almost inconsequential. … The Government has been arm-twisted by its critics into a tax response to address Auckland property prices. But from the range of options available it has come up with the least effective.

In short, National have opened the door to more effective capital gains tax, thus irritating investors and their base, while probably not achieving anything in practice. From their point of view that’s the worst of both worlds. Labour is right, the whole process is “panic-Key”:

“It is panic stations at the Beehive. These are rushed and ill-conceived measures that experts have said will have negligible impact. “Even the Government’s former tax advisor John Shewan says it won’t curb skyrocketing house prices or deter speculators.

“These are the actions of a bystander Government that has watched the Auckland housing crisis unfold and then done too little too late,” Andrew Little says.

It just might be at that.


Bonus question:

Yesterday Jessica Williams sparked an interesting discussion:

nat-cgt-discussion

So (asks Keith Ng) – are the Nats effectively underwriting losses when the property bubble bursts? Free money!


Bonus John Key lie:

“Housing crisis worse under Clark’s Government – Key”. Bernard Hickey called him out:

24 comments on “Rushed policy is bad policy ”

  1. Lanthanide 1

    Re the losses thing: it is likely you won’t be able to claim losses. Someone said on National Radio that in most other countries, losses can’t be claimed at all, or can only be offset against future payable capital gains.

    • mickysavage 1.1

      This is the sort of detail that the Government should have worked through already. The fact they do not have a response shows how ruched this policy is.

      • stever 1.1.1

        🙂 “ruched”

        ….how appropriate…the Nats are ruffled!

      • John 1.1.2

        It’s so rushed, that the same tax applied under Labour over a decade age.

        The difference is that back then there were so many loopholes that nobody paid anything.

        After ordering the IRD to clamp down on people using loopholes in this tax in 2010, and again in 2012, 2013, and 2014, we now have yet another clamp down in 2015.

        After five years of consistently clamping down on a tax that’s been around for decades, it’s now a “rushed policy” “made up on the hoof”

        Yesterday, five years of consistent clamping down on an old tax was a called a “u-turn”.

        What will it be called tomorrow?

    • alwyn 1.2

      Are you sure that they said that you won’t be able to claim capital losses?
      I is fairly common, eg Australia, UK and the US to write them off against Capital Gains, and to be able to carry any excess losses forward but I don’t know of countries where you can’t claim them at all.
      Even the NZ Labour Party policy in 2014 was going to allow them, although there seemed to be a bit of confusion about it early in the piece.

      • Lanthanide 1.2.1

        I said it was likely you wouldn’t be able to claim losses, not that they have said that you can’t. And again, if you can claim losses, it will likely be against future capital gains – but some people will end up in a position where they can never claim them.

        • alwyn 1.2.1.1

          “some people will end up in a position where they can never claim them”
          I know that only to well. I left Australia just after the start of a tax year and, while tidying up our affairs, I ended up with a CGT loss for that final year. It was only a couple of hundred dollars but they have owed it to me for nearly 20 years…….
          Sob, sob, sob.
          I’m not planning to go back there to live though.

      • Enough is Enough 1.2.2

        David got himself tied up in knots a bit explaining losses during the campaign at a meeting I attended in Hamilton, but yes my understanding was that under the Labour policy you would be able to claim losses.

        • Herodotus 1.2.2.1

          Losses, were under labours proposal were able to be offset only by any future capital gains, and was not able to be offset by other forms of income. From memory this had a time out clause of about 6 years.

  2. Colonial Rawshark 2

    The NATs are still bungling the PR of this big time. They’ve lost their focus on who they are presenting their policy to. It’s like their PR advisors are still on holiday in Scotland.

  3. Old Mickey 3

    “Rushed policy is bad policy” except for Andrew Little’s promised R&D policy.

    • One Anonymous Bloke 3.1

      “Promised” – ie: not yet delivered.

      “Rushed” – ie: delivered too soon or with insufficient attention to detail.

      We need better wingnuts.

    • joe90 3.2

      Yes, three years before an election a proposal is rushed policy.

      idiot trool

  4. esoteric pineapples 4

    It may be rushed, it may be far from perfect – but it has been presented by National whereas anything from Labour, Greens etc would not be acceptable to New Zealand’s conservative voters. This means the most difficult task of introducing the concept has been done. Now I expect it to be incrementally improved over a period of time.

  5. Enough is Enough 5

    I am not going to criticise this. This government does many nasty things to Society on a daily basis so when they actually come out with something half decent we shouldn’t just all automatically oppose it.

    The best analysis I have seen of the policy is right here on The Standard.

    “The real effect will be to slow down the property market in Auckland, and elsewhere. It will knock the top edge off the market, winding it back just a little bit. Together with the Reserve Bank’s new rules about the deposits that Auckland property buyers must have, the heat may be taken out of the property market. There will still be pressure due to inwards migration, but frantic speculation in property should calm down.”

    That can only be a good thing.

    • alwyn 5.1

      Go on. Pretend you are the Labour Party leader.
      Tom Scott got Little’s approach perfectly this morning.
      If John Key announces something, anything, it is evil

      http://www.stuff.co.nz/blogs/opinion/cartoons/6736460/Tom-Scott-Murdoch-and-others

      • Lanthanide 5.1.1

        Reminds me of when Cullen suggested indexing the tax bands to inflation and it was derided as a ‘chewing gum tax cut’.

        Then Labour announced tax cuts in the 2008 budget and National said it wasn’t big enough, and promised “north of $50 a week” for someone on the average wage, which they then failed to deliver.

        The whole point of the opposition is to point out when the government isn’t doing a good job. So actually all you’ve highlighted is that Little is doing his job well. I sincerely hope National will be just as effective when they’re in opposition.

        • Enough is Enough 5.1.1.1

          “So actually all you’ve highlighted is that Little is doing his job well”

          Really?…I think Tom is trying to take the piss out of Andrew Little

    • Lanthanide 5.2

      You shouldn’t give them a free pass, though.

      Just because they’ve done “something”, doesn’t mean what they’ve done is sufficient, or even the right thing to do. 2 years isn’t much of a burden to work around at all – 5 years would be, and would have some real impact.

      Another thing they could do which would make quite a different for investors is simply restrict the availability of interest free loans, which are used by investors but not owner-occupiers. If there was a speed limit, say only 10% of the banks mortgages by volume could be interest-only, they’d really put a crimp on how many people could get them. They could even put in time-limits, so no more than 3 years IO loan for a particular property; gets tricky if people can shuffle the houses between different entities to keep resetting the 3 years though.

      Anyone who is routinely using IO loans is sending clear signals that they’re only in it for the capital gains.

      • Enough is Enough 5.2.1

        Yes and No.

        I think as far as a CGT goes the electorate has well and truly told Parliament over the past two elections what is acceptable, and a comprehensive broad tax is for better or worse, not an option in New Zealand. I think Andrew Little and Labour have accepted this.

        Key’s announcement is not a silver bullet and won’t in itself fix the problem. But it is a step in the right direction.

      • miravox 5.2.2

        “Another thing they could do”

        Remove tax loopholes on rental income.

        • John 5.2.2.1

          Like changing depreciation rules and tightening up claiming loses via LAQCs.

          Except that was done in 2010.

          • miravox 5.2.2.1.1

            That’s cool. So the people we know who tell us they still buy unseen rentals in places they’ve never been to write off their rental expenses against PAYE tax are telling porkies and will soon end up in court.

Recent Comments

Recent Posts

  • Prime Minister’s Post Cabinet Press Conference/COVID-19 Update opening statement
    ***Please check against delivery***   E te tī, e te tā, nau mai rā [To all, I bid you welcome]   As you will have seen earlier, today there are 22 new community cases to report; three of which are in Whakatiwai in the Hauraki area, and the remainder in ...
    BeehiveBy beehive.govt.nz
    33 mins ago
  • Major milestones for Māori COVID-19 vaccine rollout as new campaign launches
    Whānau Ora and Associate Health (Māori Health) Minister Peeni Henare acknowledges two major milestones in the rollout of the COVID-19 vaccination programme for Māori. “I am very pleased to announce more than 50 percent of eligible Māori have received their first dose and 25 per cent are now fully vaccinated,” ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Government funding to fight infectious diseases
    $36 million for research into Covid-19 and other infectious diseases The investment will improve our readiness for future pandemics Research will focus on prevention, control, and management of infectious diseases The Government’s investing in a new Infectious Diseases Research Platform to boost Aotearoa New Zealand’s Covid-19 response and preparedness for ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Quarantine-free travel with Australia to remain suspended for a further 8 weeks
    Suspension to be reviewed again mid to late November Decision brought forward to enable access from Australia to first tranche of around 3000 rooms in MIQ Air New Zealand working at pace to put on more flights from Australia from October    The suspension of quarantine-free travel (QFT) with Australia has ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Extra support for Ethnic Communities to share vaccination information
    Extra support is being made available to Ethnic Communities to help them share COVID-19 vaccination information within their communities, Minister for Diversity, Inclusion and Ethnic Communities Priyanca Radhakrishnan said. “We know we need to get every eligible person in New Zealand vaccinated. A fund being launched today will allow for ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • School holidays remain unchanged for Auckland region
    School holidays in Auckland will continue to be held at the same time as the rest of the country, starting from Saturday, 2 October, Education Minister Chris Hipkins said today. “I’ve carefully considered advice on the implications of shifting the dates and concluded that on balance, maintaining the status quo ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Government continues crackdown on gangs and organised crime
    Operation Tauwhiro extended until March 2022 Since it was launched in February, Operation Tauwhiro has resulted in:   987 firearms seized $4.99 million in cash seized 865 people charged with a firearms-related offence Gangs and organised crime groups will continue to be relentlessly targeted with the extension of Police’s successful ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Speech to Body Positive 'HIV Treatments Update Seminar 2021'
    E ngā mana E ngā reo E ngā iwi Tēnā koutou katoa Ka huri ki ngā mana whenua o te rohe nei. Tēnā koutou. He mihi hoki ki a tatou kua tau mai nei I raro I te kaupapa o te rā. Nō reira tēnā koutou katoa Acknowledgements It’s a ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Power bill changes bring fairness to charges
    A key recommendation of an independent panel to make electricity charges fairer across all households will be put in place, the Energy and Resources Minister Megan Woods has announced. “Phasing out the regulations on ‘low-use’ electricity plans will create a fairer playing field for all New Zealanders and encourage a ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • NZ economy’s strong momentum will support rebound from Delta outbreak; COVID fund replenished
    The economy showed strong momentum in the period leading up to the recent Delta COVID-19 outbreak, which bodes well for a solid economic rebound, Grant Robertson said. GDP rose 2.8 percent in the June quarter, following on from a 1.4 percent increase in the previous March quarter. This was a ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Projects create benefits into the future
    Making a well-known lake swimmable and helping to halt the decline of the endangered hoiho/yellow-eyed penguins are among a suite of new projects being supported by the Government’s Jobs for Nature programme across the southern South Island, Conservation Minister Kiri Allan says. “It’s no secret that many of our most ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Opening statement for Whāriki Indigenous Small Business Roundtable
      Kei ngā tōpito e wha o te āo e rere ana te mihi maioha ki a koutou nō tawhiti, nō tata mai e tāpiri ana ki tēnei taumata kōrero mo te ao hokohoko arā mā ngā pākihi mo ngā iwi taketake Tēnā koutou, tēnā koutou katoa – Pai Mārire.  ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • New members appointed to Kāpuia
    The Government is adding four additional members to Kāpuia, the Ministerial Advisory Group on the Government’s Response to the Royal Commission of Inquiry into the terrorist attack on Christchurch mosques. “I’m looking forward to having Pamela MacNeill, Huia Bramley, Melani Anae and Katherine Dedo  join Kāpuia and contribute to this group’s ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Timeline confirmed for Emissions Reductions Plan
    Cabinet has agreed to begin consulting on the Emissions Reduction Plan in early October and require that the final plan be released by the end of May next year in line with the 2022 Budget, the Minister of Climate Change, James Shaw confirmed today. “Cabinet’s decision allows organisations and communities ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Pay parity pathway for early learning teachers confirmed
    Pay parity conditions and higher funding rates for education and care services will come into force on 1 January, 2022, Minister of Education Chris Hipkins confirmed today. The Government signalled this work in Budget 2021. “From 1 January, 2022, centres opting into the scheme will receive government funding and be ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Speech to the New Zealand Nurses Organisation Conference 2021
    Kia Ora tatau katoa.   Ka tuku mihi ki nga nēhi, He pou Hauora o Aotearoa, E ora ai tatou.   Whakatau mai  I runga i te kaupapa o te ra Te NZNO conference.   Tena koutou tena koutou Tena tatou katoa   Good morning, and thank you inviting me ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Government investment in farmer-led catchment groups sweeps past 150 mark
    171 catchment groups have now been invested in by the Government 31 catchment groups in the Lower North Island are receiving new support More than 5,000 farmers are focussed on restoring freshwater within a generation through involvement in catchment groups  Government investment in on-the-ground efforts by farmers to improve land ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Fight to protect kauri on track
    The Government is pitching in to help vital work to protect nationally significant kauri forests in Auckland, Minister of Conservation Kiri Allan says. “Ensuring the survival of these iconic trees for future generations means doing everything we can to prevent the potential spread of kauri dieback disease,” Kiri Allan said. ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Joint statement of Mr Bernard Monk; Hon Andrew Little, Minister Responsible for Pike River Re-entry,...
    [Note: The Parties have agreed on terms to fully and finally settle the proceeding and will jointly issue the below statement.] At the heart of this litigation are the lives of the 29 men tragically lost at the Pike River mine on 19 November 2010 and to whom we pay ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • More financial support for businesses
    Today’s decision to keep Auckland in a higher COVID Alert Level triggers a third round of the Wage Subsidy Scheme which will open for applications at 9am this Friday. “The revenue test period for this payment will be the 14th to the 27th of September. A reminder that this is ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Aotearoa New Zealand provides further humanitarian support for Afghanistan
    Aotearoa New Zealand is providing a further $3 million in humanitarian assistance in Afghanistan, Foreign Minister Nanaia Mahuta announced today.  “There is significant humanitarian need in Afghanistan, with the crisis disproportionately affecting women and girls,” said Nanaia Mahuta. The UN has estimated that 80% of the quarter of a million ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Innovative te reo prediction tool announced in Te Wiki o Te Reo Māori
    A new Māori language prediction tool will play a key role in tracking our te reo Māori revitalisation efforts, Minister for Māori Development Willie Jackson announced today. He Ara Poutama mō te reo Māori (He Ara Poutama) can forecast the number of conversational and fluent speakers of te reo Māori ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Further Government support for people to access food and essential items
    The Government is responding to need for support in Auckland and has committed a further $10 million to help people access ongoing food and other essential items, Minister for Social Development Carmel Sepuloni announced today. This latest tranche is targeted at the Auckland region, helping providers and organisations to distribute ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Half a million Pfizer vaccines from Denmark
    The Government has secured an extra half a million doses of Pfizer COVID-19 vaccines from Denmark that will start arriving in New Zealand within days, Prime Minister Jacinda Ardern announced today. “This is the second and larger agreement the Government has entered into to purchase additional vaccines to meet the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Inland Revenue providing essential COVID support for businesses
    Inland Revenue is seeing increased demand for Resurgence Support Payments and other assistance schemes that it administers, but is processing applications quickly, Revenue Minister David Parker said today. David Parker said the Resurgence Support Payment, the Small Business Cashflow (loan) Scheme and the Wage Subsidy are available at the same ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Zealand marks 20th anniversary of 9/11 attacks
    New Zealand is expressing unity with all victims, families and loved ones affected by the September 11 2001 terrorist attacks, and all terrorist attacks around the world since, including in New Zealand. “Saturday marks twenty years since the 9/11 terrorist attacks in the United States, which killed nearly 3,000 people ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Speech to SPREP Environment Ministers
    Talofa Honourable Ulu of Tokelau Faipule Kelihiano Kalolo Tēnā koutou katoa and warm Pacific greetings from Aotearoa to your excellencies, ladies and gentlemen. The new science released by the Intergovernmental Panel on Climate Change on 8 August paints an alarming picture of the projected impacts of climate change on the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Additional Resurgence Support Payments to support business
    Businesses affected by higher Alert Levels will be able to apply for further Resurgence Support Payments (RSP). “The Government’s RSP was initially intended as a one-off payment to help businesses with their fixed costs, such as rent. Ministers have agreed to provide additional payments to recognise the effects of an ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • More Dawn Raids scholarships announced
    Details of the ‘Manaaki New Zealand Short Term Training Scholarships’, a goodwill gesture that follows the Government’s apology for the Dawn Raids of the 1970s, were released today by Pacific Peoples Minister Aupito William Sio. “These scholarships that are targeted to the Pacific will support the kaupapa of the Dawn Raids’ ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • One-way quarantine-free travel for RSE workers starting in October
      One-way quarantine-free travel for Recognised Seasonal Employer (RSE) workers from Samoa, Tonga and Vanuatu starts in October New requirement for RSE workers to have received their first vaccination pre-departure, undertake Day 0 and Day 5 tests, and complete a self-isolation period of seven days, pending a negative Day 5 ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Govt boosts Pacific suicide prevention support
    Applications have opened for the Pacific Suicide Prevention Community Fund as the Government acts to boost support amid the COVID delta outbreak. “We know strong and connected families and communities are the most important protective factor against suicide and this $900,000 fund will help to support this work,” Health Minister ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Govt parks the expiry of licenses, WoFs and regos
    As a result of the Delta outbreak, driver licences, Warrants of Fitness (WoFs), Certificates of Fitness (CoFs), vehicle licences (‘regos’) and licence endorsements that expired on or after 21 July 2021 will be valid until 30 November 2021, Transport Minister Michael Wood has announced today. “While this extension won’t officially ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • COVID-19 community fund to provide support for vulnerable women and girls
    Minister for Women Jan Tinetti today announced a $2 million community fund that will provide support for women and girls adversely affected by COVID-19. “We know that women, particularly those who are already vulnerable, are disproportionally affected by the kind of economic disruption caused by COVID-19,” Jan Tinetti said. ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Next phase of support for Fiji’s COVID-19 response announced
    A further NZ$12 million of support for Fiji’s COVID-19 response has been announced by Foreign Minister Hon Nanaia Mahuta today. The package builds on previous tranches of assistance Aotearoa New Zealand has provided to Fiji, totalling over NZ$50 million. “Fiji remains in a very challenging position in their response to ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Robotic asparagus harvester aimed at addressing industry challenges
    The Government is backing a $5 million project to develop a commercial-scale autonomous robotic asparagus harvester, Agriculture Minister Damien O’Connor announced today. The Sustainable Food and Fibre Futures fund (SFF Futures) is contributing $2.6 million to the project. Project partner Robotics Plus Limited (RPL) will build on a prototype asparagus ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Additional Pfizer vaccines to arrive tomorrow
    More than a quarter of a million additional doses of the Pfizer vaccine are on their way from Spain to New Zealand, Prime Minister Jacinda Ardern announced today. The additional doses will arrive in Auckland on Friday morning to help meet the current surge in demand for vaccination. “It’s been ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Young people to have their voices heard in Youth Parliament 2022
    The dates and details for Youth Parliament 2022 have been announced today by Minister for Youth Priyanca Radhakrishnan, and the Speaker of the House of Representatives. Youth Parliament is an opportunity for 141 young people from across Aotearoa New Zealand to experience the political process and learn how government works. ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Boosting support for tertiary students affected by COVID-19
    Students facing a hard time as a result of COVID-19 restrictions will continue to be supported,” Education Minister Chris Hipkins confirmed today. The Government is putting a further $20 million into the Hardship Fund for Learners, which will help around 15,000 students to stay connected to their studies and learning. ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • COVID-19: Immediate relief available for Māori and iwi organisations
    The Government has reprioritised up to $5 million to provide immediate relief to vulnerable whānau Māori and communities during the current COVID-19 outbreak Minister for Māori Development Willie Jackson announced today. The COVID-19 2021 Whānau Recovery Fund will support community-driven, local responses to gaps in access and provision of critical ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • New beef genetics programme to deliver cows with smaller environmental hoof-print
    The Government is backing a genetics programme to lower the beef sector’s greenhouse gas emissions by delivering cows with a smaller environmental hoof-print, Agriculture Minister Damien O’Connor announced today. Informing New Zealand Beef is a seven-year partnership with Beef + Lamb New Zealand that is expected to result in more ...
    BeehiveBy beehive.govt.nz
    2 weeks ago