Tax Working Group report depressing reading

Written By: - Date published: 6:10 pm, September 21st, 2018 - 66 comments
Categories: business, capital gains, capitalism, gst, tax - Tags: , , , ,

It’s hard to go past the rant of Newsroom’s Managing Editor Bernard Hickey about how depressing is the interim report of the Tax Working Group.

The die was essentially cast when Sir Michael Cullen was appointed chair. For nine years as Finance Minister in the Clark Labour government he steadfastly rejected tax reform, labelling capital gains tax as political suicide.

Even when Labour was elected for its terminal third term and he had the opportunity to close the chasm of unfairness in our tax system, he baulked.

The prospect of introducing full fairness was also prohibited by the Tax Working Group’s (TWG) terms of reference that proscribed such things as a CGT on family homes, even those valued at over $1 million, inheritance tax, or higher income tax.

The report, just as the previous tax working group reports did in 2001 and 2009, acknowledges the nub of what ‘s wrong with our tax system – “a significant element of capital income – gains from the sale of capital assets – is not taxed on a consistent basis”.
The group notes with considerable understatement that this reduces the fairness of the tax system and makes it regressive because it benefits the wealthiest members of our society.

In fact, around $1 trillion of property gains in this century alone, according to Bernard Hickey, have been delivered to property investors unearned and untaxed. My guess is that given the share index has quadrupled over that time, similar, if not larger, untaxed gains have been made on share and business assets. Farm values may have increased less, but incredible capital gains would have been made nonetheless.

The report states that the underlying principle of New Zealand’s tax system is that it is a broad-based, low-tax system with few exemptions. The fact that it has this gaping hole defies that description.

The report baldly states that the inconsistent treatment of capital is unfair. “It is the wealthiest members of society who benefit most from the inconsistent taxation of capital income.”

It notes 82% of assets that might be affected by a proper CGT are owned by 20% of the population.

It also notes New Zealand’s system is not particularly progressive – less than in Australia and less than the OECD average. The inequality-reducing power of the tax and transfer system has reduced over the past three decades.

A sense of fairness is central to maintaining public trust and confidence in the tax system, the report says. The desire is to have “horizontal equity”, whereby people who earn the same amount of income should pay similar rates of tax, regardless of where, or how, the income is earned. The lack of a comprehensive tax on capital gains is behind the biggest inequalities in the system.

National Party finance spokesperson Amy Adams has already tried to dismiss the need for a CGT as introducing “unnecessary complexity”, but the report counters that by stating that “in broad terms, fairness, integrity, revenue and efficiency benefits outweigh complexity and cost detriments”.

The report suggests two potential CGT options. The most likely would extend the limited CGT on property to cover shares, businesses and farmland. Sadly, it had little to say on extending the current derisory five-year limit of the so-called “bright line test” on property that every investor can circumvent by holding the property for five years.

The other option would apply a deemed rate of return on the capital gain of assets (known as the risk-free rate of return method of taxation) on an annual basis. Don’t expect this one to fly any better than a return of Claire Curran to Cabinet as every share and business owner will scream about tax on income/gains they have not yet realised even though this currently applies to ownership of foreign shares.

Cullen said extending the taxation of capital income has many benefits, mostly pertaining to improving the fairness and integrity of the tax system.

But the report undermines this by saying it will be complex, result in higher compliance and administration costs and have limited fiscal impact. This has already been seized on by neo-liberal ideologues as a reason not to do it.

Bryce Wilkinson, “senior fellow” of the right-wing think (propaganda) tank, the New Zealand Policy Initiative (formerly the Business Round Table), says the CGT should be pitched as an efficiency issue, rather than a fairness one.

The report ruled out alternatives to a CGT, such as wealth or land taxes, as essentially too complex or unfair.

It kicked for touch on the other gaping hole in the tax system – the rort run by multi-nationals to transfer profits to tax havens. The group said double tax agreements made equalisation measures such as a 3% tax slapped on digital revenues in a particular jurisdiction, as problematic due to double taxation agreements. It recommended tagging along with OECD group action.

Reducing GST, either in parts, or overall, was considered less effective at assisting low income earners than using transfers (benefits or Working for Families credits).

The report didn’t support sugar or tobacco taxes, saying they tend to target the poor but it favoured some “corrective” taxes to change environmental behaviour. There are clear opportunities to increase the Waste Disposal levy, the Emissions Trading Scheme and water taxes, it said.

The focus of the final report, due in February, will certainly be on the GST recommendation and Finance Minister Grant Robertson has requested the group states a clear preference.

Hickey is deeply sceptical that even this limited attempt to rebalance the tax system will be passed by an electorate that is dominated by an older generation with a vested interest in housing assets. “Any form of tax on capital gains, even a limited form that excludes the family home, will be almost politically impossible.”

He believes the report “reads more like a list of excuses for why it can’t be done, than an argument for why it should”.

The report’s conclusion that a CGT will not have much influence of house prices is one reason for his cynicism.

Hickey believes the only recourse for the young renter generation is to wield their political power. If you believe that’s going to happen you may think Meka Whaitiri will be our next prime minister.

(Simon Louisson reported for The Wall Street Journal, AP Dow Jones Newswires, New Zealand Press Association and Reuters and worked as a political and media adviser to the Green Party.)

66 comments on “Tax Working Group report depressing reading ”

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  1. AsleepWhileWalking 1
    21 September 2018 at 6:25 pm

    Did it have anything on increasing royalties we receive from mining natural resources? I would include water in that category.

    “Reducing GST, either in parts, or overall, was considered less effective at assisting low income earners than using transfers (benefits or Working for Families credits).” – right. Because forcing welfare dependency is so much better than a tax cut (I’m guessing more govt revenue).

  2. Andre 2
    21 September 2018 at 6:41 pm

    “The other option would apply a deemed rate of return on the capital gain of assets (known as the risk-free rate of return method of taxation) on an annual basis. Don’t expect this one to fly any better than a return of Claire Curran to Cabinet as every share and business owner will scream about tax on income/gains they have not yet realised even though this currently applies to ownership of foreign shares.”

    I pay FIF (foreign share) tax most years. I’m generally pretty relaxed about paying tax, because I accept it’s a fair and necessary part of belonging to society. But the FIF tax really really fkn grates every time.

    It really fkn gets up my nose because it’s a pure plucked out of someone’s arse number, it’s levied in a way that’s totally disconnected from any economic activity or the taxpayer’s use of government services. The way it’s calculated means you could own an overseas portfolio that’s dropped substantially in value in its native currency, but still be whacked with the full deemed rate of return here because of exchange rate shifts.

    It seems to me an important part of a tax to be regarded as reasonable is to levy a tax when there’s an underlying cash movement that the tax is simply taking a cut from. That happens with PAYE, it happens with GST, it happens with excise taxes, it happens with a capital gains tax levied when the gain is realised. Credit card and online markets have it down to a fine art. But the FIF tax just feels like the government pulling a mafia standover shakedown.

    So yeah, introducing a broad-based tax similar to FIF would indeed be political suicide, with the party blamed for it facing an unusually long spell in the wilderness before voters affected by it would consider that party again. IMHO.

    • Timeforacupoftea 2.1
      21 September 2018 at 7:24 pm

      I agree with what you are saying here Andre, I found out most of my stocks that were in FIF are now out completely decimated cost me heaps of tax holding them 5% on value every year, given up calculating how much tax I paid but lets just say heaps.

      Now I learn that most are out of FIF’s and worthless. But hey the upside we can now claim a loss carried forward between sale price today and real purchase price.

      I am going to claim the price that they were at 31 March 2007 simply because we’ve paid TAX on them then when they set the value for those FIF stocks, some of my stocks were up 300 % then to why go for purchase price. Like a $10,000 purchase price had increased in paper value to $30,000 clown Cullen says lets have a deemed sale.

      Piss off Cullen ! You are the worst Financial Minister we have ever had !

  3. Timeforacupoftea 3
    21 September 2018 at 6:58 pm

    Jesus ! – FIF on our Kiwi Saver Accounts would decimate them.
    Labour would be out on there ear.

    I heard my husbands girlfriend Judith Collins saying that when National goes in they will change it back and pay back the losses.

    Another bailout – but hell, a bailout for us poor this time, kinda like the bailout that the unfortunate in “P” ridden state houses are getting shortly and the bailout that the Hubbard misfits got.
    Kinda nice both Parties are looking after us, must be a big voting block getting hit here.

  4. Monty 4
    21 September 2018 at 7:00 pm

    It would be good to see another couple steps in PAYE

    38% for income over $150,000 total taxable income include bonus, company dividend payouts etc
    43% for income over $250,000 total taxable income include bonus, company dividend payouts etc
    48% for income over $350,000 ditto above.

    Going up at 5% increments for every 100k with the top bracket at 58%.

    Then GST free on ladies hygiene products, bread, fresh fruit and vege, meat and milk.

    Agree with a fair and reasonable CGT so long as it excludes the family home with no loops holes allowing property flipping.

    • Ad 4.1
      21 September 2018 at 7:10 pm

      In New Zealand, the top 3 per cent of individual income earners – those earning more than $150,000 a year – already pay 24 per cent of the total tax received.

      While in 2017 there was an OECD report stating that New Zealanders paid relatively little in income tax compared to others within the OECD, that study did not include GST or Council taxes.

      http://www.oecd.org/ctp/tax-policy/taxing-wages-brochure.pdf

      I know it’s a good socialist instinct to soak the rich, but I would rather see a big chunk taken off the deeply regressive GST, and tax-free welfare benefits, and tax-free Kiwisaver.

      • Andre 4.1.1
        21 September 2018 at 7:24 pm

        Compared to the US, NZ tax rates are high for people with low incomes and low for people with high incomes. I’m under the impression that in comparison to most other OECD countries, NZ tax rates are less progressive or more regressive depending on how you want to look at it.

        It would be a good thing for NZ rates to have similar progressivity to OECD norms, rather than being unusually regressive.

        • Ad 4.1.1.1
          21 September 2018 at 7:49 pm

          I’m not sure if we need the US to be our tax benchmark.

          I agree that our system is more regressive, but it’s particularly so with 15% GST. Because of GST, actual purchasing power in our low-wage economy goes down and down every year.

          I would also have preferred to see Working For Families and other big transfers like NZSuper included in the whole picture of the full balance of $$ that citizens receive as a result of the state intervening to take away from the income earners and giving to those who have little or no income.

          This is the moment for the full social contract to be re-written and de-emphasized. Tax is the bedrock of civil society.

          • Andre 4.1.1.1.1
            21 September 2018 at 7:58 pm

            Trust me, we don’t want the US as a benchmark for our tax system.

            But it’s striking that the US, reputationally the epitome of laissez-faire, has a tax system kinder to low income earners and harsher to high income earners than we do with our egalitarian coddling welfare state reputation.

      • UncookedSelachimorpha 4.1.2
        21 September 2018 at 7:32 pm

        “In New Zealand, the top 3 per cent of individual income earners – those earning more than $150,000 a year – already pay 24 per cent of the total tax received.”

        You are repeating a deception. This only refers to IRD-declared income – of which the truly rich often have very little.

    • Andre 4.2
      21 September 2018 at 7:16 pm

      “… another couple steps in PAYE”

      Hell, make it an infinite ladder. Add another 6% to the marginal rate for every doubling of income. So that would be 39% over $140k, 45% over $280k, 51% over $560k, 57% over $1.12M, etc. Too harsh? Ok, ok, we can leave the final step as 99% on income over $143.36M.

      Personally I’d prefer a capital gains tax included the family home. With a rollover provision for people changing homes so they can defer paying tax on their accumulated capital gains until they’ve reached the life stage of downsizing or leaving the home in a box. Yes, it means a bit more record-keeping to keep updating the cost basis of the house for capital improvements. But I’ve been through that in the US for my house there and it really wasn’t much extra paperwork or particularly onerous. And I’m someone with an extremely low tolerance for mindless paperwork.

    • Timeforacupoftea 4.3
      21 September 2018 at 7:39 pm

      I would increase those tax levels Monty they are ripping off the poor !

      I was paying 60% tax in the late 60’s and 70’s and we were doing bloody well.
      We were living the high life.
      No unemployment back then.
      In fact you could name them if they were out of work mainly because of a personal issue. May have told the boss to F-off for coming in late or just having a bad day.

      45% for income over $150,000 total taxable income include bonus, company dividend payouts etc
      60% for income over $250,000 total taxable income include bonus, company dividend payouts etc
      65% for income over $350,000 ditto above.

      Going up at 5% increments for every 100k with the top bracket at 65%.

      Maybe a financial transaction tax would be best though no income tax, excise tax, petrol tax alcohol tax etc.
      Remove cash from society only card transaction. That TAX might only need to 1 to 5% I have heard some financial wiz kids saying 1% would do fine.

      • Monty 4.3.1
        21 September 2018 at 7:52 pm

        Whilst in the 60s you may have been ok but today is vastly different and you simply can’t compare NZ then to now for a start no GST then etc.

        You have to appeal voters so changes need to be seen and reasonable.

        Increasing PAYE reasonable but offsetting GST in basics as I mentioned female hygiene products, fresh fruit, vege, milk meat and bread.

        The transaction tax is interesting and in time it would work but now it would hard to manage and be so simple to have a black market taking money out of the system

      • millsy 4.3.2
        22 September 2018 at 11:07 am

        It might be in PC to say that, but highly taxed society are more equal and have higher living standards.

    • hone 4.4
      21 September 2018 at 8:00 pm

      income tax should be zero

  5. Ad 5
    21 September 2018 at 7:13 pm

    House prices seem to be adjusting fine through other measures without a Capital Gains Tax in place.

    There needs to be a better reason for a CGT than just having a go at landlords. For example, can it be shown that taxing investment housing would shift investment away to businesses and new business plant and equipment? It’s not a small cultural shift to propose.

    • Andre 5.1
      21 September 2018 at 7:28 pm

      The reason for a CGT is horizontal equity, so that people of similar incomes pay similar taxes, regardless of source. I think most people regard it as grossly unfair that someone that has to sell their time to get their income gets fully whacked by tax, while someone else that derives their income from sitting on a pile of assets and arranging their affairs so those assets deliver only capital gains pays no tax at all.

      • Ad 5.1.1
        21 September 2018 at 7:51 pm

        Yes I agree with Cullen on that.

      • AB 5.1.2
        22 September 2018 at 8:03 am

        I get the equity principle , but would go further. Why does income gained by not working deserve tequal treatment with income earned by working?
        Surely we should morally deprecate unearned income by taxing it at a much higher rate?
        In principle a CGT of 100%, excluding inflation and improvements, should be levied on properties the owner (or trustees) haven’t lived in.

        • greywarshark 5.1.2.1
          22 September 2018 at 2:16 pm

          AB
          If we want fairness would 100% CGT on the difference between purchase and sale price, adjusted for inflation and improvements, mean that it would be levied just on the profit. (The real estate agent feee would be worked out on this net figure and be at a set percentage so as not to rort the tax provisions.) This would put the house/property in a category of secure physical asset for holding financial reserves not an item to profit from creating a bubble market for profiteers.

  6. greywarshark 6
    21 September 2018 at 7:39 pm

    Something they could introduce is a policy of encouraging beneficiaries to work and get extra money for three months without any withdrawal of grants, reductions of benefit. Encourage them to get ahead and then assist them with tech classes and paid childcare so they can learn a new skill.

    Even if they can’t get a full-time job, the next time they get a period of employment and more money to get ahead, give the same funding boost, reward it with some more tech of choice and make it easy to get to, along with childcare or after school care.

    Eventually you have an all round worker, able to utilise all the skills learned, and take on a new job and be a mature person capable, and though still poor, hopeful, ambitious and able to take up opportunities when they come along.

    But i suppose that would not seem sexy enough for real top committee members, to them it would be piddly domestic stuff.

  7. Brian Tregaskin 7
    21 September 2018 at 8:44 pm

    Company tax should go back up to 39% as it did under Helen Clark

    • Gabby 7.1
      21 September 2018 at 8:51 pm

      Or even better, make ‘licencing fees’ paid to elsewhere-based companies subject to tax here.

    • alwyn 7.2
      21 September 2018 at 9:26 pm

      “Company tax should go back up to 39% as it did under Helen Clark”.

      It wasn’t. It was 33%. It was the personal tax rate that went to 39% on income over $60,000.
      That was why high income earners arranged their affairs into a company structure.

      • Muttonbird 7.2.1
        21 September 2018 at 11:54 pm

        By “arranged their affairs” you mean stole from the country, of course.

        • alwyn 7.2.1.1
          22 September 2018 at 7:25 am

          No it isn’t. The people who “stole from the country” are those like the unlamented former Green MP Meteria Turei.
          There weren’t many like her but they were the greedy little piggies. They made all the people who really needed the benefits, and only collected what they were entitled to, have to operate under a cloud of suspicion.
          The only reason for the 39% was Michael Cullen’s bitter hatred of anyone who was better off than he was. He still is inclined that way.

          • Muttonbird 7.2.1.1.1
            22 September 2018 at 7:53 am

            You guys stole hundreds of millions of dollars from schools and hospitals, Alwyn. By immorally avoiding tax, by hiding money in proxy companies. You stole from our children and made the sick to suffer, Alwyn.

            • AB 7.2.1.1.1.1
              22 September 2018 at 8:30 am

              Mutton – remember that for RWers, mere legality is a sufficient test that their actions are OK.
              Any old self-serving skulduggery is fine, so long as it meets the letter of the law.

            • alwyn 7.2.1.1.1.2
              22 September 2018 at 2:26 pm

              You have no idea what I pay in taxes, or collect in benefits.
              Kindly stop slandering me.
              I’m sure you will apologise and admit you have no reason at all to justify your wild accusations. On the other hand I don’t think I will hold my breath while I wait. I fear I may be waiting for a very long time.

          • KJT 7.2.1.1.2
            22 September 2018 at 1:49 pm

            Turei has contributed more in tax than she ever took.

            Meanwhile a large proportion of the richest people in the country pay tax on less than 70k. English also “stole’ from the tax payer. But that is OK because he wasn’t a brown single mum. How much did Key and his mates cost New Zealand tax payers, playing with our dollar, again? Oh, that theft is alright because it was legal!

            In New Zealand “the rich are so jealous of the poor, they take what little they have left”.

            • Draco T Bastard 7.2.1.1.2.1
              22 September 2018 at 2:20 pm

              +111

            • alwyn 7.2.1.1.2.2
              22 September 2018 at 2:28 pm

              “Turei has contributed more in tax than she ever took.”
              To be able to say that you must have access to all her tax returns, and know the details of everything she ever claimed in benefits, both legally and illegally.
              Do you plan to publish these numbers?
              Or are you just making it up?

    • cleangreen 7.3
      22 September 2018 at 2:45 pm

      Agreed Brian 100% especially since “The Panama Papers” came out showing widespread swindling by ‘Companies’ !!!!!!

      So Brian is correct here we must balance the tax equally now!!!!

      Now many poor folks are taxed ‘three times’ with what Rob Muldoon called ‘a tax on a tax’ now with each transaction and this can be as high as totaling 45% tax after facing another 15%GST times x3=45% total..

      • KJT 7.3.1
        22 September 2018 at 2:50 pm

        Not to forget the highest marginal tax rate is on welfare recipients who do part time work.

        Not something that encourages people into jobs. Especially as they get hit with it just as they have to buy gear or start paying for travel to work. Then, there is the likelihood that it is just short term, anyway, and the employer will use the 90 day bill to remove them after they are no longer required.

        • alwyn 7.3.1.1
          22 September 2018 at 5:40 pm

          “Not to forget the highest marginal tax rate is on welfare recipients who do part time work.”
          Absolute rubbish.

          The highest marginal tax rate is 33% on income above $70,000/year. If you don’t earn that much you will not end up paying that rate. After all, if you overpay your tax you can claim it back at the end of the year.

          If you are talking about a reduction in the benefit then you are talking about an entirely different thing. Do you really think that if a person on a benefit who gets a job which may be very well paid should not have their benefit reduced? I suppose that you think that someone getting an accommodation subsidy should continue to receive it after winning $20 million in Lotto and now having an income of a million per year?

  8. Jum 8
    21 September 2018 at 9:47 pm

    wtf is wrong with a financial transactions tax; the real financial criminals are stealing from our youth.

  9. mosa 9
    22 September 2018 at 2:29 am

    Looks like nothing ” progressive ” is going to come out of this expensive over hyped tax working group.
    A CGT looks dead in the water due to the fact that so many self entitled boomers would be taking a hit on their investments.
    Never mind the fact that the poor and middle class continue to shoulder the burden.
    A lot of changes are needed for the system to be fair but as always the need to do what is right is compromised for short term political ramifications and risk of electoral suicide.
    I just hope that after February next year this whole CGT idea is shelved for good and disappears from the political debate and that has hung like an albatross around the Labour parties head for nine years.
    I am sure the right wing and their usual mouthpieces will take great pleasure in telling the government ” we told you so ” and how Adern and her colleagues are all talk and no action.
    One thing is for certain , we don’t do fairness and the huge inequities in our tax system will remain.

    • KJT 9.1
      22 September 2018 at 1:51 pm

      Not boomers. Rich and/or lucky people.

      Buying into the inter-generational BS allows the wealthy spivs, to escape blame.

    • millsy 9.2
      22 September 2018 at 1:58 pm

      A lot of the boomers have Roger Douglas to thank for their wealth. MOW, NZR, NZPO and NZED middle management (among others), they managed to secure very generous redundancy payments when they were laid off which they were able to pay off their mortgages and start their own businesses with, and from there, start building their portfolios.

      • KJT 9.2.1
        22 September 2018 at 2:04 pm

        Possibly about 3% of boomers.

        I know more than a few of them, who never had another decent job again, now heading for retirement with several hundred thousand dollar mortgages, or renting.

        Like the equally inaccurate generalization about boomers free tertiary education. Less than 10% of boomers went to Uni. The rest of us just paid high taxes, so the children of the rich could have “free” study.

    • Draco T Bastard 9.3
      22 September 2018 at 2:16 pm

      Looks like nothing ” progressive ” is going to come out of this expensive over hyped tax working group.

      That’s because it’s designed to keep things the way they are, to keep the poor paying for the wealthy.

  10. Ed 10
    22 September 2018 at 7:27 am

    ‘Amy Adams has already tried to dismiss the need for a CGT as introducing “unnecessary complexity”,’

    The complexity of taxing all of Amy Adsms’ properties.

    https://www.stuff.co.nz/national/politics/92409698/the-many-houses-of-our-mps–which-mps-have-a-stake-in-multiple-properties

    • greywarshark 10.1
      22 September 2018 at 1:58 pm

      It seems that despite all the Nats supposed cleverness, at heart they are all Simple Simons that can’t handle the complexity of modern pluralistic democratic living and long for the old days of the landed aristocracy and nouveau riche going at building money piles in spades.

  11. corodale 11
    22 September 2018 at 8:21 am

    Did the report consider this, from Social Credit? I genuinely wander why not, any comments from you tax gurus?

    “Replacing GST with a transactions tax at less than a quarter of one percent (25 cents in every hundred dollars) on all withdrawals from bank accounts would give workers across the board a substantial increase in purchasing power.

    It would generate roughly the same in tax revenue as GST, but with a substantial amount coming from the speculative sector of the economy.”

    • dV 11.1
      22 September 2018 at 9:05 am

      YES Corodale, AND the side benefit of the transaction tax is that it would also catch those overseas payments by the big companies.

  12. ianmac 12
    22 September 2018 at 9:07 am

    Remember when Key cleverly introduced the idea of the sell off of shares in Electrical Companies a few years ahead and then eventually action it. A sort of “Good things Take Time” approach with plenty of rhetoric in between.
    Our problem is that the ant- CGT rhetoric has been captured by the Opposition.
    What to do to wrest it back?

  13. SaveNZ 13
    22 September 2018 at 9:32 am

    I think the obsession with any taxes based on income is a waste of time. We all know that there are copious ‘pretty legal’ loopholes that mean organisations in particular those overseas based can minimise their taxes. This is probably why they are not exactly expecting to see much gains in tax revenues, so therefore that is the point? A punishment tax for the honest??

    I think under globalism and the new wave of money entering NZ being gambled (500 million from one of China’s most wanted), and laundered in various ways means that any new taxes should be taxed immediately, the same for everyone and based on amounts and not open to any interpretation at all and therefore the rich and super rich can’t litigate their way out of paying their share

    Think GST and petrol taxes. The more you buy the more you pay and the tax collected immediately. No interpretation, accountants or lawyers needed.

    Petrol taxes in Auckland have already raised some enormous amount in the first month! I think they were a lesser evil than other ideas but could have been fairer in many ways aka targeting trucks for example. But petrol taxes because they are easy to understand, relatively fair and everyone in that area pays them I think people were more accepting of them. However imagine if they linked it to income like capital gains and you have a whole bunch of people apparently earning ‘nothing’ in fact making losses and driving around in their Mercedes, then Kiwis would see red. Fairness is very important in taxation and the perception is important.

    Therefore the only taxes I favour are transaction taxes, stamp duty on property so that it catches people like Peter Thiel who actually have their multi million dollar property as the family home paying taxes, (sounds like he would not be caught by the proposed capital gains taxes) so that some Kiwi teacher on $50k with a second property pays taxes but some of the richest people who own the most expensive property in NZ but don’t work here pay no capital gains.

    Or a set capital gains of say 5% that apply to every business, trusts, partnerships at a set rate so that it gets around the current tax loopholes on income. (Doing that would automatically make everything more transparent as people would then be encouraged not to put everything into a company or trust when they don’t have to). Also if the capital gains tax was not excessive then there would be a lot less fuss about it.

    Saying that, if the government was smart they would only implement a small tax that catches the super rich and those with high turnovers of trade or multimillion dollars in NZ only.

    A small stamp duty like 5% on property or commercial transactions over $5 million for example would not effect most Kiwis property and only get the large commercial transactions that can afford it and make sure it is paid by the lawyers on the transfer of title and NOTHING to do with income taxes. Most Kiwis would cheer to know that richer folks have to pay a bit of a tax just for them and if the stamp duty was quite small, that would be just a bit more than the agents fees generally for the sale. Not being too greedy and being fair as well as understanding how to collect under globalism, is the key for taxation.

    I’d also like to see a gambling transaction tax implemented on every dollar gambled not just the profit of it.

  14. SaveNZ 14
    22 September 2018 at 9:52 am

    The other thing I’d like to see, is if NZ is in the process of selling residency for 10 million for rich people. Make it 10 million as a straight out fee, not some weird investment strategy that ends up being meaningless because they take the investment out after getting citizenship.

    They should also make the visa residency not citizenship and can be revoked if they get a serious criminal conviction and limited to say 1000 people a year. That would then raise 10,000,000,000, straight off and make it a straight forward approach for the super rich so they don’t have to muck around with the investments and compliance and red tape in NZ. Spend that money each year on 50% housing the homeless, 50% on government investments for example.

    10 million is pretty much small change for a lot of the world and NZ is doing it anyway but at least this way the government actually get the money to spend and makes it easier for the applicants, because one thing rich people like is certainty, and one thing they don’t like is to waste their time and a set fee of 10 million, even if on the steep side, is money well spent if you value what NZ has to offer aka peace, privacy, beauty and safety.

  15. SaveNZ 15
    22 September 2018 at 10:06 am

    I’d also like to see an airport levy on people coming and going to raise money for public transport to and from the airports so that the locals who can’t afford to use the airports can actually use their rates and taxes on something they do use and people who are rich enough to fly around can pay a bit extra for the public transport infrastructure.

  16. SaveNZ 16
    22 September 2018 at 10:09 am

    My final tax is not a tax, but making those who make or sell products responsible for their packaging, that is not biodegradable to be disposed off. This would quick as a flash, ensure that manufacturers and retailers select more environmentally friendly products to sell and if they don’t, they have to pay for it themselves, not pass it on to the consumers. The tax from disposing of this commercial rubbish could be spent on pollution controls and the environment.

    They should NOT be taxing the consumers because often they have little to zero options to reduce the packaging whereas the manufacturer and retailer have all the power and simply have no incentive to be more innovative to reduce rubbish.

  17. Herodotus 17
    22 September 2018 at 11:53 am

    I see from my reading nothing about the distortion created when a family unit has a range of incomes and the tax that family unit pays over and above a family unit that has a more “balanced” or narrow spread of incomes. Yet both families can earn the same gross income.
    e.g. $150k family income both earn $75k tax paid is $31,340
    Income $120k ($30,520)and $30k ($4,270) tax $34,790 a difference of $3,450.
    Many here from my reading of comments perhaps haven’t taken into account or considered if our current tax bands are to narrow, and IMO the amount of income that these bands incorporate should be extended, this can be done and still be tax neutral from the govts perspective, by also adjusting the tax rates.
    https://www.ird.govt.nz/how-to/taxrates-codes/rates/itaxsalaryandwage-incometaxrates.html

    • KJT 17.1
      22 September 2018 at 1:42 pm

      Welfare decided on family income, but tax decided on individual income always, seemed to me to be unfair.

      Welfare, like ACC should be on an individual basis, and get the Government out of peoples bedrooms.

      The easiest way to do this, is of course, a UBI.

      CGT is essential for fairness. And, there is no reason why 10million dollar “family homes” should be exempt. A “family home” exemption has loopholes the rich can drive a truck through. Fairer to make capital gains only payable on total assets worth more than, say, the median house price in the cities. Or make it progressive, at the same rates as income tax, adjusted for the CPI.

      Finally, replace the regressive and unfair GST, with a FTT, and more progressive tax rates. GST was a cynical tax swap, of taxing those who have benefited least from our society.

      Inheritance tax should have been left on the table. Accumulating intergenerational wealth is a drag on the economy and society. If they are really wealthy because of merit, then their children should also get rich on merit without Daddies millions.

      • SaveNZ 17.1.1
        22 September 2018 at 2:20 pm

        I’d like to see family and benefit income based on couples outlawed because it seems to enable people to save money if they are not in a relationship, but in many cases it is better for people to be in a relationship socially, as well as modern day relationships can be fleeting which becomes a nightmare if your income is linked to that.

        Get rid of incentives for poorer folks on benefits (single parents/pensioners) to not be in a relationship or punitive measures if they are deemed to be.

        It is very confusing, even members of parliament seem to be caught out both on the relationships and Super (Winston) and DPB (Metira, Paula B).

        I think it is in societies interests to encourage people to work less and spend time with family and their own kids rather than the capitalist way to discourage non paid work aka caring for your own kids and family members!

        • KJT 17.1.1.1
          22 September 2018 at 2:29 pm

          The former family benefit. 60’s and 70’s, was a substantial amount and it went to mothers. A UBI for mothers.

          A start to UBI, in addition to our existing one, for pensioners, would be to replace the DPB and family support, with a family benefit again paid to the primary caregiver, or both parents if care is shared.
          We could afford it back then, with a much greater number of children, baby boom remember, we should be able to afford it now, as we are supposedly,”much more prosperous”.

          Of course we need to get rid of the , totally irresponsible”, “Budget Responsibility” rules!

  18. Philj 18
    22 September 2018 at 3:10 pm

    This working group looks like a do nothing BAU exercise. Don’t rock the waka Jacinda.

  19. SaveNZ 19
    23 September 2018 at 8:09 am

    Also a big issue for taxation was not addressed…

    “Private banks make huge profits from money creation, five billion dollars in 2017, with most of that money going overseas. That creates a huge hole in our economy.”

    http://www.positivemoney.org.nz/Site/petition/default.aspx

    Try getting the bank to lend to you for a business. They are only interested in lending if you have property to guarantee the loans.

    In spite of complaining about people investing in housing in NZ, the government is doing it themselves with the massive construction and infrastructure programs with taxpayers money and debt, to produce housing and support construction only (which is already dysfunctional and seemingly unable to produce quality housing that lasts at prices and time frames that are competitive).

    Likewise the immigration drive over the last 10 years has been around supporting housing and encouraging any new migrants to make investments in housing and construction. You could actually get residency doing this even if you didn’t qualify under other criteria. This has created a Ponzi where many migrants have come in who do not have jobs in the productive or manufacturing sector, but housing and construction or just the plethora of fake cafe and retail jobs which each week more whistleblowers are coming forward about how they have been extorted out of money for these scams. (You have to wonder why, immigration/Natz government didn’t twig that the top 5 categories of immigration were extremely odd, aka chefs, restaurant managers at fast food places, level 5 IT, retail ‘managers’ etc on low wages….now we have thousands of these people and scammers operating in NZ, because these scams were never shut down by government.)

    In short most of the obsession for property is entirely created from banks and the government while pretending it is consumer driven.

  20. SaveNZ 20
    23 September 2018 at 3:53 pm

    The other easy thing the government could do to reduce poverty and raise income at the bottom end is to increase the amount people who get benefits can earn and lower the punitive tax regime on income over it.

    For example a student on a student allowance is only allowed to earn $200 p/w apparently and they get an allowance of $200 a week. $400 is pretty hard to live on in Auckland as a student if you pay rent, power, phone, internet, car/public transport/books and then you still have your student loan to pay off…

    Likewise those on DPB or other benefits could have their incomes lifted by allowing them to work longer before the benefit starts being deducted and being less punitive on the tax side.

    Also get rid of secondary tax (if it is still around), most people on it are poor and work multiple low paid jobs so it is a joke to be charging them higher tax rates and the red tape to get the tax back.

    Supposedly employers can get anybody for low income part time work – so it will help business to be able to have these workers work more hours.

  21. Graeme 21
    25 September 2018 at 9:26 pm

    I don’t normally pay much attention to Bruce Munro at the ODT, he’s a bit conservative and family for me, but this piece on how a land value tax (LVT) would work is interesting.

    https://www.odt.co.nz/lifestyle/magazine/fairer-tax

    Even though he uses Queenstown as an example of somewhere it would help, I’m not so sure. There would need to be some pretty substantial tax reductions in other areas to off-set having to pay 1% of your land value (in our case $4K) annually. However it has the potential to bring in serious coin to the tax base, and could reduce capital flows into property speculation.

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