capital gains tax

John Key and Andrew Little are on the same page: no Capital Gains Tax

The Government isn’t going to try to take the heat out of the Auckland housing market by introducing a capital gains tax.

Prime Minister John Key has ruled that out, and says if the Reserve Bank thinks it needs new tools to deal with the city’s soaring prices it’s free to talk to the finance minister about that.

The Reserve Bank’s Deputy Governor, Grant Spence, yesterday said Auckland house price rises couldn’t be sustained and a “disruptive correction” could harm the economy.

He said speculators were looking for tax-free capital gains, and the Reserve Bank couldn’t fix the problem on its own.

That’s been taken as a clear signal the government should introduce a capital gains tax, but Mr Key isn’t interested.

“It’s a hideously complex tax,” he said.

“Labour campaigned on it and couldn’t explain it, and when family homes are excluded that means three-quarters of all housing is excluded – it’s just not very effective.”

Speculators should be hunted down by the IRD and taxed to the full extent of the law.  Those who have been trying to sneak it past the goalie aren’t looking at a bright future.   But CGT won’t work if applied to everyone.   The real problems are supply of land, zoning, consents and excessive immigration pressures.   Read more »

Will Labour run on a Financial Transaction Tax?

Labour have a finance spokesman who has never worked in the real world, and basically has very little idea about finance.

It wouldn’t be surprising if he did what the Democrats are doing now they are in opposition, and promote a Financial Transaction Tax.

To pay for the plan, the U.S. would impose what Van Hollen called a tiny fee on market transactions, of 0.1%. A Democratic aide said the fee would apply to any buy or sell transactions, and include stocks, bonds and derivatives. The plan would also limit tax deductions on CEO pay above $1 million.

So far this type of tax has only been promoted by the looney left, in the form of the Alliance and Jim Anderton, Mana, and the Greens.

5. Financial Transaction Tax

The Green Party will:

  1. Involve New Zealand with the group of countries working to agree on a tax on international currency movements, to set up a fund to provide capital for poor countries to improve their social and environmental wellbeing. This would discourage currency speculation without being high enough to impede genuine trade.

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Robbo continues to show Labour’s condescension toward voters

Are Labour really about to take notice of what the voters are telling them, an historic moment if it’s anything more than lip service.

David Parker the media’s favourite policy wonk who has been awarded plaudits for developing policy and the details behind it…..well not really has been thrown under the bus.

Labour’s manifesto is in tatters as without the inflated forecast revenue from the CGT and the savings in pension there is no cash to fund any other policies, except of course that old favorite of cracking down on tax dodgers.

You do have to wonder what on earth Labour have been doing for their taxpayer funds considering the CGT, pension age, minimum wage have been policy for four years and only now are they noticing that the public think Parker and Labour are idiots.

Who knows maybe even the groupthink the MSM might one day notice their audience don’t like these policies either and start questioning them properly.

Grant Robertson has made his pitch for the party leadership, signalling a crackdown on banks, supermarkets and power companies and a plan to rebuild the party.

As he moved to counter the momentum building behind former party president Andrew Little’s bid, Robertson formally filed his nomination yesterday, signed symbolically by Maori MP Rino Tirikatene and Mana MP Kris Faafoi.

He is expected to launch his campaign in Auckland next week aiming to reverse the 2011 leadership launches where David Cunliffe overshadowed him.

As rumours swirled in the party that Cunliffe may withdraw, given Little’s hit on his union base, Robertson yesterday promised ‘‘a three-year programme to rebuild and reconnect the Labour Party as the driving force for progressive change’’.   Read more »

Fed Farmers and NZIER agree…Labour’s CGT is a dud

Despite some epic dancing on the head of a pin by David Parker, the Federated Farmers commissioned report from NZIER is damning of Labour’s Capital Gains Tax.

A report by the New Zealand Institute of Economic Research (NZIER) reinforces Federated Farmers concerns over the Labour Party’s proposed Capital Gains Tax (CGT).

“The NZIER say the Labour Party’s proposed Capital Gains Tax would not be a good addition to New Zealand’s tax mix as it is proposed, we agree,” says Dr William Rolleston, Federated Farmers President.

“The nature of politics will see the Labour Party try to dismiss the NZIER report.  Yet they must listen to the message because the messenger is credible.

“We commissioned the NZIER to examine Labour’s CGT proposal since it represents a major change to New Zealand’s tax system and has been devoid of critical analysis.

“Perhaps the most concerning aspect of the report comes down to the Labour Party’s revenue assumptions.  In 2011, the Labour Party estimated a 15 percent capital gains tax would raise $17.5 million in its first year, rising to $3.7 billion by 2026.

“The NZIER tell us these estimates are high, since the revenue potential of its proposed CGT is more likely to be half that sum.  In fact it may be smaller.  If this key policy is out by such a margin it asks fundamental questions about the Party’s shadow budget.

“What’s more, the Labour Party’s estimates of CGT revenue were revised up this year.  The NZIER noting Labour’s “…2014 estimates are less believable than the 2011 estimates.”

“Labour also expects to raise at least $1.3 billion from the farming sector but a more realistic estimate is half that sum in 15 years’ time.  NZIER further estimates that the loss in current farm values will be between $2.4 billion and $7.6 billion.  But this will be a one off hit for farmers.

“Lower land values mean lower tax revenue too.   Read more »

Some more reader questions about Capital Gains Tax

I doubt Labour can answer these, after 4 years they still have no idea what he shape of the CGT will look like.

Hi Cam & All

I have a few questions regarding CGT that I don’t think I’ve seen raised, and which certainly don’t seem to have been put to Cunliffe:

What adjustment will be made to the selling value of a property due to inflation? In other words, this tax fails to take into account inflationary pressures, and is, in effect, a tax on inflationary gains (which, as we all know, is NOT a capital gain in the real sense of the term).

Another thing that is not taken into account is the real cost of purchase. Most people buy a house using a mortgage. The real cost of the house (purchase price + interest) is much higher than the actual value of the house when purchased. Will this be taken into account when determining any capital gain?     Read more »

Cunliffe all over the place on capital gains tax

The Fairfax embedded Labour fanboi and sometime political reporter finally comes clean on how the MSM like to pick up their pay cheques without doing any work.

The last sentence in the article says Labour is being dragged into the mire by a clever National by forcing it to explain the detail of its policy!

But by dragging Labour down into the mire, explaining detail of its tax plan, National had its best day of the campaign since its official launch 11 days ago.

Seriously, you actually wrote that, it’s on paper, there is a record of it!

Explaining details of policy is now being dragged into the mire!

Reporting on hacked emails, some of them forgeries is high principled good journalism though.

If you want a proper explanation with detail that treats you like a grown up with a brain stop here, if on the other hand you want to know what a bunch of middle aged gossips with not a lot to do thinks well stick to the MSM.

Forget for a moment the rights, wrongs and details of Labour’s capital gains tax. National is cock-a-hoop.

After days and days dominated by dirty politics, it has shifted the focus – for a day at least – and put Labour and its leader, David Cunliffe, on the defensive.

The issue flared after the Press leaders’ debate on Tuesday when Cunliffe ducked answering Prime Minister John Key when he asked if under Labour a family home held in a trust would be hit by a capital gains tax (CGT) – and then claimed it would.

It was Key’s best “hit” of the night, leaving Cunliffe looking awkward and trying to change the topic.

It is a mystery why Cunliffe did not come back in the second half of the debate and call Key out on misrepresenting his policy, after his advisers confirmed the family home in a trust would be exempt.

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Impertinent questions about Labour’s CGT tax grab

It’s also completely unworkable.  ACT’s Jamie Whyte explains

Exempting the family home from Capital Gains taxes is harder than it sounds.  What if you charge one of the children board?  What if it is one of the children’s friends?  A boarder?  Many South Auckland families share a house.  When does it stop being a family house?  If you take a job overseas or elsewhere and rent the home for a while, is it still a family home? What about the Granny flat?  What if it is not granny?

Labour’s proposal is not fair.  The million dollar Dotcom mansions will be capital tax free and the Otara ex-state house will be taxed because the owner needed extra income to pay the mortgage.

As with many Labour policies, it’s just aimed at the rich pricks, but hasn’t actually been thought through.   And with David Cunliffe hiding all his wealth in trusts, he’s got no idea how it will affect real people.

and this, via the Tipline   Read more »

Hands up who wants to trust an “expert panel”?

David Cunliffe says that Labour will make sure there is an “expert panel” who will determine whether or not the house you are selling is your residence, before applying the capital gains tax.

Key said National would release its fiscal plan next week but reiterated any tax cuts would be modest and aimed at low and middle income earners.

He hammered the point that Labour would add five new taxes and tried to reprise the “show me the money” moment from his 2011 debate against Phil Goff asking Cunliffe if his capital gains tax would apply to houses in trusts.

But Cunliffe avoided answering, turning the topic instead to Labour’s broader tax plan. His advisers told media in the break that the tax would not apply to the family home if it was in a trust.

Speaking to media after the debate, Key clarified his attack on Cunliffe regarding Capital Gains Tax applying to family homes that were owned by a trust.

“My read of the [Labour policy] is that if you own a family home and it’s in a trust, under Labour you will be subject to a capital gains tax because that policy says that you don’t pay a capital gains tax on a family home… if you are the owner/occupier. 

“But, of course under a family trust the trust is the owner.

Key said he’d received a “ball park” figure from an unnamed tax specialist that 300,000 Kiwi homes were in trusts.   Read more »

Labour’s CGT tax grab is coming for 300,000 Kiwis

John Key destroyed David Cunliffe’s capital gains tax plans last night in The Press leaders debate.

He forced David Cunliffe to admit that 300,000 Kiwis were going to get slammed with the capital gains tax on what is ostensibly their family home, despite the promises of the Labour otherwise.

John Key landed a blow on David Cunliffe over Labour’s planned capital gains tax in a fiery leaders debate in Christchurch.

ONE News political reporters say The Press leaders debate seemed pretty even until the National leader turned to his Labour counterpart and asked: “Will I pay a capital gains tax if my family home is in a trust?”

After being challenged again with the question, Mr Cunliffe responded that Labour will run surpluses every year “as long as there is no international downgrade”.

He said Labour will “pay down the record debt this government has built up – more than New Zealand borrowed during World War Two”.   Read more »

Herald editorial slams Labour’s health bribe

Another day, another poorly poorly designed policy although this one is just a straight out bribe to rip the votes away from Winston First.

People are seeing Labour’s cynical health policy for what it is, a bribe, with money the government doesn’t even have.

When policymakers in the modern world worry about the cost to future taxpayers of ageing populations, pensions are only part of it. Healthcare also contributes to the bill. As is always evident in doctors’ waiting rooms, older people are heavy users of health services. But it is not just their number that is increasing as the postwar baby boom moves into retirement; advances in the care and treatment of organ deterioration are rapidly extending the human lifespan. Welcome and wondrous as they are, the treatments come at ever increasing cost to a decreasing ratio of working taxpayers.

For that reason, younger voters ought to ask hard questions of the Labour Party’s election promise to provide free primary healthcare for everyone over 65. The first question to ask is, how many of them need it? Some with chronic conditions may struggle to afford a fee for the frequent visits they need, but these days general practices are funded for the needs of a range of enrolled patients and doctors can vary their charges. Labour proposes to replace doctors’ discretion with free consultations and medicines to the over-65s regardless of their ability to pay.

It would give the elderly the same benefits provided to children up to age 13 in this year’s Budget, which Labour endorses. It would add pregnant women to the free list too, for any medical attention they might need in addition to the prenatal care that is already free. Not all parents of children under 13, or expectant mothers, need these benefits either. Many can well afford to pay a fee. But at least a case can be made in generational equity for children and young parents. Not so, the older generation.

Labour is offering free doctors and medicines to a generation that grew up in a welfare state, attended university at a fraction of the cost faced by their children, bought houses at lower relative prices, had their top income tax rates reduced by half early in their working years and enjoyed galloping house price inflation in their peak earning period.

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