capital gains tax

After slamming the government Robbo, with his next breath, says Labour will increase taxes

As I said previously Grant Robertson knows as much about finance as Jacinda Ardern does about child rearing.

After slamming the government over tax cuts in his next breath he announces Labour will fight the election proposing tax increases.

Labour is planning to announce tax increases before the next election to help fund its spending plans but will leave the detailed work until it is in government.

Their spending promises are shaping up to be massive. Billions upon billions, and the only way they can fund that is by stiffing us with tax increases.

In a pre-Budget speech to a business breakfast on Monday, Labour finance spokesman Grant Robertson said a Tax Working Group would be set up after the election to develop ways to correct the imbalances between the productive and speculative parts of the economy.

“While we want a comprehensive review there will be some interim steps that we will announce before the election … to ensure that we have the revenue to address pressing issues, particularly in health, education and housing,” he said.

“I think it’s only fair to New Zealand we go to the next election with some sense of the direction of our tax policy. We want the Tax Working Group to do the detailed work but I think it’s only fair for New Zealanders that they see the path we are on.

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The problem with Robbo’s UBI

Danyl McLauchlan writes:

I’m still having trouble imagining how a UBI would actually work. Comments on the previous posts were very informative, so please help me out some more. How would payments differ between:

  • An unemployed 18 year old living with their parents
  • An 18 year old living away from home studying at university
  • A single parent with three children under five
  • A parent with three children under five with a partner on a high income
  • A person suffering from a serious chronic illness preventing them from working in perpetuity

Or do they all get the same amount?

By its very name “Universal” it means they all get the same. Good luck to Labour with selling that policy.

But the problems just get worse and worse. Having Gareth Morgan rant and rave all over Facebook doesn’t really help your cause.

Labour has massive problems with policy and they can lay them at the feet of Andrew Little.   Read more »

Has the government shot itself in the foot with its “Bright-line” test?

I have come across something that more suitably qualified people might like to comment on. I think the government has created a “vote-losing” law inadvertently.

It is this new “Bright-line” law regarding housing sales.

I was talking to a chartered accountant and lawyer about it the other day.  It appears the government may have inadvertently created a problem whereby ANYONE making even a slight change to a trust is going to end up triggering a tax situation even though no real sale happens or money is involved.

The relevant law is Section GB 53 of the Income Tax Act 2007, below. The problem word is effect in 1(c) [underlined].

Section GB 53 says:

GB 53 Arrangements involving residential land: trusts

When this section applies

(1) This section applies when—

(a) the trustees of a trust own residential land directly or indirectly (trust residential land); and

(b) trust residential land makes up 50% or more, by market value, of the assets of the trust; and

(c) the trust’s trust deed changes, a decision-maker under the trust deed changes, or an arrangement under the trust changes, with a purpose or effect of defeating the intent and application of section CB 6A (Disposal within 2 years: bright-line test for residential land).   Read more »

Ben Carson proposes flat tax system

Republican Presidential candidate Ben Carson has come out proposing a flat tax system for the US.

Alex Swoyer at Breitbart reports:

GOP presidential candidate Dr. Ben Carson, whose campaign is adjusting to new aides in key positions, released Carson’s plan“for reforming America’s convoluted and systematically unfair tax code.”

“Liberty and fairness are bedrock principles of this great nation,” Carson says. “It’s time that our tax system reflected those ideals.”

My plan for a simple, fair and transparent flat tax will not only eliminate the onerous burdens the IRS places on taxpayers, but it will grow the economy. Everyone will be on the same footing, from the largest corporation to the local family business. No one will be able to hide from their tax burden, but neither will anyone be ruined by an incomprehensible tax code. A Carson administration will push Congress from Day One to implement this plan to revitalize our economy through fundamental, common-sense tax reform. We will take the power away from the IRS and put it back in the hands of “We The People.”

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A newspaper editorial on the housing debacle in Auckland

A newspaper has an editorial about the failure of the much vaunted housing accord.

It is disappointing, though no surprise, that after two years the Government’s “housing accord” with the Auckland Council has produced just 102 houses (of which it knows) in areas designated for faster building consents. When the accord was signed in October 2013, Auckland needed 39,000 houses in three years. This is the rate of building that will be needed to accommodate the region’s projected population increase over the next 25 years. At least 25,000 new houses should be built or nearing completion by now if the three-year target is to be met. The tally of 102 known to the council is pitiful.

But it is no surprise because the housing shortage in Auckland is not caused only by slow council consent procedures. The Productivity Commission has found a raft of other contributing problems, including the scale and capacity of the building industry in New Zealand. The council also points to the fact that when it does issue consents, there is no guarantee a house will be built. In fact, 2027 consents have been issued under the accord’s fast track and only 102 are known to have come to fruition so far.

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Labour still clueless as to what to do – start by throwing out the really wacky policies

Labour really are lost, they are cleaning out their dead wood policies and swallowing plenty of dead rats.

Some in Labour sure are going to have their vitriolic words thrown back at them, particularly the nasty comments they made over raising the retirement age which has now been dumped as a policy.

The Labour Party has officially dumped its policies to introduce a broad capital gains tax and raise the retirement age.

Steps to remove the two policies from the party’s policy platform were approved by delegates at the party’s conference today.

Labour leader Andrew Little would not rule out a comeback for the policies in the future, but said if it got into Government in 2017 it would not introduce them without campaigning on them again in a future election.

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Capital Gains Tax in effect as of today

A new brightline tax, that the government won’t label a capital gains tax, comes into effect today.

It will clamp down on low property speculators who currently don’t pay tax on their one-or-two property sell-ons a year.

It won’t make much of a difference to the tax paid by professional investors.

Auckland Property Investors Association president Andrew Bruce said there’s a few exceptions to the tax as well.

“If its your own home that is exempt, if the property is inherited there’s an exemption there – there are one or two other exemptions.”

Bruce said professional traders and developers will be paying tax already and won’t see much of a change.

He said its mainly people who are trying to cut corners. Read more »

The real reason why house prices are rising rapidly

Labour would have you believe that rising house prices is the fault of people with chinky sounding names.

They also say we need a capital gains tax and possibly a stamp duty and restrictions on those yellow investors to halt the rise of house prices.

Even John Key is reacting by suggesting that perhaps a non-resident withholding tax could be deployed.

But the problem won’t be solved with any of those “solutions”.

The ANZ Bank has some new research which gives some insight into the real causes of rising house prices…and it will frighten most politicians.

In a paper on housing affordability released on Friday, ANZ Research said it was low interest rates and cheap mortgages that were contributing to the rapid growth in house prices, particularly in Sydney, rather than tax policies like capital gains tax concessions or negative gearing.    Read more »

Same problems as here but…

A newspaper has an article about the problems facing potential house buyers in Australia:

Singles on an average income have no hope of quickly saving a deposit to buy their first home, particularly in Sydney.

Getting a deposit together quickly is probably unrealistic even for couples where both partners earn the average wage, unless their parents can help out with the deposit or act as a guarantor on the home loan, said Canstar finance editor Justine Davies.

“The percentage of salary that would need to be set aside to get into the housing market quickly is very unrealistic for most people.

“You might be able to do the hard yards for a couple of years and get a five to 10 per cent deposit but to try and to do that to achieve a 20 per cent deposit I think for most people is going to be unrealistic,” she said.

A Sydney couple on average wages would have to set aside 41 per cent of their net income to get a 5 per cent deposit together in a year, research from Canstar shows.   Read more »

Robbo grooming himself for another tilt at the leadership?

With Andrew Little’s poll ratings mired below even David Cunliffe’s you have to wonder whether or not Grant Robertson is grooming himself for another tilt at the leadership.

Despite his announcement after being rinsed by Andrew Little off of the back of the union bosses supporting Little, it appears that Robbo may actually be having a crack again.

He has ramped up his publicity…he’s gone after John Key on a privileges complaint and done a soft…and I mean really soft positioning piece with Tracy Watkins at Fairfax.

The whole article doesn’t say much at all other than Robbo is going to do some shouting. Presumably in some country pubs because that is what all Labour aspirants do…cart themselves around the provinces supposedly to reconnect.

It is hard to tell though from the article.

Rugby mad Hurricanes fan Grant Robertson must have shouted himself to exhaustion at the Super Rugby final last weekend, One of his final tweets from the match admitted as much before his phone battery finally gave out from all the tweeting and texting.

Robertson’s approach to the finance portfolio curve ball thrown at him by Labour leader Andrew Little has been nowhere near as shouty as he was forced to rapidly negotiate unfamiliar territory.

Robertson was not the obvious fit; that mantle sat squarely on former finance spokesman David Parker’s shoulders. Always the lateral thinker of the Labour caucus, Parker was the man behind Labour’s  20011 economic platform. He  won widespread kudos for tackling some of the thorny issues – think capital gains tax, monetary policy and raising the pension age – head on. But kudos failed to translate into popularity, and Little’s claim to the leadership was built on a promise to review – read dump – the more unpalatable measures.

Little may be having a rethink as a lot of the economic chickens come home to roost, in the form of Auckland’s housing crisis, particularly in light of Bill English and John Key’s halfway house move to a capital gains tax.

But Robertson’s challenge has been to craft a coherent economic position while waiting on the wider party and caucus to grapple with the fundamentals of which parts of Labour’s 2011 manifesto to jettison, and which to keep or re-package.

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