capital gains tax

Labour intends to pick your pockets by at least an extra $5 billion

When I describe Labour as the Tax and Spend party I really mean it.

They are planning to raid your pockets by an extra $5 billion because they know best what to do with your own money.

On Q+A, David Cunliffe said:

By the way, a capital gains tax which at full running is going to bring in 5 billion dollars a year, close to, 4 to 5 billion is the single biggest change to New Zealand tax policy in decades and it’s one that I’ve personally championed for years.

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I wonder if Moira shudders every time Cunliffe attacks evil property developers

David Cunliffe and various other Labour spokes-people like to attack property developers and speculators. It is the rationale behind their capital gains tax proposals.

David Cunliffe in speech to Young Labour:

We have too many children who are getting sick because they live in cold, damp, cramped houses with black mould growing up the walls. Sometimes owned by speculators who just push the rent up while getting rich on tax-free capital gains.

David Parker on The Nation:

  • “You need to tax the speculators….capital gains tax
  • “Loan to valuation ratios would not be needed if they were taxing speculators and building affordable homes.”
  • “National Party, despite the fact that we had 40 percent house inflation, they’re not doing anything about it. Not taxing speculators…

I wonder though what evil property developers, Moira & Ian Coatesworth, think about that policy.

Moira Coatsworth and her husband Ian live just north of Thames on the Thames Coast.    Read more »

How many Tax Commissars and Stasi operatives will Labour need?

Labour's new tax commissars line up outside IRD's Stasi HQ

Labour’s new tax commissars line up outside IRD’s Stasi HQ

Labour’s newest great idea is to establish a Tax Stasi, filled with Tax Commissars who will be “embedded” in businesses that Labour thinks are bastards.

They will be observing what is going on and reporting back to the Tax Stasi Gruppenfuhrer

This is an outrage…you can’t tell me that once the Tax Stasi have finished doing over multi-nationals that Labour won’t suddenly decide to implement more snitches and stasi agents and lower the threshold and rules down to businesses with say $30 million turnover.

What is more of an outrage is labour have exempted banks from the snoopy activities of having Tax Stasi agents roaming the corridors looking for evasion.

If National had done something like that Labour would be accusing them of cosying up to bankers, and corporate cronyism…like they do now over insurance companies?

You do have to wonder though if one of labour’s aor David Cunliffe’s major secret donors is bank or someone associated with banks.

There are serious questions though…surely if they are targeting tax dodgers and rorters then the unions should have Tax Commissars assigned to them, in particular Unite Union, with their history of non-compliance. Or will Labour except unions from having Tax Stasi Agents sitting in their offices.

In other matters you can tell they don’t know what to do about almost everything because they have retained their promise for us to trust them, they know what they are doing, look we will appoint an Expert Panel.

Expert Panel : An Expert Panel will be established to deal with issues that are technical in nature and involve areas where a high degree of specialised knowledge is required before a final decision can be reached.

This policy will raise an additional $25 million in its first year, growing in outyears to reach $1 billion a year by 2020/21.

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Brain Drain reversing and the opposition don’t like that either

Labour has made much of the brain drain in opposition, criticising the government for driving people off shore.

Nevermind that the same thing happened under their watch and never mind that these things are cyclical.

Now however it appears the brain drain is reversing and the opposition don’t like that either.

Tracy Watkins reports:

A big turnaround in the trans-Tasman brain drain is poised to put new pressure on house prices and has the Government scrambling to build new classrooms.

Experts are predicting that, by the end of the year, the number of Kiwis heading across the ditch will be outpaced by the number returning – which has not happened since 1993.

Bank of New Zealand economist Tony Alexander said yesterday he expected the crossover point to come this year. The main driver was fewer Kiwis leaving for Australia “because the allure of Australia has diminished quite a bit”.

“A lot of chooks have come home to roost in their federal budget management, in their manufacturing sector and also their resource sector, coming off an exceptionally high level so . . . a big reality check.”

Alexander said the migration surge would likely add pressure to house prices – making it less likely the Reserve Bank would ease restrictions on the size of deposit required for mortgage lending.

Auckland house prices rose on average by 38 per cent between January 2009 and July last year and that was during a period of “slightly below average” net migration gains.

“If they’ve got this extra boost to the housing market coming along from accelerating population growth, it’s pretty unlikely they will be making any great change in those rules later this year.”

The predictions of a reverse brain-drain compare with two years ago, when the exodus across the Tasman reached record levels and there were fears it would only accelerate.

The speed of the turnaround appears to have taken officials by surprise – last week’s budget predicts a net migration boost of about 40,000 as a result, a rise of 12,000 on December forecasts.

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Labour’s reality gap on housing and interest rates

Peter Cresswell writes about the increasing ‘reality gap’ with Labour rhetoric and shallow policy thinking on housing, interest rates and capital gains taxes.

Their real big tool, it turns out once the hand waving subsides, is their old friend the Capital Gains Tax which, he insists is going to “cool” house prices and rents so markedly – by up to a third, he told Radio NZ’s Suzy Ferguson this morning! – that this will leave ample room for folk forced to save to afford the forced-saving his little “complementary” tool of a variable-compulsory savings rate will still require.

Do you see a problem here?  It’s called a reality gap – a gap that no amount of hand waving can massage.

It’s a little like the realty gap with Labour’s housing policy itself.  Their housing policy requires homes by the thousand to be built for well under $300,000 or else, as Labour’s Phil Twyford concedes, the Labour Party’s Kiwibuild policy “will quickly run out of money.” Yet the room full of experts in which Twyford had made that concession had already established that homes by the thousand could not be built for well under $300,000, leaving the Labour Party’s Kiwibuild policy as little more than a wet rag to wave around on the election trail that will quickly run out of money if they ever get a chance to try it.

The ‘suite of tools” Cunliffe began to reveal this morning has a similar reality gap: because just as Labour’s housing policy relies on a figure the industry can’t produce, Cunliffe’s “real big tool” relies on house price reductions that no capital gains tax anywhere in the world has delivered.

What he seems not to have noticed is that virtually every western country in the world apart from ours had a capital gains tax, yet every one of those places still experienced a housing bubble just like ours.   Read more »

Guess Who, Don’t Sue

Resist the temptation to make things complicated via a CGT

Matt Parkinson from Grant Thornton discusses capital gains tax proposals in the NBR:

Several political parties have once again proposed a capital gains tax on property and a restriction on foreign ownership of houses. But these approaches fail to address overall population growth, increased migration and trends to smaller housing.

Australia’s restriction on foreign ownership to new builds was supposed to reduce demand and, as a consequence, the rate of price rises for existing houses. But house prices in Sydney are still rising at 10% a year and the government there is now undertaking an inquiry into the effect foreign ownership has on housing affordability.

Any political response to New Zealand’s situation should resist the temptation to make things complicated and acknowledge it is simply a case of supply and demand.

On this basis, the government and its post-election successor would do well to ensure local authority processes such as building consents are as efficient as possible so the housing shortage can be rectified sooner rather than later.   Read more »

ANZ Bank mocks “Chicken Little” style commentary

The ANZ Bank has made mention in their NZ Market Focus newsletter of 22 April (PDF) that they are not impressed with the “Chicken Little” style commentary over housing.

The “bubble” is not about to burst, and we don’t find “Chicken Little” style commentary useful. That said, New Zealand is facing challenges, as we have highlighted many times before, and with euphoria sky high according to both business and consumer confidence surveys, it’s perhaps timely to remind readers of that. New Zealand is navigating a potent combination of legacy issues from the last business cycle (a weak balance sheet and high debt levels) and opportunity (high commodity prices and growing exposure to Asia) – while addressing a fairly urgent and demanding to-do list in terms of housing shortages and a city rebuild along the way. It’s an outlook fraught with tensions and frictions, and a bun-fight for resources. Net immigration is set to touch a decade high.

[...]

The so-called “bubble” is not about to burst. That’s our opening salvo in response to headlines over the weekend about New Zealand facing an economic disaster. Throw together rising interest rates, overvalued property prices, large household leverage, and the high New Zealand dollar and you have the so-called recipe for a crisis. If that’s the case, then major parts of the world are pretty well cooked. Somehow government debt made it on the list of 12 reasons as to why the bubble will burst – somewhat surprising given that New Zealand’s government debt is in the lower quartile across the OECD. For that matter the article also claims New Zealand is not an agriculture-based economy (“nothing could be further from the truth”).

If you strip out all the positives, the outlook will be negative. There is a reason why interest rates are moving up; the economy is moving forward. If New Zealand is going to have problems in terms of rising interest rates biting into leverage, the world should be very afraid: a host of other countries have interest rates at or near zero and government debt through the stratosphere! A 40-year peak in the terms of trade means the NZD should be high, though we’d still put it in overvalued territory. New Zealand has had an income boom that the article ignores. Yes, New Zealand has some clear issues in the housing arena; they won’t be sorted overnight but at least we’re seeing some action on the supply side. LVR restrictions were bought in precisely to curtail some of those systemic risks bubble trouble can lead to, and the RBNZ has other tools available as well. The OCR will be lifted a second time this week.

Nonetheless some clear challenges cannot be ignored, and it’s timely to remind readers that the NZ economy is going through a material transition – probably one of the most significant in fifty years. We’re moving from legacy issues to opportunity, amidst the demands of rebuilding our second-largest city, housing shortages in our largest city, and an overvalued currency. There will be bumps in the road. Read more »

Cunliffe continues to lie over capital gains tax

David Cunliffe just can’t help himself, again telling mis-truths over capital gains tax.

A Labour led government would impose a capital gains tax of 15% on realised gains from investment property. He says the family home would be exempt, Labour leader David Cunliffe told TVNZ’s Q+A programme this morning.

“I’m comfortable with that because speculators are driving this market, and to make matters worse, according to the BNZ and Real Estate Institute about 12% of speculative house buyers, all house buyers last year in Auckland came from non-resident foreigners.  Non-resident foreigners who have access to cheap finance are driving up the price of homes in New Zealand, so young Kiwis can’t get into their own homes.” Mr Cunliffe said.

When questioned on why a capital gains tax isn’t working in Australia, Mr Cunliffe said, “The problem would be worse if they didn’t have it.”  Read more »

David Cunliffe’s ongoing lies and deception

incorect

Yesterday David Cunliffe spent an hour on NewstalkZB with Tim Fookes.

I listened so you didn’t have to. It was dreadful but the amount of times David Cunliffe ‘mis-spoke’ or deliberately lied was incredible.

Take his claims on capital gains tax and his attack on farming.

David Cunliffe attacks farmers and lies about CGT David Cunliffe NewstalkZB. "David Cunliffe attacks farmers and lies about CGT"

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