The devil is in the detail

Labour doesn’t want to talk detail, they think that the public doesn’t care and that they will look boring. Unfortunately taxation plans need to be full of detail.

Bernard Hickey talks detail, and it isn’t detail Labour are going to like:

The debate is welcome, but Labour could have done much better and should be trumpeting how such a tax would shift investment into more productive export industries and create higher-wage jobs to keep young New Zealanders here.

Instead, it has watered down that message by proposing a capital gains tax that is full of exemptions and then used the revenues to shuffle tax from the very rich to the poorest.

A capital gains tax is a good way to change the incentives for investors and reduce our appetite for foreign debt-funded domestic consumption.

But it would be better if it raised considerable amounts of tax and was difficult to avoid.

The exemptions for the family home, for residences in family trusts, for Maori land, collectibles and gambling winnings will be welcomed with open arms by budding tax accountants and lawyers.

These will be high-paid jobs, but they’re not the sort we want.

He reckons Labour should have pushed for a land tax instead. hardly a ringing endorsement, but then he just gets nasty on Labour’s plans.

Labour’s capital gains would initially raise just $18 million in its first year and take 10 years to get to $2.3 billion a year.

Capital gains does nothing to rectify the intergenerational wealth transfer created by the doubling of house prices in the property boom from 2002 to 2007.

That created more than $300 billion in wealth for a generation of property owners and means the generations to follow will have to take on huge debts to afford a family home, particularly in Auckland.

The property boom has shifted wealth in the form of future debt repayments by the young into equity gains now for the old.

A capital gains regime that is not retrospective locks that shift in place and punishes future generations for any capital gains they make. And exemptions for small businesses mean baby-boomer owners wanting to sell to younger generations will get to keep those capital gains tax-free.

But the biggest problem with Labour’s tax package is not the tax. It’s a lack of spending cuts or any real and new reduction in foreign debt.

Labour’s capital gains would initially raise just $18 million in its first year and take 10 years to get to $2.3 billion a year.

Capital gains does nothing to rectify the intergenerational wealth transfer created by the doubling of house prices in the property boom from 2002 to 2007.

That created more than $300 billion in wealth for a generation of property owners and means the generations to follow will have to take on huge debts to afford a family home, particularly in Auckland.

The property boom has shifted wealth in the form of future debt repayments by the young into equity gains now for the old.

A capital gains regime that is not retrospective locks that shift in place and punishes future generations for any capital gains they make. And exemptions for small businesses mean baby-boomer owners wanting to sell to younger generations will get to keep those capital gains tax-free.

But the biggest problem with Labour’s tax package is not the tax. It’s a lack of spending cuts or any real and new reduction in foreign debt.

Bernard Hickey was touted as one of those in favour of Labour’s tax plan. He has clearly looked at the thin evidence and plans presented and has decided that labour are economic numpties.

Labour makes a lot of noise about “owning the future”, but hasn’t addressed the need to reduce borrowing. That is the major reason we are getting poorer through interest payments to foreign creditors.

High borrowing by our government and property owners also makes us poorer in the long run through a ruinously high currency that hollows out the value-added jobs needed to keep our younger generations here.

By refusing to talk about the detail and referring hard questions to the “Expert Panel”, Labour has bombed this tax talk. In what should have been as Phil Goff talked it up in the preceding two weeks as a “step change” it has turned out to be more like a “slip change”.

The poll on TVNZ tonight will hammer this home to them.

 


THANK YOU for being a subscriber. Because of you Whaleoil is going from strength to strength. It is a little known fact that Whaleoil subscribers are better in bed, good looking and highly intelligent. Sometimes all at once! Please Click Here Now to subscribe to an ad-free Whaleoil.

  • kevin

    labour/goff looking to ‘clip-the-ticket’ on everything possible. Sad bunch…

40%