15 March 2019

Fri, 15 Mar, 2019

ME TOO

Spotted doing the rounds on social media this week, added here for those who didn’t see it:

Ladies, if he:

    - Reads your texts

    - Gives unsolicited advice and hurts you if you don’t comply

    - Never respects your privacy

    - Takes money out of your wallet

    - Tells you what you can and can’t smoke

He’s not your man. He’s the government.

WILL THE REAL LEADER OF THE OPPOSITION PLEASE STAND UP

In case you missed this also, David is effectively described as the Leader of the Opposition by Kate Hawkesby in the NZ Herald earlier this week.

CGT = CONFUSING GAINS TAX

Green Party co-leader Marama Davidson says she thinks the Capital Gains Tax should extend to everything including the family home.  Labour’s Tax Working Group says it won’t - oh unless your home is on a section size of over 4,500m² (that’s just over an acre to you pre Gen Xers and millennials) – which would affect most rural residents, not just farmers. This is a serious difference in opinion between coalition partners.  And that’s before mentioning NZ First.  What impact is this uncertainty already having on people’s investment decisions?

Prime Minister Jacinda Ardern says the tax will be revenue neutral (and then says it may not), so why do we need it? It’s supposedly about “fairness”. Well why not make the whole tax system fair and simple? Consider not taxing other forms of capital investment as well, after all it is capital investment that grows the economy, and if it’s about fixing the housing market (it won’t), then encourage other forms of investment such as private retirement funds that are not taxed on their cumulative interest. Investment funds provide capital to businesses, who produce stuff of value, employ people, and are taxed on their profits.  Isn’t it better that private individuals risk their own capital instead of the government investing in businesses and industry sectors that they somehow have a crystal ball over? I know which I’d rather.

So for the vast majority of people, a CGT is a going to be a tax on investment savings. That’s just wrong.

REMEMBER WHO OPENED THE DOOR

I agree with Simon Bridges in this article but he ducks one critical point: it was National who introduced the Bright Line test which we always said was a precursor to a full CGT, and I can’t trust them to repeal all of it. Only ACT says we should never tax capital.

From an ACT press release in March 2018:

“Tonight, we have a capital gains tax in all but name, and the National Party is as responsible as the Government,” says ACT Leader David Seymour.

Tonight’s passage of the Taxation (Employment Income and Remedial Matters) Bill means homes bought and sold within five years will be subject to tax on capital gains.

The five year bright-line test means that many New Zealanders will find themselves paying tax when they sell a home. 

'Amy Adams’ contortions on the Bill would qualify her for Cirque du Soleil. She tries to claim that a five-year bright line test is a stealth capital gains tax but the two-year bright line tax introduced by National was not.

Adams leaned on the IRD’s report on the Bill, more for support than illumination. Contrary to her claims in the House, the IRD’s Regulatory Impact Statement does not say a two-year bright line test will better catch speculators than a five-year test.

The lesson for National and voters on the right is this: taxes are like acorns, they grow. You don’t fight taxes by introducing them and then complaining when they grow.

The two-year bright line test should never have been introduced. There is no evidence that a capital gains tax charged over any length of time will reduce house prices as claimed. Some of the worst housing affordability in the world is in Sydney, Vancouver, London and Los Angeles, all cities with capital gains taxes.

This a sad day for New Zealanders and the quality of our policy settings. We now have a more complicated tax system with no useful benefits to New Zealanders”, says Mr Seymour. 

If you haven’t done so yet, please support our campaign against Labour’s capital gains tax here. 

THE HOUSE ALWAYS WINS

I’ve been thinking about my own situation described here a couple of weeks back. It is now clearer to me that instead of investing in a rental property, either residential or commercial, to help fund my retirement, I would be better to sell up, buy a larger and more expensive home, renovate extensively to increase its value, and take on some boarders (tax-free) to house-share with me and cover the mortgage repayments. Is this what the CGT will cause more people to do? And if it does, what’s next – a rule on how big a house you can build? You betcha!

SIMPLICITY CREATES FAIRNESS

Of course, whatever happens there will be unintended consequences (even if I’m unclear on what the intended ones are!), and those with fancy accountants and pockets deep enough to pay them, will find a way around it. Making taxes as low and flat and simple as possible fixes avoidance.

John Stossel explains the myth of “fair share of taxes” in this video. Warning, after you’ve watched one, you will want to watch more.

My head hurts. Time for a wine-down. Have a great weekend everybody.

Beth Houlbrooke

Deputy Leader / Vice President  

Support Us

for free speech, free trade, smaller government, lower taxes

Share Beth's Ad Lib with a Friend

They can sign up here