Hickey on Tax
July 17th, 2011 at 2:23 pm by David FarrarBernard Hickey writes in the HoS:
Prime Minister John Key says a capital gains tax is one of the “third rails” of politics in New Zealand – and anyone who touches it will, in political terms, be killed instantly.
This week Labour touched that rail and received only an invigorating tingle rather than the shock of their lives.
That may be a premature call.
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. …
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.
The exemption for gambling is interesting. If you take a chance by investing in the (initially) unproven company Xero, and make a capital gain you’ll be taxed on it. But if you take a chance at a casino and win the same amount of money, you’re exempt from tax.
A land tax would have been much more efficient, simple and lucrative.
The idea put forward to the Tax Working Group in late 2009 by Motu economist Arthur Grimes for a 0.5 per cent land tax with a $50,000 a hectare tax-free threshold and the ability to defer payment until sale would have raised about $2 billion a year.
I support a land tax, so long as income tax rates are cut to compensate.
Related posts:
- Hickey on Key
- The case against a CGT
- Housing Affordability
- For use next time Labour claims a CGT leads to more affordable housing
July 17th, 2011 at 2:31 pm
This shows how premature the “CGT or bust” claims are.
We should be debating:
Vote:- which of CGT and Land Tax (or both or neither) should be added
- how that should affect company tax, PAYE and GST
- and while we are at it how to simplify the whole messy benefit system
July 17th, 2011 at 2:32 pm
The big one they left out was superannuation funds. They are capital aggregatiors much in the same way any business is. Why shouldn’t Andrew 3 hats be taxed on the capital gains of his super when he decides to have a change of employer just like a person who sells their business is having a change of employer. A business for many is there super fund.
This is just another nasty greedy tax by socialists who need to spend others money.
The issue is stop spending Other Peoples Money.
Get Govt’s spending down inside their income. Just like you have to.
Vote:July 17th, 2011 at 2:34 pm
Looking at the QV site the houses sold around me (investment properties): (eg)
1985 $65,000
1990 97,000
1994 119,000
2001 B/C &D syndicate bought for $132,000
and in 2005 sold for $312,000.
the smart money Fox Rat and Weasel seem to be bailing out at the right time and now Joe and Mrs Bloggs will have to front up with baby Blogs for the same house as at 2001 with no extra improvements.
National has moved to the Dark Side.
Old Muldoon got a lot of things wrong but at least he had a heart.
Vote:July 17th, 2011 at 2:40 pm
This is just another nasty greedy tax by socialists who need to spend others money
Vote:…/…
You can buy one property, get it revalued, use the equity to buy another property and then buy another and another. “And you do it all with OPM. Other people’s money. OPM. It’s like being high on drugs!” ;What’s more, the wonder of depreciation claims on the building and contents means “the government subsidises your investment! It’s delightful!”
http://www.listener.co.nz/uncategorized/house-of-the-rising-sum/
July 17th, 2011 at 2:43 pm
hj, that was 2003. High gearing in property (and other) investment can enable you to build investments, but if you don’t get out at the right time the gears turn against you, hence people and companies crashing big time over the past few years.
Vote:July 17th, 2011 at 2:43 pm
Outraged developers in Queenstown have blasted a proposal before the Government suggesting radical changes to the tax system.
http://www.stuff.co.nz/southland-times/news/3248188/Developers-slam-land-tax-proposal
Queenstown being the blackhole of finance companies.
Vote:July 17th, 2011 at 3:10 pm
Bernard Hickey writes:
“The idea put forward to the Tax Working Group in late 2009 by Motu economist Arthur Grimes for a 0.5 per cent land tax with a $50,000 a hectare tax-free threshold and the ability to defer payment until sale would have raised about $2 billion a year.”
Works for me. Hickey’s a smart cookie. Perhaps he should consider running for office.
Vote:July 17th, 2011 at 3:28 pm
i keep hearing the lefties push a line of “it cant be that bad, its got people talking”
im sure some party mooting that rape would get people talking too.
morons
Vote:July 17th, 2011 at 3:40 pm
land Tax isn’t inherently left wing as seen here:
http://www2.macleans.ca/2010/10/21/did-2010s-man-of-the-year-die-in-1897/
In addition I heard David Farrah praise the idea of a Land Tax on The Panel with Jim Moira.
Vote:July 17th, 2011 at 3:48 pm
hj (1,369) Says:
July 17th, 2011 at 2:34 pm
Looking at the QV site the houses sold around me (investment properties): (eg)
1985 $65,000
1990 97,000
1994 119,000
2001 B/C &D syndicate bought for $132,000
and in 2005 sold for $312,000.
the smart money Fox Rat and Weasel seem to be bailing out at the right time and now Joe and Mrs Bloggs will have to front up with baby Blogs for the same house as at 2001 with no extra improvements.
National has moved to the Dark Side.
Old Muldoon got a lot of things wrong but at least he had a heart.
So HJ you think you should be able to go and buy that same house today at the same price as 1985 but would you sell it in another 25 years for the same $65000.
Are you prepared to work for 1985 wages as well?
I don’t think so. You are part of the system like everyone else. You are just as “greedy” and of course you have no idea at all what others have spent on that house to keep it functioning as a dwelling.
And there must have been a buyer willing to purchase that house at any of those times at that price. Its called a market place.
Vote:July 17th, 2011 at 3:49 pm
Well David is a died in the wool true blue socialist.
Vote:So what’s your point.
July 17th, 2011 at 4:04 pm
When the sh*t hits the fan and debt around the world implodes, guys like Hickey will disappear. People like him have no idea what they are talking about. The financial markets are going to get hammered and this light weight is taking about what should be taxed, he should be informing people where to put their money before it diappears before their eyes as will happen to the value of shares.
Vote:July 17th, 2011 at 4:12 pm
And Maori land. We definately shouldn’t tax Maori land. Because it’s Maori land. Do you see?
Vote:July 17th, 2011 at 4:15 pm
Just two things….
All the proponents of the CGT (HJ) seem to think that investing in property is some sort of quick rich scheme, a sure way to become a millionaire.
If so, why didn’t they get into it?
1.Because as true socialists they do not participate in schemes that will disadvantage ‘the working man’.
Or….
2.They know that it isn’t really a sure bet, hard work and risky and they could end up like so many of those Blue Chip investors.
They then parade two people on television (One of them Gareth Morgan) who have made millions out of selling a company or shares, of which there might be a dozen in the whole of New Zealand, to show how ‘unfair’ it is not having a CGT.
Of course those people don’t mind telling other people that paying 15% CGT is ‘fair’.
1.After paying 15% CGT they would still have a cool 7 million to play with.
2.They can say they don’t mind paying CGT because they won’t (The tax is not retrospective). They want the rest of New Zealand suckers to pay it.
And…
If if they think it is not fair and if they don’t mind paying 15% why don’t they now?
Who has told these ‘generous’ people they cannot donate 15% of the profit they have made to the IRD?
Put your money where your mouth is Gareth.
It shows there really are some rich pricks in New Zealand.
Vote:July 17th, 2011 at 4:16 pm
Gambling exemption makes sense. Capital in gambling is always working capital, not equity.
Vote:July 17th, 2011 at 5:02 pm
Mr Morgan has the worse performing kiwisaver fund, basically all these smart theoretical economists haven’t got a clue and what happened in the real world was different to their models. What looks good in some model rarely takes into account behavioral changes, personally I would rather Morgan chose to do good works with his millions than give it to Goff and co to distribute.
Vote:July 17th, 2011 at 5:05 pm
Gambling turnover is taxed anyway whereas domestic rents aren’t taxed at all unless the landlord actually makes a taxable profit – which most avoid although the removal of depreciation will have made that a bit more difficult.
Land tax could always be a minimum tax in that any income tax paid on the earnings from the land could be credited towards – and so all those non-residents and farmers paying little income tax would be caught while those already making a reasonable taxable income from their land would not.
Vote:July 17th, 2011 at 5:52 pm
Let me see if I have this straight:
Jewellery, Gambling and Art will not be subject to GCT because they are examples of productive investments that the Labour Part wants to encourage? (I know Cunliffe waffles about compliance issues but it seems to me that if you can levy GST on the sale of art and jewellery, you can also levy GCT on it.)
Farms and smallish businesses (ie with a worth beyond $250,000) will be subject to GCT because they are chokablok full of speculative lucre that is bad for the economy?
Vote:July 17th, 2011 at 6:02 pm
Just in Colmar Brunton:
Vote:Labour 27%
National 53%
Greens 10%
Mana\maori 3%
July 17th, 2011 at 8:39 pm
Guess who pays land tax?
The landlord? – but suppose the lease indicates that the likes of land tax is an ‘outgoing’ to be met by the tenant?
Even if not, a land tax would make property investing less worthwhile, slowing down commercial building construction until compensated for by rising rents. so while landlords would take a land tax ‘hit’ for a few years, rent increases will start to cut in to compensate for it.
From a business tenant’s point of view, land tax is another deadweight overhead which has to be paid through thick or thin. At least businesses get income tax and GST ‘breaks’ buring trading downturns.
Vote:July 17th, 2011 at 9:21 pm
The exemption on gambling I presume is based on expected returns. If you tax people for gains, you need to allow writeoffs for losses. In the case of gambling, the losses would normally substantially outweigh the gains. So better to exempt.
Vote:July 18th, 2011 at 6:09 am
Why do people persist in Arguing that taxing productive assets and exempting non productive assets as proposed by Labour wi somehow lead to more investment in those productive assets? It won’t.
Vote:July 18th, 2011 at 11:22 am
Hickey is a clucking lightweight. He publishes left-leaning, socialist geared articles on his pathetic interest.co.nz website, having goes at “Greedy rich pricks” and “farmers who pay no tax and rip off the hard working salt of the earth kiwis” simply because it gets him bucket loads of leftard traffic and the resulting ad-revenue.
It was only 2 years ago when he was predicting the implosion of the housing market in NZ, with across the board 40% drops in house prices – so I went out and bought another investment property, and it is now border-line cashflow even.
He is a clueless idiot, simply trying to generate income by writing sensationalist pap that is geared at all the Labour and Green voters who sit around all day and don’t have to actually work.
The sad thing is, when he wrote for stuff.co.nz he was focused on public sector waste, and actually had some really good articles. Now he writes out of pure greed for advertising revenue. What a dick.
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