Labour’s package

July 14th, 2011 at 2:52 pm by David Farrar

Here are details to hand. On radio shortly so won’t have time to check full details of timing, and whether the numbers add up.

  • Cullen’s envy of 39% put back on, but starting at $150,000
  • The first $5,000 tax free (which includes increasing benefits by $10 a week)
  • A of 15%
  • Boats will be exempt from the CGT.
  • A farm house will be exempt, but not the farm itself
  • Jewellery is exempt. So if you invest in a start up company which makes money you pay CGT, but if you buy jewellery which appreciates you do not
  • If you are over 55 and have owned a small business for 15+ years then first $250,000 capital gain is tax free.
  • No GST on fresh fruit and vegetables

I’d say tax accountants will be celebrating the extra work, if this came to pass :-)

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124 Responses to “Labour’s package”

  1. Michaels (1,317 comments) says:

    Give to the poor and take from the rich.

    Good on ya Robin Hood.

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  2. Grizz (477 comments) says:

    Sales of gold and gems will skyrocket the day before this law is introduced.

    The NZ Herald released this at 14:45. It also included CGT on people who occasionally trade shares. If that is the case, will they repeal FDR on foreign assests.

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  3. mikenmild (8,925 comments) says:

    Well, they’ve set out a stall, so at least there are some differences to debate.

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  4. bhudson (4,720 comments) says:

    So investment properties are subject to 15% CGT. Equity investments (shareholdings) are subject to 15% CGT.

    How exactly does this proposal shift incentives to ‘productive’ forms of investment?

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  5. garethw (205 comments) says:

    So you’re mainly concerned that they didn’t take their CGT far enough and want them to have gone further and taxed personal possessions and the primary dwelling of farmers? Fair enough ;)

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  6. Adolf Fiinkensein (2,685 comments) says:

    And that’s a bold game breaker?

    How pathetic!

    No serious revenue in the first year so Goff’s going to borrow a huge $4 billion plus of new debt in that year, just to fund his election bribes. Haven’t they learned ANYTHING?

    Be lucky if it makes the news before 6.20.

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  7. queenstfarmer (696 comments) says:

    Here come the exceptions… Always ruin a nice tax idea.

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  8. alex Masterley (1,439 comments) says:

    Blackadders codpiece is a bigger package, and bolder too.

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  9. MyNameIsJack (2,415 comments) says:

    makes John Key look like he’s sat on his arse and done nothing for almost 3 years. Oh, hang on…

    Still waiting for the cycleway, John.

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  10. dog_eat_dog (683 comments) says:

    $78m in the first year! Wow, only another $11bn worth of spending promises to fund!

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  11. Cunningham (746 comments) says:

    Good grief it looks like half the country will need to be employed by the IRD or become accountants to deal with all the complexities. What a crock!

    BHudson hit the nail on the head. How on earth is this supposed to grow the economy??

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  12. Nick K (919 comments) says:

    How on earth is this supposed to grow the economy??

    Because it produces more revenue for the gummint to spend. Remember, under Labour the gummint is the economy

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  13. Jimbob (639 comments) says:

    When a small business is sold after 15 years it is exempt the first $250k, but when a farming small business is sold after 15 years, it is not.
    I presume the small business owner is supposed to be a Labour voter.

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  14. virtualmark (1,423 comments) says:

    under Labour the overwhelming majority of Kiwis will end up paying less tax not more

    Yep. Under Labour the freeloaders will get even more lollies.

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  15. MikeG (359 comments) says:

    “Cullen’s envy tax of 39%” – what other country has a top rate as low as this?

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  16. wreck1080 (3,533 comments) says:

    FFS, it makes you wonder if it is even worth working in this country.

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  17. davidp (3,329 comments) says:

    I have some questions:

    Presumably most farms are owned by sole trader companies, including the house on the farm. So does this mean that shares are subject to CGT, but any shares covering assets that a company owns that are lived in by the shareholders aren’t? What about any outbuildings that are used as dwellings by farm staff? They might be family home too, even if the families living in them aren’t shareholders.

    If a couple owns a beach house and they separate and one partner moves in to the beach house, then does this become a family home? Does it escape CGT when it is sold, or does CGT need to be paid for the period it was a second home?

    If I owned a beach house, then could I sell my city home CGT-free when I retire and move to the beach house? If so, will I need to pay CGT if I later sell the beach house and move elsewhere? Does CGT need to be paid for the period it was a second home?

    I’m confused about the jewellery policy. Anyone who has tried selling diamonds will find it is hard to do at a huge loss. The idea that an individual might profit from the things is next to impossible. So why mention jewellery specifically, and not a long list of other depreciating assets?

    Will CGT be inflation adjusted? I suspect most house price rises over the long run are mostly inflation related. It’d be unfair if a house appreciated in price at a rate a little slower than inflation, then as well as suffering a real loss you were taxed.

    If two singles move in together and one later sells their house, then will they need to pay CGT?

    If I move to Australia and then sell a property, then will I escape CGT whereas if I’d sold it before moving to Australia I could have avoided the property?

    If I owned a second property and let my elderly parents live in it, then will I pay CGT when I sell the property after they die?

    Can a family register a beach house in the name of one spouse or a child and escape CGT?

    Can a family register a beach house in the name of an elderly parent, then escape CGT by inheriting it when the parent dies?

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  18. anonymouse (652 comments) says:

    Anyone taking bets on Hone’s antics in the house upstaging Goffs announcement on the 6pms tonight?

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  19. Murray (8,835 comments) says:

    “Sales of gold and gems will skyrocket the day before this law is introduced.”

    Whens that, the 47th of Fantasyober?

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  20. RRM (8,997 comments) says:

    From the comments on this thread, anyone would think Labour had some chance of turning their tax policies into law in the next term… ;-)

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  21. alex Masterley (1,439 comments) says:

    David,

    The devil will be in the detail. at this stage this is policy, and without seeing how the amending legislation is drafted it would be impossible to work out the permutations.

    As for farms, the business structure isn’t generally as simple as people think. For example, the land may be owned by a family trust associated with Mr & Mrs farmer. The business of the farm will be run by a company owned by Mr & Mrs Farmer. They will lease the stock off another entity. So who pays what and when will be interesting.

    But these comments asume that Labour win an election sometime in the next decade.

    And yes i think Hone has upstaged Mr Goff but that isnt difficult

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  22. Batman (97 comments) says:

    Anonymouse: i’ll take that bet!

    on their tax package: HA HA HA HA! what a joke! especially after seeing the earlier blog on net taxpayers!

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  23. Chris R (61 comments) says:

    “Labour’s Package.” If this was my package I’d buy smaller underpants! The accountants will love this utter non-event.

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  24. mikenmild (8,925 comments) says:

    RRM

    That’s a good point. I can only see this as setting out something now that they can promote over the next term. Labour could not have realistic hopes of forming the next government, although of course they can’t admit that. Announcing a package like this now gives them a chance to campaign on it this time around and then see what else they should do. A bit of a road test. Probably a smart move.

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  25. davidp (3,329 comments) says:

    I have some more questions:

    If I invest in a multi story office block and live in the penthouse then is the whole building a family home? Or is this like the farm case where some proportion of property investment company shares aren’t subject to CGT if a share holder lives on the premises? What if the building is untenanted when I sell… could I escape CGT by spreading some of my possessions around the building and claiming I live in the whole building?

    If I live on a house boat then is that a CGT-exempt boat or a CGT-attracting house?

    How small is a “small business”? Is this a disincentive to employ people and grow the business? Surely most increase in business value will be due to development and innovation, rather than waiting for a capital gain to occur? How will the IRD determine what increase in value was due to business development, and what increase in value was a capital gain?

    Will CGT be applied to trust and company structures, like the ones Goff has used to hold his own investment properties?

    Will CGT apply to the Green MP property investments that they rent out to parliamentary services for their own benefit?

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  26. Pete George (21,831 comments) says:

    They have a website at http://www.ownourfuture.co.nz/

    Unfortunately the front of this is just about all on anti-asset sales, and their tax policy release is hidden in downloads.

    First 4.5MB 2 page Word DOC download – press release that says nothing new.

    Second 4.7MB Word DOC download – .DOT error, recover needed. Formatting looks a bit wonky, presumably because of this. Why the hell didn’t they PDF it?

    And then there’s not much that hasn’t been said already, on the surface. See what comes out of the woodwork.

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  27. trout (866 comments) says:

    Back of the envelope stuff from a party in survival mode. Exceptions to the basic tax will be enjoined ad hoc as labour pollies are confronted by their constituents. Short of Goff standing on top of the beehive naked they had to produce something that would make the news. If this is their solution to NZ’s problems God help us if they get elected.

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  28. gravedodger (1,426 comments) says:

    Did he address the inflation component of CG or will the bastards tax that which they create as well as what we create.

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  29. Murray (8,835 comments) says:

    Labour could promise to repeal gravity and a rainbow pooping uncorn for every household for all it matters.

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  30. side show bob (3,660 comments) says:

    “The first $5000 is tax free”, wicked, praise the Lord and pass the peanut butter.

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  31. mattyroo (885 comments) says:

    My farmhouse and section just quadrupled in value, but at the same time, the value of my farmland was decimated….

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  32. Murray (8,835 comments) says:

    You lost 10% matty?

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  33. backster (2,000 comments) says:

    MICHAEL:::”Give to the poor and take from the rich.Good on ya Robin Hood.”

    No Its all about grabbing all the community money, wasting most of it and making the poor apply to get some back so as to create dependency.. The Community being deprived of money will again borrow, as they did last time and will be dependent on the largesse of the Government for employment and benefits, same as last time. Growth except in the Public Service will stagnate. Government may reduce debt, but community debt will rise, productivity stagnate, same as last time.

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  34. georgebolwing (496 comments) says:

    The new top tax rate is to fund the exemption of fruit and vegetables from GST.

    The CGT isn’t going to raise much revenue for a while.

    So where does the money come from for the tax-free threshold?

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  35. ben (2,386 comments) says:

    I’d say tax accountants will be celebrating the extra work, if this came to pass

    No need for a smiley face, David, you’re absolutely correct. They will be kept busy and well paid by this nonsense from Labour. So will lawyers, QCs, High Court judges, and of course officials.

    Re: the 39% envy tax. Witness the senseless policy of Labour and their voters. Not content to see the best and brightest disappear off overseas in record numbers, they want to add another reason to go by putting up income tax. Not content with the cleanest value added tax in the world, they want to destroy that by introducing exceptions, which of course will see very smart people go to court to argue over the definition of fruit.

    Senseless, senseless stuff. A passport to lower living standards from Labour.

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  36. TMC (68 comments) says:

    DavidP – I agree with Alex…devil is in the detail but also have a look at the US CGT and its impact for example.

    Without a comprehensive CGT but one full of exemptions, what you get is all sorts of distortions, movements and shifts. For example, depending on what qualifies as a family home, you get people moving into their rentals so it qualifies for the exemption (as you mention/question). This is just what my Aunt did in the SF Bay Area. Talk to a US tax professor or expert. They will tell you just what will happen with Labour’s CGT. It’s not rocket science. It’s been done before.

    Either way, not sure why NZ always feels it needs to re-invent the wheel. Look around at other CGTs in other countries and their impact. Build a better one, and hey do it along with a truly fair system (not Labour’s idea of “fair” but what the word actually means). No, Labour have just introduced another turd. But then this isn’t about real fairness is it? It’s about Goff pandering for the vote. It also gives Goff and Labour an out card so when they get crushed in November they can have all sorts of key messages about trying to do the right thing, “fairness”, NZ not ready for it…etc etc. A lose/win if you will…

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  37. ben (2,386 comments) says:

    Davidp is asking some really interesting questions.

    I especially like his point about inflation: if CGT does not back out inflation, and surely it will not, since no other tax does, then a CGT will be owed on property whose real value has declined, which I rather suspect many of us will find ourselves in in the next few years. Combined with Labour’s apparent desire to end Reserve Bank independence, the writing is on the wall is it not: regain control of the printing presses, start printing, and watch effective tax rates and the tax take sharply increase.

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  38. slightlyrighty (2,450 comments) says:

    This policy will not gain traction in the polls. They seem determined to place themselves further from the center. If they do see an increase in the polling, it would just as likely come from the Greens.

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  39. Courage Wolf (559 comments) says:

    Looks like the Labour Party activists are out in full force on the NZ Herald website comments section:

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10738433

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  40. Courage Wolf (559 comments) says:

    Viv (Glen Innes)
    03:19 PM Thursday, 14 Jul 2011
    I think it is a winner!

    Mind you anything is going to be better than selling off our assets which would result in the average New Zealander paying higher prices for services that are already higher than most would wish.

    Well done Phil Goff and Labour for having the guts and integrity to introduce this.
    5 likes

    Reply
    Like
    Report

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  41. alex Masterley (1,439 comments) says:

    Mr Goff won’t be happy.
    Most people are pissing themselves laughing at how lame the proposals really are.
    I don’t think that was the intention.

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  42. alex Masterley (1,439 comments) says:

    Off to the Herald then.

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  43. MyNameIsJack (2,415 comments) says:

    Australia Income Tax Rates for 2010 – 2011
    Tax Rates for Residents

    AUD$ 1 – 6,000 Nil
    AUD$ 6,001 – 37,000 15c for each AUD$ 1 over 6,000
    AUD$ 37,001 – 80,000 AUD$ 4,650 plus 30c for each AUD$ 1 over AUD$ 37,000
    AUD$ 80,001 – 180,000 AUD$ 17,550 plus 37c for each AUD$ 1 over AUD$ 80,000
    AUD$ 180,001 and over AUD$ 54,550 plus 45c for each AUD$ 1 over AUD$ 180,000

    So did Goff not go far enough?

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  44. bhudson (4,720 comments) says:

    Well Labour has at least changed its anti-rich position…

    The rich who appreciate art are permitted to make as much tax-free capital gain as they wish.

    The rich who do not appreciate art are still on Labour’s un-loved list

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  45. MyNameIsJack (2,415 comments) says:

    £0 – 37,400 20%
    £37,400 – 150,000 40%
    Excess 50%

    Hmm, what was that about “envy tax”?

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  46. Elaycee (4,089 comments) says:

    Jeez – Goof told New Zealand a week ago that there would be a ‘bold’ new tax package announced today… and we get this?

    Predictable Labour tactic – tax those who work for a living and create wealth so Labour can give it away to their career welfare beneficiary, voter base.

    Not really worth much debate because it won’t be implemented anyway.

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  47. MyNameIsJack (2,415 comments) says:

    Germany personal Income tax
    Germany personal income tax (Einkommenssteuer) rates are progressive up to 45%.

    Taxable income (EUR) Tax payable (EUR)

    Less than 8,004 Nil
    8,005 to 52,881 Progressive rates of between 15% and 42%
    52,882 to 250,000 42%
    More than 250,000 45%

    And Germany is still the economic powerhouse of Europe.

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  48. ciaron (1,165 comments) says:

    @ Courage Wolf; Well, fuck, yeah, Glen Innes, what more would you bloody expect. (impressive spelling for that locale)

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  49. Courage Wolf (559 comments) says:

    alex Masterley (769) Says:
    July 14th, 2011 at 3:52 pm

    Mr Goff won’t be happy.
    Most people are pissing themselves laughing at how lame the proposals really are.

    You underestimate them, and overestimate parties like ACT. When interest free student loans was proposed everyone here on Kiwiblog laughed it off as ridiculous. Yet Labour was able to win the election, despite the fact that Don’s initial Orewa speech put them in the 30s and boosted him to the 50s. Already Labour have managed to shape the direction of the media into becoming a debate between CGT and asset sales. They’re winning. National are too pussy to do any real economic reform and ACT are retardedly trying to debate race relations.

    That’s the problem with Kiwiblog. Everyone thinks they’re so smart and economically literate and get all prideful and big-headed when posting some witty comment about how stupid Labour are or how weak John Key thinking they’ve scored some sort of internet goal and proven to everyone how right they are and how wrong and ‘stupid’ the politicians are. They’re a lot more cunning than you realise.

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  50. backster (2,000 comments) says:

    Are there to be deductions for losses?. Will Lotto wins be subject to the tax? How big a lawn around his house is a farmer allowed to have?

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  51. alex Masterley (1,439 comments) says:

    I have no doubt about the cunning of politicians.
    The problem is that for Labour the policy has been in lights now for a week and yet I can’t see it being a game breaker.
    The memories of Labor’s conduct up to 2009 are still fresh and some of those responsible for that conduct are still in the limelight.
    Oh and hasn’t Phil Goff knocked back the idea of CGT for the past 25 years? And why when in power did they not take the bul by the horns and introduce it then?

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  52. expat (4,048 comments) says:

    1. @mynameis jack-regarding the cyclepaths, the progress is pretty good http://www.nzcycletrail.com/news-media/new-cycle-trail-website-launched-trenz

    2. Regarding Labours tax package, what a hodgepodge of bollocks, ‘scuse my french.

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  53. MIKMS (163 comments) says:

    They seem to want to cripple land conveyancing while increasing tax bureaucracy and also punish those who do best in our society yay!

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  54. noskire (797 comments) says:

    What a shame Labour didn’t introduce this before they decided to buy back KiwiRail.

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  55. georgebolwing (496 comments) says:

    I note that Phil Goff has intorduced the teleprompter to New Zealand politics: http://www.stuff.co.nz/national/politics/5284832/Labour-confirms-capital-gains-tax-new-rate

    I guess that this is very modern, but not sure it will play well with the average punter.

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  56. mikenmild (8,925 comments) says:

    Courage Wolf

    Excellent comment.

    I think Labour might just get themselves back in the game. They can’t expect to win, but they do get to stake out some distinct positions, while National are proposing, as a vision for the future, what exactly?

    This isn’t applause, but a welcome to some political competition, at least.

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  57. Manolo (12,644 comments) says:

    while National are proposing, as a vision for the future, what exactly?

    Vacuous National proposes nothing but inaction and spineless platitudes. On the other hand, socialist Labour announces hell and higher taxes for the productive sectors of New Zealand society.

    We’re caught between Scylla and Caribdis.

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  58. trout (866 comments) says:

    Memo to MNIJ: GST is OZ is 10% against 15%in NZ. Personal tax rates cannot be compared in isolation.

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  59. Batman (97 comments) says:

    Mynameisjack: multiply those euros by two and then you will get NZ dollars, so really only those getting paid $500,000NZD are being taxed at 45%. you are trying the Helen Clark tax rate evasion tactic, its what she did when asked about the 39% rate!

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  60. Eisenhower (134 comments) says:

    Its widely considered that National Super has become unaffordable, and will inexorably get worse yet any shares, unit trusts, managed funds etc that retirees depend on will now be slugged 15% of the gains.

    And why do the left, in particular the watermelons, cite the numerous other countries who have a CGT, claiming “if they can do it why can’t we”, but then refuse to acknowledge those nations also have a 90 day or more employment trial period that they condemn so vociferously.

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  61. Pete George (21,831 comments) says:

    Did you wonder why Labour’s Own Your Own website is mostly about asset sales.
    Did you wonder why Labour framed the debate as CGT versus asset sales?

    Asset sale proposal behind planned capital gains tax – Goff

    The catalyst for Labour’s support of a capital gains tax was the government’s proposal to sell shares in state-owned assets.

    Labour leader Phil Goff said at the launch of his party’s tax policy this afternoon that the proposal was a declaration of intent that effectively called on Labour to find the political courage to map out a better, more viable alternative.

    So it didn’t start as a “what’s the best way to deal with tax in New Zealand”.
    It started as a “what’s the best way to deal to National’s asset policy”.

    Good grief. And he admits it.

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  62. KH (686 comments) says:

    As the values of my property drift downwards as they have done over the past year or three.
    Does this mean that I will get tax deduction for the loss of capital value.

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  63. noskire (797 comments) says:

    I’m curious as to why jewellery should be exempt from the proposed CGT. Hasn’t Chris Carter been expelled from Labour?

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  64. nickb (3,629 comments) says:

    We had a big chuckle round the office today about this, don’t you worry.

    One of two outcomes here:

    1. Gold mine for us when Labour gets into power; or

    2. Labour are confined to electoral oblivion for decades.

    Either way, win for us.

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  65. Eisenhower (134 comments) says:

    Labour’s policy actually presents National with a golden opportunity – to target the grey vote by hammering the message of the reduction in retirees investments. And by going after Luigi’s electorate it may just deny his ambitions.

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  66. F E Smith (3,277 comments) says:

    MNIJ:

    I’m not a tax lawyer, so I don’t pretend to be completely au fait with this, but I understand the marginal (?) tax rate in the UK comes out at a total of about 70% for the hardest hit part of the population. Those rates you mention are simply income tax rates and don’t include the 20% VAT nor the National Insurance.

    And before you suggest that the UK is anything to model ourselves on, they are in a serious financial mess, most of it driven through poorly targeted government expenditure. If it wasn’t for the City, the UK would be bankrupt.

    But while you are lauding the UK tax rates, why don’t you suggest we adopt their inheritance tax as well?

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  67. wreck1080 (3,533 comments) says:

    We need new taxes cos our government knows how to spend our money better than us!

    Yeah right!

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  68. tom hunter (4,012 comments) says:

    Boats will be exempt from the CGT.

    Funnily enough I read this and reflected that I’d just been telling the neighbours that the new effluent pond I’ve pissed tens of thousands away on, is big enough to swallow a house. So why not build another, larger, clear-water pond and float the …

    .. then I saw this.

    A farm house will be exempt, but not the farm itself

    Damn. That would have been cool.

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  69. MyNameIsJack (2,415 comments) says:

    trout (505) Says:

    July 14th, 2011 at 5:01 pm
    Memo to MNIJ: GST is OZ is 10% against 15%in NZ. Personal tax rates cannot be compared in isolation.

    I am well aware of that, as I am also aware that Oz GST excludes fresh food and that added to the quoted income tax levels are the medicare levy, as well as some pretty punitive state taxes such as stamp duty that adds thousands to the cost of buying a car, house, etc.

    However, DPF was trying to frame the debate that 39% is an “envy tax”, just pointing out it is higher elsewhere.

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  70. nickb (3,629 comments) says:

    I have some more questions:

    If I invest in a multi story office block and live in the penthouse then is the whole building a family home? Or is this like the farm case where some proportion of property investment company shares aren’t subject to CGT if a share holder lives on the premises? What if the building is untenanted when I sell… could I escape CGT by spreading some of my possessions around the building and claiming I live in the whole building?

    If I live on a house boat then is that a CGT-exempt boat or a CGT-attracting house?

    How small is a “small business”? Is this a disincentive to employ people and grow the business? Surely most increase in business value will be due to development and innovation, rather than waiting for a capital gain to occur? How will the IRD determine what increase in value was due to business development, and what increase in value was a capital gain?

    Will CGT be applied to trust and company structures, like the ones Goff has used to hold his own investment properties?

    Will CGT apply to the Green MP property investments that they rent out to parliamentary services for their own benefit?

    Great post, and certainly sums up the fuckwittery in play here.

    Oh and “No GST on fresh fruit and veges” – ahahahahahah!

    Lets play this game.

    Will the GST Act defines what is “fresh”?

    Is canned fruit “fresh”? Well it is in a can and not going bad/mouldy – why shouldn’t this be exempt?

    What about dried raisins or prunes? They are fresh? Will they not be exempt because they are packaged? What if they are sold in bulk? Will the law define what constitutes “packaging”?

    What about fresh fruit juice? If it is pure enough this is virtually fresh fruit in liquid form – will the GST Act confine the exemption only to solid fruits? Will the Act define “solid” or “liquid”?

    Well done Labour, you have closed the grand total of 0 loopholes and opened around 59078535654.

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  71. nickb (3,629 comments) says:

    As the values of my property drift downwards as they have done over the past year or three.
    Does this mean that I will get tax deduction for the loss of capital value.

    Slow down there…

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  72. Anthony (737 comments) says:

    This was a great chance for Act to push a broad based almost flat tax structure – say 25% CGT and 25% top tax rate and repeal of all the ridiculous international tax rules that apply to NZers – now that might get more productive investment and more tax residents in NZ.

    But no, Brash has come out with a rant that could have come from Key. I feel like resigning my membership.

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  73. calendar girl (1,108 comments) says:

    Courage Wolf @ 4.05pm: “Already Labour have managed to shape the direction of the media into becoming a debate between CGT and asset sales. They’re winning. National are too pussy to do any real economic reform…”

    Well spoken, Courage. This (artificial) Election battleground has been marked out by Labour and adopted with enthusiasm by leftish media. National has only itself to blame for the dilemma that it now faces. It has had nearly 3 years to capture and shape the broad domestic economic agenda, but has chosen instead to treat as its priorities selective, narrower policies such as those related to external Free Trade Agreements, the Emissions Trading Scheme and Maori issues.

    It should be acknowledged that National has influenced the economy positively through reforms of the RMA, minor improvements in the Employment Relations Act, promotion of a programme for national infrastructure, and pursuit of FTAs in Asia and with the USA. But it has not employed its strong political capital to set out a broad, realistic and cohesive economic strategy for the country, and to establish traction and irreversible momentum for that strategy.

    Capital Gains Tax v. Asset Sales. That’s what the economically illiterate masses will be invited to vote on in November. as though (in the current NZ context) those two fragmented policies are not only mutually exclusive but also the most important determinants of the country’s future economic success.

    Frankly that kind of outcome is pathetic, but has been likely for quite some time.

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  74. kiwi in america (2,336 comments) says:

    Courage Wolf
    How’s that “shaping the direction of the media” working out for Labour? A good chunk of this package was leaked to the media before and during the TV 3 poll – the result, Labour’s 2nd lowest poll rating in their polling history. Even Labour’s own internal polling had more voters disapproving of the CGT. Keep hope alive Courage!

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  75. Manolo (12,644 comments) says:

    KIA, can you draw an analogy between Obama’s proposed tax hike and this rubbish released by Goff?
    By the way, what has the mighty United States done to deserve the Messiah, the epitome of incompetence but supreme demagogue.

    The obscure community organiser from Chicago deserves to be turfed out as soon as possible.

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  76. James (1,338 comments) says:

    Bottom line…its a tax…tax is theft and isn’t necessary if we do what we should and reduce Government 90 odd percent down to its essentials.

    Next non issue….

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  77. side show bob (3,660 comments) says:

    As I believe it all assets will have to be valued by April the 1st (very good date by the way) 2013 should the two bobs regain the treasury benches. What’s the bet government appointed valuers will be like pigs in swill and all our assets will be worth twice as much. I’m already feeling richer.

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  78. Mary Rose (392 comments) says:

    >Jewellery is exempt.

    How bizarrely random.

    >No GST on fresh fruit and vegetables

    Look forward to lots of stuff like this:
    http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_CL_000118&propertyType=document#P53_2850

    Sample:
    ‘live horses are not a food species”
    Ornamental cabbages are taxable.

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  79. Other_Andy (2,079 comments) says:

    And of course all the shops will reduce the price of fruit and vegetables by 15% a soon as Goofy’s club takes the GST off.
    Flap, flap,…oink….,oink.

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  80. double d (219 comments) says:

    KIA – the tax package from Labour wasnt leaked. it was spoonfed to the media to test the waters.
    if it is leaked we would see Phil having a hissy fit about it.
    Strategic information delivery to test the waters and then refine the product to head off criticism.
    that is what really guts me about this … it is all so cynical. policy designed to get votes – to change the game – not because it is deemed to be good for the economy – not because they believe. because it offers a point of difference. PG – agree with your post of 5.12pm. Cannot believe that Goof is so shallow to admit such a thing.
    but then again …

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  81. KH (686 comments) says:

    ……….nickb at 6.08
    Mine was a serious question and I don’t quite understand your answer. I’ll try again more clearly.
    I have some properties which I clearly understand that Labours Capital Gains Tax will apply to.
    However — For two or three years now, and perhaps longer the value of these has been drifting down.
    My guess is that will continue for some years yet. Sad but true. And I am a long term investor.
    But But But.
    Does that mean that I can claim a tax deduction, to my overall tax bill, on the continuing slide in their value. ???
    In the current climate it seems there are more than few people in similar circumstances.

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  82. Anthony (737 comments) says:

    KH the capital gains are only taxed on realisation so it would only be if you sold at a loss that you might get a tax loss to reduce your other tax.

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  83. Other_Andy (2,079 comments) says:

    @ KH & Anthony.
    You assume Labour and its new taxes will be fair.
    Think again.

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  84. nickb (3,629 comments) says:

    Does that mean that I can claim a tax deduction, to my overall tax bill, on the continuing slide in their value. ???

    Sorry, I was being facetious before.

    The answer is: fuck no you can’t. Do you really think tax is meant to be fair?

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  85. side show bob (3,660 comments) says:

    KH a situation like yours was raised on the Larry Williams show tonight, sorry mate you won’t get a tin of shit. Socialism, don’t you love it.

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  86. nickb (3,629 comments) says:

    For two or three years now, and perhaps longer the value of these has been drifting down.
    My guess is that will continue for some years yet.

    Are you investing in Auckland? Only place in NZ to invest IMO.

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  87. plebe (271 comments) says:

    I cannot wait for our electricity companies to be owned by the Chinese under Keys asset sales,NOT

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  88. Luc Hansen (4,573 comments) says:

    Did y’all catch up on Wayne Swann’s surgical skewering of Bill English and National today?

    Quote: “…in Australia we have had a CGT for 15 years and it is accepted by both sides…”

    They didn’t show Double Dipton’s face, sadly: the look would surely have been priceless!

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  89. Other_Andy (2,079 comments) says:

    @plebe
    Put your money where your mouth is.
    Here is your chance to invest in a NZ company AND pay Goofy’s club 15% of the profit you make for the privilege.

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  90. reid (15,625 comments) says:

    Quote: “…in Australia we have had a CGT for 15 years and it is accepted by both sides…”

    Luc point is it takes ages to get going and we’re in the middle of a very fragile global state which could shatter in a number of areas. We could easily have a global market crash.

    So what is this in terms of getting confidence and optimism into the economy?

    What’s that?

    That’s not important, right now?

    Liarbore clearly did it not for fiscal reasons for it does nothing in these vitally important times, but so they could show their base they on their base’s behalf were sticking it to “the man.” That’s venal, unimaginative and counter-productive at a time like this, Luc.

    Did you guys ever think about stuff like that when you were designing it, or were you only thinking of that narrow dem you call your base?

    I thought so.

    Thanks, appreciate the wisdom of the Left’s main fount, in these very fragile and unstable times. Really well done. Go Kiwi. We’re all in this together aren’t we so let’s all pull together and make a win, or let’s just be whiny fucks who play to their base at the expense of the rest of the team.

    Guess which one you guys are?

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  91. Other_Andy (2,079 comments) says:

    @Luc
    That wouldn’t be Wayne Swann, the Deputy Leader of the Australian Labor Party now, would it?
    That’s a surprise…..
    Well if he says it, it must be true.
    Politicians don’t lie.
    Especially not Labor politicians.

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  92. Courage Wolf (559 comments) says:

    0.8 Percent Growth: Whoopee!
    A Press Release published by Hon Sir Roger Douglas at 4:56pm on 14 Jul 2011 in the following categories: Economy .

    Whoopee, ACT New Zealand Finance Spokesman Sir Roger Douglas said in response to the Government’s announcement that there has been 0.8 percent growth in the March quarter.

    “If we are lucky, by this time next year we may be back to where we were in 2008,” Sir Roger said.

    “By 2014 we might even gain back what we’ve already lost between 2008 and 2011.

    “I won’t hold my breath,” Sir Roger said.

    ENDS

    Looks like ACT aren’t even trying anymore. This is the opportune time to put in an ad in the newspapers advocating ACT’s economic strategy. A half page ad strongly attacking National and Labour would work wonders for those dumbfuck ‘mum and dad’ voters who are looking for something different. Sadly I’m guessing Ansell blew all of ACT’s money on the Maori ads last week in an attempt to try and make race relations this election’s biggest issue. ACT have become irrelevant and it would appear that Labour wins again in making it a two horse race, as it was in 2005. The average centre-right voter will think that they better vote National if they want to keep Labour out and not waste their votes on ACT.

    If we are lucky, by this time next year ACT may be back to where they were in 2005. I won’t hold my breath.

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  93. Luc Hansen (4,573 comments) says:

    reid, a relatively minor tax that will, as you say, take years to come into full effect, cannot cause a market crash today. People simply aren’t that stupid. We are not rushing out to sell our investments.

    The plan makes fiscal sense according to almost all credible institutions, think tanks and individual economists who don’t allow their personal ideology interfere with their professional judgement.

    I’m not a Labour party member.

    Given our most recent economic growth figures, and our internationally conservative public debt settings, just how fragile and unstable are our times?

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  94. East Wellington Superhero (1,151 comments) says:

    To all the born-again-good-tax-policy-Labour-supporters, I point out this: Labour had nine years to introduce a CGT. They didn’t.

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  95. reid (15,625 comments) says:

    reid, a relatively minor tax that will, as you say, take years to come into full effect, cannot cause a market crash today. People simply aren’t that stupid.

    Luc a market crash is not the point. A CGT damages confidence in the very people you need to invest. At this particularly vital time. For nothing, nada, zero, zip, not a fucking bean. I mean fucking d’oh. Does Liarbore want to make this “recovery” even more drawn out?

    The plan makes fiscal sense according to almost all credible institutions, think tanks and individual economists who don’t allow their personal ideology interfere with their professional judgement.

    Luc I’m in favour of CGT well designed and implemented when appropriate. This isn’t appropriate now, for fucking d’oh Luc how many times does one need to tell the apparently fucking mentally stupid lefties that newsflash: THE ECONOMY RUNS ON CONFIDENCE and nothing else. It runs on nothing else whatsoever.

    So time and place Luc, time and place.

    I’m not a Labour party member.

    Well done, but you’re a lefty and I’m afraid Luc that’s a black mark straight away.

    Given our most recent economic growth figures, and our internationally conservative public debt settings, just how fragile and unstable are our times?

    What the hell are you talking about? I’ve just explained I think they are extremely so and they are. For this is the GLOBAL economy Luc, not the one here.

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  96. side show bob (3,660 comments) says:

    Luc” just a minor tax along with all the other minor taxes we now suffer under will break the camels back one day. Look at all the taxes we pay in this country, you would think that all our problems would be solved but not so. Surely it must be obvious to all but the very stupid that every new tax rise and every new tax does not make the situation better but worst. I believe it’s time to go the other way. I believe in a low flat tax rate, smalll government, the free market and personal responsibility. I also doubt we will never agree on any issue.

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  97. Southern Raider (1,378 comments) says:

    So to balance this all out how about all the “rich” people like myself cancel all the donations we give to charities to counter the income tax increase.

    I’m sure all the charities will be happy as the savings made on fruit and vegetables will more than balance this out.

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  98. krazykiwi (9,188 comments) says:

    internationally conservative public debt settings

    When compared to which countries Luc? Italy? Spain? Greece? We borrow $NZ20b a year, because to borrow less might cost votes that the ruling elite judge they can’t afford. Of course Labour wasted the best economic conditions in my lifetime so they’re equally to blame.

    The answer is small government. Less spending, less tax, less getting in the way. But for you blinkered socialists that’s the very opposite of what you have achieved. Our state is bloated, sucking the life from our economy, leaving a debt mountain for future generations… and all for what? Votes!! Votes = power for the ruling elite, and to hell with the cost or consequences as their gold-plated pensions and UN postings fall due. Socialist politicians, and I include Key & Co in that do not care for the health or welfare of NZers. They care only for their place in history, and for their nest, feathered in perpetuity by voter ignorance

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  99. Anthony (737 comments) says:

    I’m not supporting Labour’s tax plan but I do support a CGT because the current system of farmer Bob paying very little tax and banking on a big fat tax free gain when he sells is unfair, distortionary and silly. If something can’t generate enough taxable income to make it worth owning then too much was paid for it or it isn’t worth owning!

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  100. side show bob (3,660 comments) says:

    Ease up Krazy you’ll blow a fuse and it’s pass ten, the quack is probably shut by now. I have to say I agree 100% with what you are saying, well said sir. You must forgive Luc, young, urban, idealistic but most importantly, as thick as pig shit.

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  101. nickb (3,629 comments) says:

    One thing that hasn’t been commented on is whether Labour will raise the Trust tax rate to 39%.

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  102. side show bob (3,660 comments) says:

    Anthony you are not thinking. I’m a farmer. Our gross income is a quite a few hundred of thousands a year, don’t blow a fuse yet. Like the rest of working Kiwis we pay the bills, quite few hundred of thousands a year. Anyhow to gut a long story short we don’t make the fortune most of townies are lead to believe, we have a good life but it could hardly be described as excessive. I work seven days a week and probably to be honest have only had 3 weeks off in 4 years. I’ve mates who live in the city and they would have nothing to do with our way of life, way to hard. What I’m trying to say is that farmers generate real dollars for our economy. forget how much tax they pay or do not pay this money keeps all going. Why should anyone be they farmer or urban dweller be screwed because they have work to build an asset for their old age only to be fuck over by socialist scum when they retire.

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  103. DavidC (179 comments) says:

    if the trust and comany rates stays down it makes an even bigger joke of this bullshit that Goof and Co have foisted on us today.

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  104. DavidC (179 comments) says:

    Dammit! can I delete that comment ?? those bastards might be reading this!

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  105. Mark (496 comments) says:

    So what about Kiwisaver, does that mean if you have money in a scheme when you get your payout you will be taxed on 15% of the total?

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  106. Jeff83 (765 comments) says:

    DPF is in full defense mode, because this is what an alternative government actually does. Takes a problem, and gives an alternative solution to privitisation being offered by National.

    I support most parts, except the 39% tax rate. Way to high

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  107. Pete George (21,831 comments) says:

    Mark – Kiwisaver is one of the many exemptions.

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  108. nickle (27 comments) says:

    My weekly shop for this week – supermarket $200, butcher $60, grocer $25. A typical weekly shop for our ‘rich-prick’ family of 5 is usually $300-350, and we eat a healthy amount of fruit & veg. I must be blind as I can’t see how GST free produce is going to make a huge difference to the average weekly shop.

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  109. Pete George (21,831 comments) says:

    nickle, it’s unlikely to make much if any change. For example, bananas have been 2.99 for how long? Produce uses price points, not cost plus.

    Same at farmers markets, they’ll still price at $1 or $2 a kilo sort of thing.

    All Labour are proposing is added complexity for bugger all change in prices.

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  110. KiwiGreg (3,129 comments) says:

    Taxes disincentivise behaviours, subsidies encourage them. To take just two elements of Labour’s policy – taxing gains on productive assets while exempting non-productive assets (like collectables and homes) means at the margin more investment will be driven into non-productive assets; raising the price for being a beneficiary by $10 will, at the margin, buy you more beneficiaries.

    Fortunately I think (hope) Labour si presently unelectable and we wont have this crap foisted on us.

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  111. slightlyrighty (2,450 comments) says:

    Is it just me, or is it somewhat strange that a political party, which has campaigned against asset sales as a means to reduce debt, have put as an alternative a tax gathering system that requires citizens to sell assets in order to collect tax?

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  112. dog_eat_dog (683 comments) says:

    Does anyone else remember Labour saying there was ‘no economic logic’ in raising GST to 15%? Remember the Axe the Tax bus? Now tell me which policy was strangely absent from their announcement.

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  113. salivalnz (15 comments) says:

    Not long ago on Radio NZ, Bill English claimed that this package of Labour’s is actually a tax cut because people paying tax on property trading currently pay 33% on capital gains.

    That’s obviously not true (or at least not to the extent he claims – most people just boycott the tax completely, or claim that capital gain was just incidental rather than being the point of the purchase to get around it), or the same people would be welcoming Labour’s news with open arms. Very few people complain about tax cuts.

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  114. KiwiGreg (3,129 comments) says:

    @ salivalnz – read the policy. There is no intent to provide a tax cut to existing traders subject to income tax. In fact they’ll enjoy paying 39% on their gains instead of 33% as at present.

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  115. david (2,483 comments) says:

    If the cloth cap envy tax is going to make up for the GST removed from fruit & vege (ie is revenue-neutral), and the CGT won’t bring in any significant revenue for 10 years, where is the money coming from to pay for the spernding promises that Phil and his band of merry spenders have been recklessly making over the last couple of years?

    Doesn’t stack up

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  116. salivalnz (15 comments) says:

    @KiwiGreg – Then Bill English needs to be put right!

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  117. Bandycoot (29 comments) says:

    Coming a bit late to the fray – but my 2c worth….

    Goff was on the radio yesterday saying that this CGT is being proposed to reduce the current government debt, as opposed to selling assets. Except it takes years to generate any real revenue, and means Labour are still not showing where they propose to fund their $4+billion spending promises from. And the increase in income tax to 39% has already been used to cover off the change in GST on fruit and vege so they can’t use that to pay off debt. So really this looks like a huge increase in debt until some minor increase in revenue some time in the future (which may be enough to pay off a small part of the annual interest cost on all the borrowings in the mean time).

    And another thing – for those promoting the high rates of income tax in other countries – so they have higher rates than us – So the F**K what?? This is still an envy tax, even if others have to pay more elsewhere.

    I am not necessarily against a well designed and implemented CGT, in the right time and place, but this proposal is bollocks as the loopholes are going to lead to all sorts of unexpected behaviours, and I still don’t see how it will drive investment into the “productive” sector. And please do not tell me it is going to pay off debt, it isn’t even going to pay for their spending promises…..

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  118. krazykiwi (9,188 comments) says:

    Bandycoot – Labour wouldn’t recognise the productive sector if it hit them over the head and showed them its drivers licence. They have no interest in promoting what they don’t understand. What they do understand is wasteful, ideologically driven social engineering.. with triennial lapses into targeted vote buying.

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  119. Pete George (21,831 comments) says:

    I’m happy to consider a capital gains tax in addition to what we already have.

    I’m unhappy with a terrible way of implementing tax policy.

    I think Labour are going about their tax proposals about as badly as possible. It’s all about trying to get enough votes to win, and nothing about sensible policy development and implementation.

    I’ve looked at the wrong way and the right way to implement CGT – or to implement any policy:

    Wrong way and right way of doing CGT.

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  120. david (2,483 comments) says:

    Pete,
    But ya gotta say that they are being consistent with their vote-buying as they are with their public purse rorting.

    Ill-considered and hastily implemented targetted promises like:
    WFF
    Interest Free Student Loans

    But wait there’s more (no you silly billy, not a set of steak knives)

    Just like the purchase of the train set and the fudging of the PREFU and the booby trapped ACC, there is a sting in the tail of a CGT and that is that once implemented it will be quite difficult to remove. It will be so disruptive to put in place that no-one will want to go through a similar disruption to remove it and neither action will have advanced this country’s economy by an iota.

    At least the stupid GST off fruit and veg could be removed by the stroke of a pen.

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  121. backster (2,000 comments) says:

    LUC………..”reid, a relatively minor tax that will, as you say, take years to come into full effect, cannot cause a market crash today. People simply aren’t that stupid. We are not rushing out to sell our investments.”

    Don’t kid yourself. If an investment is going to be worth so much one day and devalued by 15% the next who wouldn’t sell out. I will certainly be trying to cash up myself. I’m glad you will stay in it might slow the slide.

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  122. Luc Hansen (4,573 comments) says:

    backster

    It’s not retrospective.

    You will buy the investment in the full knowledge of the tax to be paid on resale, and you will factor that into the price you pay, just as the seller will factor it into the price he/she demands.

    Business as usual.

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  123. Luc Hansen (4,573 comments) says:

    By the way, what are we to make of DPF’s sudden interest in what Labour members are packing?

    Oops, I better be careful…he don’t take to well to some jokes, as my recent banning attests to :-)

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  124. Joseph Carpenter (210 comments) says:

    Well I’ve had a chance to read the detail of Labour’s CGT policy (what there is of it ignoring the massive amount of detail “to be determined by future panel of experts”) and I have to say IS THIS IT? Is this the gamechanger? I literally laughed out loud at some of the details and exemptions, The farm house and surrounding land but not the farm? Boats – huh? Jewellery?!@!, Gambling – FFS.

    So if I buy an investment property (after V-day) for $200K including a fresco painting by the owner for $1 and sell it in ten years (current valuation = $400K) for $200K conditional on buying the fresco artwork for an additional $200K = I pay no CGT. Go Labour you r orsum!

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