Herald omits key facts

November 11th, 2012 at 10:40 am by David Farrar

Once again the do not tell us something important. The Herald (on Sunday) reports:

The dire shortage of houses for sale in the Auckland market has desperate buyers going door-to-door pleading with homeowners to sell. …

Auckland couple and Oliver Mannion have taken a different approach, asking Remax agents Peter Thomas and Roshni Sami to use their names in personal letters to homeowners to try to secure their first home.

So does this random couple have a solution?

They said the situation in Auckland was so bad the Government needed to introduce a capital gains tax if there was to be any relief for buyers.

They believed taxing investment properties was the only way to make home ownership affordable for families and less attractive for investors.

On a minor note, they are economically illiterate. There are some sounds reasons to have a capital gains tax. But reducing house prices is not one of them. A tax on housing will increase house prices, not decrease them.

But is it a coincidence that this random couple said that the solution is capital gains tax – the key tax proposal by the Labour Party?

Either the reporter was unaware that Kate has been the Womens vice president of the Labour Party for the last six years, or they decided not to tell the public this.

Kate was also a candidate for Labour in 2008 and 2011. The failure to disclose this in the article is appalling. Even worse it is their lead story online with the headline “Buyers begging for home”.

I would also point out the choice of “desperate” couple was shall we say debatable:

But even with a good deposit and a budget of between $600,000 and $700,000, the desperate couple are still flatting in an Onehunga property Sutton and her brother own.

So already part-owner of a property. So Kate was going to become an evil multiple property owner who needs to be taxed more!

Incidentially Trade Me has 5,220 properties listed for sale in Auckland that cost under $700,000 and are three or more bedrooms.

This is what you call desperate and begging.

UPDATE: Kate brags on Facebook how she managed to get the Herald on Sunday to write about Capital Gains Tax. So was the HoS an unwitting dupe, or an accomplice?

 

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87 Responses to “Herald omits key facts”

  1. Longknives (4,686 comments) says:

    As I said in General Debate- The Herald are losing the plot. They are beginning to read like a Green Party newsletter…..

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  2. jaba (2,097 comments) says:

    I cancelled my HOS subscription a couple of months ago .. seems that Sutton and Ardern have similar preferences on where they live .. don’t want to live anywhere near their own supporter base

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  3. calendar girl (1,203 comments) says:

    Right up to the “Herald”‘s normal standards of “journalism”.

    The only surprising aspect is that the political activist(s?) in the story seems to think that they can score political points in the MSM while concealing their political vested interest.

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  4. George Patton (351 comments) says:

    Whaleoil also points out the missing facts in a Herald on Sunday story regarding the afflicted chap who wants to bring a private prosecution against John Banks. The man in question is apparently on blackmail charges from earlier this year, is a long term beneficiary, is a serial litigant and a convicted tax cheat!

    http://www.whaleoil.co.nz/2012/11/herald-on-sunday-glosses-over-alleged-blackmailers-background/

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  5. Archer (189 comments) says:

    I agree DPF, appalling standards. I can tick off Kirsty Wynn as a Labour Party hack whose stories should be avoided in future.

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  6. m@tt (613 comments) says:

    “A tax on housing will increase house prices, not decrease them.”
    Are you deliberately being disingenuous or do you truly not understand how a tax on the capital gains realised by property investors, the ones with the means to consistently outbid owner occupiers, will have a downward affect on house prices?
    I suspect it’s the former but if it’s the latter I’d suggest you get educated before commenting further.

    [DPF: It won't have a downwards effect. It will mean owners will hold out for a higher price to sell, to cover the CGT. You overlook that investors are both buyers and sellers. Dunce]

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

    You beat me to it, m@tt.

    What’s that favourite term of John Key again? Thick as…?

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  8. mister nui (1,012 comments) says:

    m@tt, please point me to an economy in the world where a CGT has materially lowered house prices.

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  9. bhudson (4,736 comments) says:

    Well Kate would hardly have helped her predicament with a CGT that reduced her equity in her investment property, reducing the total amount she could borrow and therefore making the affordability problem on her desired residential property even worse.

    I believe the term is “numpty”

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  10. Cactus Kate (549 comments) says:

    CGT has worked in Australia at creating affordable housing in large cities —- not

    Now Ardern has proved housing is affordable with her recent Auckland Central purchase, Sutton is marketing herself in the”poor me” crowd of young women who cannot find a house they like in an area where all their friends live.

    When comparing our parents situation with now they’d best remember that men used to earn most of the money in the workforce and getting married to one at a young age was the only way young women could afford housing.

    Does anyone believe a 15% CGT will make a villa in central Auckland more affordable and with it a higher selection of property available to buy? Course it won’t. People will get around the poorly designed tax by holding all their property longer until they make each a primary residence flicking off that one.

    The days of owning your own home as a measure of your security and success are well gone.

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  11. dime (9,685 comments) says:

    im stunned this is the first story on the herald website. they have become a bunch of sad fucks.

    lots of houses for sale in west Auckland under 700k. enjoy.

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

    @CK

    It’s widely recognised by economists that the CGT in Australia helped to scrub off the worst excesses of the property bubble.

    That said, price is also a function of supply. Houses were most affordable when the state was actively engaged in promoting home ownership through interventionist building programmes. My first home was through the State Advances Corporation, capitalising the Family Benefit towards the deposit.

    Most people actually don’t set out to rort the system. That particular pleasure is a reserve of the types you represent.

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  13. JeffW (324 comments) says:

    One has to admire the way the left goes about systematically building grassroots support for their inane policies, and get the MSM to buy into them and indeed lead them.

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  14. mister nui (1,012 comments) says:

    Hansen, that is absolute tripe, look at Melbourne for instance, prices there are simply astronomical and rising. One of the few places in Australia where CGT may have had an impact is Brisbane, but it is more likely that the dire economic conditions Queensland was suffering until a few years ago was the cause. And anyway, the only thing that happened in Brisbane was stagnation for a few years, now with the current gas boom prices are off and away again.

    On your second point, it is precisely state intervention that is driving house prices up, you fucking tool. The RMA and lack of land made available, both effects of gummint policy, are restricting the housing supply and making any new housing supply expensive before the first hammer blow is even struck.

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  15. alex Masterley (1,502 comments) says:

    I do wish people would stop banging on about CGT as if it were the panacea to ever increasing house prices, in auckland. it isn’t. some reasons in no particular order.
    1. the Labour policy is for CGT to be levied on 2nd homes, not the main property occupied by a family. it won’t affect prices on owner occupied homes.
    2. CGT won’t magically create 10-20k PA of houses that Auckland needs.
    3.As Kate says cgt hasn’t stopped house price inflation in OZ, and they have far more taxes on property including stamp duty for example, than we have here.
    4.the increase in value of property in auckland is linked to the lack of properties being sold. Demand seriously outweighs supply. I go out an tire kick every now and again. the agents are all saying that.

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  16. Kevin (1,122 comments) says:

    Now this is more like what blogging should be! Thank you for pointing out the total hypocrisy and moral bankruptcy of Kate and her Auckland labour colleagues. She is well known as an extremely nasty piece of work.

    [DPF: I'm not sure Kate has done anything wrong. It depends on if she disclosed her Labour role to the newspaper or not. If she did, then fault is with the paper]

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  17. thor42 (971 comments) says:

    Are these people “desperate” enough to consider houses in another city?
    If not, then they are not really “desperate” at all.
    They would get a LOT more for their money in another city. Ok sure, they’d have to change jobs, but that’s life. At least in another city with cheaper housing, their mortgage would be a sh*tload smaller.

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  18. Shunda barunda (2,973 comments) says:

    The days of owning your own home as a measure of your security and success are well gone.

    No they aren’t.

    NZers will only tolerate the arrogance and parasitic nature of people like Cactus Kate for so long, then the greed fueled ‘something for nothing’ investing will come crashing down.

    While in this instance there is obviously a serious integrity issue with the individuals involved, that doesn’t mean the issues will go away. Capital gains tax is coming Kate, as soon as Labour get their shit together it will likely win them an election.

    You seem completely oblivious of the realities of a disillusioned younger generation and the political power this group could bring to bear.

    Enjoy getting something for nothing for now, but it won’t last.

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  19. Alan Johnstone (1,086 comments) says:

    The tax system is fundamentally flawed in taxing income rather than wealth.

    A CGT if used properly can help rebalance that, but anything it does to house is just a side effect.

    Administrations if all colours have increased costs in building new houses to increase cost and therefore maintain the price if existing housing stock. Most voters are home owners, it’s in the interest of the political classes to maintain prices.

    On the wide subject of taxes, they are going to massively rise in the next twenty years as the demographic time bomb of the baby boom hits. The Australians addressed this 20 years ago with their workplace super schemes. We didn’t.
    It’s too late to fix it now, the ship had sailed. The maths are inexorable.

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  20. Kevin (1,122 comments) says:

    There is a very simple and equitable way of solving the problem. Simply tax all forms of income the same. So profit from house, company, share capital gains are just taxed along with income – wages, salaries, rent, dividends etc. But governments seem to be ideologically opposed to equality.

    Yes capital gains are coming and for sure they will be designed to punish the middle class – as always. They will be designed for wealth redistribution only.

    But the problem is that anything is sure to be too late. We are decades down the track on the gravy train to the third world and no one is doing anything about it.

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  21. Kevin (1,122 comments) says:

    Wtf is taxing wealth a better idea than taxing income? Actually we could be in for major tax changes because gst may become more and more costly to enforce in the global market place.

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  22. queenstfarmer (756 comments) says:

    Capital gains tax is coming Kate, as soon as Labour get their shit together it will likely win them an election.

    You may be right, given the apparent economic illiteracy of Labour voters. But what will Labour do when it doesn’t magically make houses affordable for their indigent voters? What will they blame for the failure of their election-winning strategy?

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  23. Kevin (1,122 comments) says:

    Labour dont give a rats arse about reducing house prices they just want to use cgt to raise the total tax take and redistribute it to their voters.

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  24. Kevin (1,122 comments) says:

    Luckily taxes can’t increase massively. Do you think the young people, and the large number of immigrants who have many other options are going to sit around in NZ paying for fat lazy old hippies to have a comfortable retirement? Please credit them with a,bit more intelligence.

    No the only solution is equality. A modern, productive egalitarian democracy that treasures the producers of the wealth and doesn’t try to ream them for every cent they earn. Nothing else can or will work.

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  25. Cactus Kate (549 comments) says:

    Shunda

    I would really like to own a gulfstream as well but it is not affordable to me so I cannot and have to accept that.
    A house in the inner Auckland city with population growth as it is predicted to be means people like Kate have to manage their expectations as to what people our age can actually afford. Or rent.

    I bet I will get as close to owning a gulfstream as most will to buying in “nice” Auckland suburbs. Forget it and have a good life renting without the burden of expectations that are unrealistic.

    If owning your own home is the pinnacle of achievement in your life then, nope you aren’t doing it properly.

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  26. Peter (1,674 comments) says:

    No one forces anyone to live in Auckland.

    If they want to do so, they choose to pay the price.

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  27. Dave Stringer (186 comments) says:

    Luc Hansen (4,261) Says:
    November 11th, 2012 at 11:28 am
    @CK
    It’s widely recognised by economists

    Luc, thank you HEAPS, I haven’t had such a good laugh in days.
    The idea that economists, who have failed to predict all the major economic shifts of the last 50 years, have ‘widely recognised’ something just makes it certain – to me – that what they have recognised is false :-)

    QED

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  28. Paulus (2,568 comments) says:

    Typical Herald – taking over where SST, now defuncting, left off.
    Seem to be making a lot of balls up recently.
    But the repeaters are the product of our education system !
    As for the Labour shill – stupid is stupid as – economically illiterate like most in Labour.
    A CGT will only put up the price by the same amount, and look forward to hearing how it will work, and what it will bring in, when will the tax start coming in (say 15 years) ? and what will it cost to administer (more public servants in Wellington though – will keep house prices high in Wellington).

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  29. labrator (1,849 comments) says:

    What would really lower house prices is making more land more available. Unfortunately for Kate Sutton and Oliver Mannion this land will not be in central Auckland, central London, central New York or any other place already in demand. There’s plenty of land in West Auckland, some with nice houses already on it and quite affordable.

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  30. Shunda barunda (2,973 comments) says:

    If owning your own home is the pinnacle of achievement in your life then, nope you aren’t doing it properly.

    Well, I paid off my first home and have recently purchased a second, granted, they are low value shit boxes, (and they aren’t in Auckland) but they are my shit boxes.

    I am doing what NZers used to do a lot of Kate, doing it myself.

    My approach is to actually add value to a property, imagine that, actually working to increase property value.

    This is the problem in NZ, NZ investors are absolutely addicted to getting something for nothing, which is deeply immoral in my opinion, parasitic is the correct term.

    I have heard people like yourself complain about working for families payments, which I can’t understand, because WFF is essentially becoming a government subsidy for property investors, that it flows through a family first is irrelevant.

    In a country with such a large land area to population it is utterly ridiculous that home ownership is out of reach for most people.

    It will get to a point where people won’t stand for it any longer.

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  31. SPC (5,473 comments) says:

    Talk about omitting the key facts.

    Boot camps are resulting in higher re-offending rates (helping young crims with their networking by gathering them together) – yet the government is trying to prevent the public knowing this and is continuing with them.

    Why, to prevent the government being embarrassed – is this more important to them than our safety?

    http://www.stuff.co.nz/dominion-post/news/politics/7934502/Minister-keeps-a-lid-on-boot-camp-failure-figures

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  32. SPC (5,473 comments) says:

    The opinion that a tax on housing will increase house prices, not decrease them because “it will mean owners will hold out for a higher price to sell, to cover the CGT. You overlook that investors are both buyers and sellers” is an attempt to create an urban myth.

    If there was any evidence to support that spiel – there would have been reference to evidence to support it.

    It does not even stand a test of logic, homeowners already hold out for the highest price – change in tax regime does not change anything.

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  33. dog_eat_dog (763 comments) says:

    SPC – Are you suggesting sellers will just take the hit on margin when they sell a house and not pass of that cost onto the purchaser?

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  34. Whaleoil (766 comments) says:

    Another item omitted is Oliver’s boss at the University is none other that Dr Peter Davis.

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  35. SPC (5,473 comments) says:

    dog eat dog, do taxpayers ask for a pay increase to cover their income tax?

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  36. Manolo (13,517 comments) says:

    Dishonest progressives. Surprised anyone?

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  37. dog_eat_dog (763 comments) says:

    That might be a good analogy if it wasn’t a seller’s market. You also have to look at the other proposals surrounding the CGT being floated by the Greens and not dismissed by Labour, such as lower interest rates. If buyers have access to cheaper credit, then it’s not unimaginable to think that sellers would expect to be able to pass at least some of the cost of a Capital Gains Tax.

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  38. bhudson (4,736 comments) says:

    do taxpayers ask for a pay increase to cover their income tax?

    They certainly do to cover inflation. Just another good reason why the economic policies of Labour and the Greens would be disastrous.

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  39. Joseph Carpenter (211 comments) says:

    And of course if you’re going to levy a CGT on property gains you will of course have to allow for losses with tax writeoff’s. Don’t forget although Auckland (and only parts thereof) and a few other areas are making significant increases, a lot of the country is still underwater. Thank you Labour & the Greens for bailing out all the shonky property developers and provincial landlords who are kind of stuck at the moment, even better they will be able to offset at their higher income tax rate and not the CGT rate which would typically be lower.

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  40. Anthony (785 comments) says:

    Of course a CGT is not a panacea but DPF gets his basic facts wrong YET AGAIN in saying it will increase prices! It does not affect the price of new houses, which is the only thing that increases supply!!! The resale of existing houses does not change the supply!!!!! However, making existing houses less attractive to property investors may mean a slight drop in price and an increase in owner occupiers.

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  41. Fairfacts Media (371 comments) says:

    It only seemed the other a Labour Party activist featured in a Herald story.
    Does Lairbour have a factory of activists with which are used to manipulate the media and does Granny have a policy to act as willing accomplice?

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  42. Kevin (1,122 comments) says:

    Yes fair facts, the left is unbelievably well organised. Often government funded through benefits, salaries of academics, and grants to charities. Some university departments and faculties are,basically branches of labour and the greens. But national refuses to listen to that so it goes on and shifts the whole NZ political spectrum far left.

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  43. SPC (5,473 comments) says:

    Property developers already pay tax on CG at the company tax rate.

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  44. Cactus Kate (549 comments) says:

    Shunda – working to increase the value of the property? Really? DIY means you do not employ someone else to do the job therefore of less value to the economy as a whole than had you hired a tradesman.

    If you did the house up with the purpose of resale and profit then the current law as drafted means you should be taxed. Keep repeating this then you definitely will be.

    As for WFF, nonsense. I am against it as it gives money to those who actually should not need it and distorts the lab our market.

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  45. SPC (5,473 comments) says:

    A CGT does not impact on the market price that a property is bought or sold for. Every seller already wants to maximise their price and buyers always have other options.

    The idea that someone having made a 10% CG, wants to compensate themself for a 15% tax on this by not selling their property unless they get 1.5% more is nonsense. If they sit on it, inflation over the next year will be greater- and then there is the opportunity cost of not investing the money elsewhere in the meantime.

    Remember a CGT does not apply on historic CG made before it is enacted – the amounts of CG are not large in the short term after we have a CGT. So the idea that house prices would increase is without any context to market determining price or the reality of the sellers position under any CGT regime.

    It’s just spin – an attempt to influence to believe a lie to influence voters preference between National and Labour.

    The rising cost of housing in Auckland and some people making big money off this – all untaxed, is growing as a political issue.

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  46. Kevin (1,122 comments) says:

    All tax gets passed on to consumers. Otherwise business could not exist. Taxing business is just a convenient way of collecting tax from the end user. Consequently much of our high cost of living is a direct result of our high taxation.

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  47. SPC (5,473 comments) says:

    PS, the high cost of housing in Oz is based on the ability of someone on their high wages to pay back a loan. And the amount of money their banks are prepared to borrow from the world and lend locally against property with low or zero deposits – to homeowners and investors both. As their government rakes in the CGT revenue (the rising price being a form of hidden tax collection), why would they change this?

    As for us we get the investors bidding up property values but without the CGT – because that group has the government party by the ….. . No wonder they cannot close the deficit.

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  48. Kevin (1,122 comments) says:

    “Property developers already pay tax on CG at the company tax rate”

    No they don’t spc. I know what you mean, property developers pay tax, but not at the company rate because they would pay themselves salaries and dividends and only pay company rate,on the profit.

    That’s what we don’t need a cgt. Just make the rules the same for everyone who buys and sells property – pay tax on profit.

    BUT if labour and greens get in with a good majority it is very conceivable that they will make the CGT both retrospective and on unrealised profit ie you will have to pay cgt on increasing house value even if you haven’t sold.

    The problem is, it’s too late. The baby boomers and foreigners have taken the profits already. Their should have been one income tax law for all for the last 40 years. Horse has bolted and We will be the new Greece soon.

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  49. SPC (5,473 comments) says:

    If anyone wanted to lower house prices, cost to either own or rent – without impacting on the productive sector they would

    1. add GST to mortgage finance cost (and car and personal consumer finance – but exempt business borrowing). Thius is better than just a surcharge on mortgages alone as Bollard once suggested.

    The revenue used to lower the witholding rate on interest income. This would allow a lower OCR and dollar.

    2. place minimum deposit requirements for loans to first property owners – say 10% (and also loan to property value maximums for second property ownership, say 25% but signal a rise over time to 50%, to reduce speculative leveraging).

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  50. wreck1080 (3,820 comments) says:

    Whatever the case, it is clear house prices in auckland are in runaway mode.

    I’m looking at dumps in auckland that 10 years ago were priced around 350k, and are now pushing 1.8 million.

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  51. SPC (5,473 comments) says:

    Kevin, yes I meant that developers pay tax on their income/profit at the company tax rate.

    For the rental investor, the CG is their profit.

    NO neither Greens or Labour plan to make any CGT retrospective and both plan to tax ONLY the realised CG.

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  52. bhudson (4,736 comments) says:

    but exempt business borrowing

    So you’ve just added 15% to the cost of finance for family homes, but the investment home owners are exempt because property investment is a business. Not sure that makes a whole lot of sense given the current and (recent) historical property markets!

    What is more, your clever plan has just make it much harder for a new entrant to the market looking to buy their first home – the mortgage payments have just gone up, meaning they can afford even less!

    Even more than that, the lending institutions will have lower demand for consumer financing unless they reduce their rates and margins. That might look attractive to some on the face if it, but actually means the capital will go elsewhere where they can get a better return. That will place upward pressure on rates and therefore costs to consumers. Well done – either way, you’ve just managed to put some retailers out of business and certainly increased unemployment as they let staff go!

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  53. Kevin (1,122 comments) says:

    How do you know that SPC? Politicians lie!

    But why don’t we be daring and do something better. Make the rental investor obey exactly the same tax rules as anyone else. Including gst on rent. It would have solved everything. Now 30 years too late, can NZ ever be anything but languishing at the bottom of the OECD. I doubt it.

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  54. Kevin (1,122 comments) says:

    No bhudson, properly implemented making rentals investors obey the same tax laws as everyone else would do the opposite. It would create jobs, not only by stabilising and eventually reducing house prices but also by shifting capital to the productive sector. It would have to be part of a long term plan, and like that’s going to happen in the people’s democratic republic of aotearoa.

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  55. ross69 (3,652 comments) says:

    David Farrar is beaten by his own logic yet again.

    Some home owners have to pay GST on their property when they sell. All sellers have to pay GST on the commission they pay real estate agents. So has Mr Farrar argued that GST is bad and should not apply to property deals?

    [DPF: Umm GST doesn't apply to property deals, and I both sold and purchased my last apartments without an agent]

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  56. Viking2 (11,284 comments) says:

    This is the problem in NZ, NZ investors are absolutely addicted to getting something for nothing,

    Please tell me where we can arrange this. I’m really interested to take advantage of the “something for Nothing”

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  57. SPC (5,473 comments) says:

    bhudson, there is no actual increase in total cost to home owners. The reason the mortgage surcharge (or GST placed on such lending) was proposed was so there could be a LOWER OCR. Bollard suggested this move to contain the house price bubble without impacting on exporter returns.

    The homeowners would simply have to secure the 10% deposit.

    What capital are you talking about, the banks mainly on-lend money borrowed from offshore. As for banks competing to offload more local savings/capital as loans to local business instead of cionsumer finance importing goods from offshore … you have a problem with this?

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  58. Viking2 (11,284 comments) says:

    SPC (1,478) Says:
    November 11th, 2012 at 2:16 pm

    The opinion that a tax on housing will increase house prices, not decrease them because “it will mean owners will hold out for a higher price to sell, to cover the CGT. You overlook that investors are both buyers and sellers” is an attempt to create an urban myth.

    We;ll as RTA costrs have risen the prices of hiouses have followed suit. e.g. when one council area I have a house in raised its consent fees by that amount up went the prices to buy. Why wouldn’t they.

    House prices are extablished by two things.
    Demand
    Cost to build new
    When demand is greater then the cost of second hand rises until it approaches new cost at which time new supply comes on stream. Once a new supply is established then price will reamain around that cost until demand subsides.
    No mystery.

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  59. Steve (North Shore) (4,524 comments) says:

    Chardonay Socialist gold digger. Sad realy that Sutton is just another greedy whiner

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  60. SPC (5,473 comments) says:

    bhudson, as for the rental investor, they would be subject to an impost on mortgage payments like anyone else. If as a company they would be claiming a cost but paying the company rate of tax on their profit.

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  61. RightNow (6,844 comments) says:

    ross69, good point about GST (not for the reason you said it though).
    Why have a new tax when GST already applies?
    You can read all about it here:
    http://www.ird.govt.nz/resources/3/0/305950004bbe5936836ed3bc87554a30/ir313.pdf

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  62. rightoverlabour (76 comments) says:

    Noddy has more fact in it than the Herald. Won’t read it on principle. To call it journalism is an insult to real journalists.

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  63. bhudson (4,736 comments) says:

    SPC,

    Aside from you not suggesting an offset shift in the OCR when you suggested putting GST on mortgages, the RBNZ have already made it clear they are not of a mind to reduce interest rates further right now. Given the continued state of our traditional trading partners up North, reducing rates now actually constrains our options if things turn worse offshore.

    I still hold your suggestion would (in reality) lead to higher mortgage costs on family homes, eating into incomes for all New Zealanders (obviously impacting lower income earners more) and make it more difficult for new entrants in the market.

    I have no problem with banks lending to business. I don’t think it is a good idea to attempt to create that by shifting costs onto income earners through their mortgages and increased consumer finance. Those increased costs would also impact local demand (which might negatively impact the demand from businesses for investment.)

    The banks also have the ability to use their capital on offshore investments. If consumer demand drops, they will do that ahead of reducing profit margins. That risks further upward pressure on consumer interest rates.

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  64. bhudson (4,736 comments) says:

    as for the rental investor, they would be subject to an impost on mortgage payments like anyone else. If as a company they would be claiming a cost but paying the company rate of tax on their profit.

    SPC,

    A look through company is still a company – they can continue to offset the investment property losses against their personal income tax, while not being impacted in the slightest by the mortgage GST as i) they can claim it back, and ii) they can (and would) tack it on to the weekly rent if need be.

    Not only are you driving the up the price of housing through increased mortgage costs, you’re sending rents up also, really squeezing those in the middle that are forced to rent (even now) because they can’t afford to buy. Well that’s just put them further behind the eight ball.

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  65. swan (659 comments) says:

    Anyone supporting a CGT want to explain why they want to advantage owner occupies over renters? It will be the renters paying the CGT after all. That sounds like quite a regressive policy to me.

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  66. DJP6-25 (1,313 comments) says:

    No surprises here then. Just the MSM up to it’s usual tricks.

    cheers

    David Prosser

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  67. hj (6,756 comments) says:

    PM says ‘no’
    Prime Minister John Key reiterated later a land tax and broader capital gains tax were still off the cards. Asked whether the implementation of one or the other could allow government to reduce income taxes to give people more income to spend, he replied:
    “At the risk of repeating myself from last year, we looked at a land tax, and land taxes, one, reduce the value of land in New Zealand, by definition, and it has an impact on every single homeowner in New Zealand.”
    http://www.interest.co.nz/news/52737/imf-recommends-govt-broaden-capital-gains-tax-base-and-introduce-land-tax-your-view

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  68. hj (6,756 comments) says:

    For every house built in Auckland 7 people arrive
    http://www.radionz.co.nz/national/programmes/sunday/audio/2538112/insight-for-11-october-2012-auckland-housing.asx

    Savings Working Group
    January 2011
    “The big adverse gap in productivity between New Zealand and other countries opened up from the 1970s to the early 1990s. The policy choice that increased immigration – given the number of employers increasingly unable to pay First-World wages to the existing population and all the capital requirements that increasing populations involve – looks likely to have worked almost directly against the adjustment New Zealand needed to make and it might have been better off with a lower rate of net immigration. This adjustment would have involved a lower real interest rate (and cost of capital) and a lower real exchange rate, meaning a more favourable environment for raising the low level of productive capital per worker and labour productivity. The low level of capital per worker is a striking symptom of New Zealand’s economic challenge.

    http://www.treasury.govt.nz/publications/reviews-consultation/savingsworkinggroup/pdfs/swg-report-jan11.pdf

    Government policies blamed for house prices
    “Immigration and tax breaks for investment in residential property are being cited as the underlying causes of steep increases in the cost of housing over the past decade.
    New Zealand now boasts one of the highest rates of home unaffordability in the world as a result of prices rising far faster than incomes, and the government’s Savings Working Group blames that squarely on the policies of successive governments.
    Although “the favourable tax treatment of property investment” accounted for about 50% of house price increases between 2001 and 2007, the working group said, there was also strong evidence that rapid swings in immigration brought about price-rise “shocks”.
    There was a sharp spike in immigration in 2001, 2002 and 2003 and, said working group committee member Dr Andrew Coleman, it appeared that property prices did not fall anywhere near as greatly when immigration fell again.
    The report added that there was little evidence that immigration boosted local incomes. In fact, the need to build roads and schools meant that net migration contributed to the national deficit. ”
    http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed-for-house-prices

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  69. hj (6,756 comments) says:

    The findings of the Savings Working Group go largely unreported:

    After 1997, and certainly since 2000, opinion and feature writers
    adopted a very different approach, prompted in part by a major downturn in Asian
    immigration and a greater appreciation of at least the economic benefits of
    immigration but also as a result of a growing awareness amongst journalists that
    they had a role to play in explaining (positively) the complex issues of immigration.

    There was a realisation, from both managers and the journalists concerned, that these
    new migrants were an increasingly significant audience in their own right, underlined
    by the decline in print sales and revenue. There were some exceptions in terms of a
    small number of columnists in particular and of news reporting generally.

    Reporting Superdiversity. The
    Mass Media and Immigration
    in New Zealand
    Paul Spoonley & Andrew Butcher
    ……..

    Mat Nolan says some economists think immigration is good and some think it is bad (not those exact words) yet the NZ news media treats the issue as settled.

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  70. mikenmild (11,246 comments) says:

    Makes one wonder why we have a savings working group.

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  71. hj (6,756 comments) says:

    makes me wonder why we have a radio nz as they have completely side stepped the findings of the savings working group in any analysis of the housing crisis.

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  72. Warren Murray (293 comments) says:

    It seems the individuals named were quite pleased to promote propaganda for their own agenda.

    As to whether cgt would help the situation, many others have noted rampant house inflation already exists in places with such a tax.

    I cant quite go along with DF’s response for the simple reason that i dont yet know how a cgt would work here. If, for example, it became an annual tax on unrealised gains, it could impact on some landlords who can barely meet their current commitments. Conceivably, it could stimulate a short term boost to supply, as those landlords realised their assets. But i dont think the effect would last long.

    As an aside, i wonder what the presumably labour / green coalition would do with the revenue?

    If the tax was applied to unrealised gains and the market fell, presumably landlords who held their ground would get a nice tax refund (assuming such a policy did what its proponents say will happen).

    If the gct is levied on realisation, i fail to see how it would boost supply. On the contrary, if such a policy was introduced and somehow it undermined house prices, wouldnt wealthier people with capital or good lines of credit just move in to add to their portfolios?

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  73. UpandComer (525 comments) says:

    Fuck these idiots.

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  74. Scott1 (482 comments) says:

    Swan,
    Meh, it doesnt matter. CGT is a policy for improving economic incentives, it also gets some extra tax dollars (or it should) and thus you can use that to fix any problems it creates.

    Warren,
    almost nowhere in the world has house prices/inflation like NZ at the country level.
    But if you are saying that this is a perfect tax and that it doesnt distort the market at all – then I am EVEN MORE in favour of it!

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  75. bhudson (4,736 comments) says:

    Meh, it doesnt matter. CGT is a policy for improving economic incentives,

    Scott1, when swan said ‘renters’ it was a reference to the people having to rent housing, not the people who own the rental property. Your “meh” is a “let them eat cake” to all the people who can’t afford to buy a house!

    Swan’s point was that a CGT would not actually fix either the problem of housing affordability or promoting investment in a productive industry [principally because the CGT proponents will apply a CGT equally to those investments also.]

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  76. bhudson (4,736 comments) says:

    As for the attitude of Sutton as per DPF’s update to the post – that exemplifies why Labour lost so badly last year and are still performing so woefully in the eyes of the public.

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  77. seanmaitland (472 comments) says:

    m@tt – if you’re still reading this – you don’t have a frickin clue what you are talking about.

    Come back when you have property investments of your own and can talk what the real world does (and I don’t mean owning your own home).

    Idiot.

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  78. ross69 (3,652 comments) says:

    [DPF: Umm GST doesn't apply to property deals, and I both sold and purchased my last apartments without an agent]

    Wrong, GST does indeed apply to some property deals…and I said that when you use an estate agent the seller pays GST on the commission. According to your logic both of these factors must distort the market.

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  79. ross69 (3,652 comments) says:

    You might like to read what the IRD says about the payment of GST on the sale of some properties…

    http://www.ird.govt.nz/property/property-common-mistakes/zero-rated-apartments/prop-zero-rated-apart.html

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  80. ross69 (3,652 comments) says:

    > It will be the renters paying the CGT after all.

    No, it won’t. Do renters pay the GST which is incurred by every seller who employs an estate agent?

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  81. Fentex (909 comments) says:

    I seem to recall someone being keen to make the point often in the past that what you tax you get less of.

    If you tax expensive property shouldn’t that mean you get less of it by that logic?

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  82. Mark (1,436 comments) says:

    There is no silver bullet for the Auckland housing market. It is not a NZ wide issue it would seem. I am a fan of CGT but it is not to kerb the housing market. for those who say CGT will increase rents it is unlikely.

    Increase the availability of land for sub division. Increase the density of development allowed on that land and reduce the resource management costs. Its not rocket science.

    CGT has always made sense to me as it simply closes the loop on a gaping hole in the tax system.

    The other big hole that needs to be closed is the ability to offset losses on rental property against other income. Fine if there is a capital adequacy provision on the deductibility of Mortgage interest but it is nonsense to allow people to have 100% gearing and then deduct the interest on the losses generated by that investment property against their other earnings.

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  83. simo (150 comments) says:

    Why are the suckholes banging on about CGT, any developer/investor in the property market is paying income tax on the sale of properties. It treated as income at the normal rates. This is just another piece of socialist rant cluttering up the issue of lefty councils screwing around with the land availability

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  84. pq (728 comments) says:

    I am interested in the discussion on Capital Gains that flowed from this article.
    Is there any sympathy for the Gareth Morgan so called ‘Capital Tax’
    This is the tax 1.8% per Annum on all assets of any value, regardless of whether they are earning or not.
    An example of the Morgan proposal is:
    A widow of 70 yrs without significant income, lives in Auckland in her home, [ $700,000 paid up no mortgage]
    She receives superannuation $17,000 per year, and largely makes do with this and some small savings.
    The Gareth Morgan tax arrangement would decimate her super annuation to $11,000 per year [ a drop of $6,500], and the tax on asset home [1.8% ] would be $12,600.

    She suddenly has to find $19,000 per year for the Gareth Morgan gig kahuna tax redistribution.
    Is there any support for the Morgan asset tax, which he sells by calling it a wealth tax.

    http://garethmorgantax.blogspot.com/

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  85. bhudson (4,736 comments) says:

    Is there any support for the Morgan asset tax, which he sells by calling it a wealth tax.

    No.

    Aside from other distortions, a key point to note is while the super annuitant, who paid tax all their working life, has to sell the one significant asset they may own (assuming they were a ‘worker’) to pay Gareth’s tax, someone who can’t be bothered working gets a handout from Gareth with no obligation to train or work. Of course the handout isn’t actually from Gareth, it’s from the poor working stiffs whom he will be making sell down their homes in their near future.

    His answer to super annuitants (and DPB recipients – people might have a different view on them) is ‘you have at least 2 years to prepare. Get a job. Downsize your house.’ All so that those who do not wish to work, do not have to (unless they own a house of course.)

    On top of that, his approach really does turn employees (those that only have their labour to trade) into fodder for the matrix: taxed on your wages, taxed when you spend, taxed when you save. And taxed annually if you have the temerity to use your taxed income to buy a house to live in and perhaps raise a family. It really is an Orwellian view on the role and value of people in society. In Gareth’s view they are nothing but units of production.

    By the way, he makes clear in his book that he would not stop at the home – if he could easily tax the car and boat, he would.

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  86. Minnie1972 (42 comments) says:

    Incredible article. Incredibly ridiculous!

    I couldn’t help but be struck by the sheer idiocy of Sutton and her man friend’s “plan”. I can tell you right now that if some bright young thing put a flyer into my letter box wanting to buy my house, I would immediately tell them that sure, it’s for sale – well over GV of course, if I was never intending to sell anyway. Good luck with that “plan” getting them a low priced house…

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  87. Scott1 (482 comments) says:

    Bhudson,
    Re letting the new home buyers eat cake
    I’m not sure the evidence supports the idea that a tax on housing will increase house prices and if it does im not sure that keeps new home owners out of the market (considering the lower income tax rates and hypothetically better economic growth you could achieve). but if it did, and yet that made the economy more efficient -> then they can eat cake.

    Re your super annuitants – why so much love for such freeloaders?

    Imagine how annoyed you might be if you had no house but an income and had to pay lots of tax money to support a huge number of people sitting pretty in a multi milliondollar house freehold just because they dont want to sell an asset or take a loan against it whilst you couldn’t afford to buy it at all – knowing that the country wont be able to afford to offer the same to you when your turn comes up.

    As to your fairness argument – the generation that paid tax all their life now also benefited from a even larger amount of spending – thats why NZ has debt.

    That and that is is very inefficient to discourage work like that.

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