OnPoint by Keith Ng


Lies, damn lies, adjectives

The vicious lynch mob gathers angrily. They menacingly surround the industrious elderly folksy old folks, who were frugally baking nutritious cookies for the respectful local children in their bespoke bungalow in a well-to-do suburb with stunning views of the luminescent harbour.

“Argh,” the vile leader of the listless mob shouts melodiously with venomous vitriol, “we’re gonna make you pay… pay taxes! Argh!”


“As the vitriol builds against property investors it's becoming increasingly clear that there will be many innocent bystanders injured by the mooted changes to tax law.”

Let’s just clarify some points here:
• “Hang ‘em all!” (Vitriol.)
• “Put the capitalist pig-dogs against the wall!” (Vitriol.)
• “Make them pay 0.5% on unimproved land value and remove exemptions on depreciation!” (Not vitriol.)

The property investment industry has been putting up a noble fight since the Tax Working Group report came out. They’re not fighting for themselves, they’re fighting for the hardworking elderly folk who’ve scrimped and saved all their lives, and who will struggle to get by if these punitive measures enacted against them.

David Chaplin cited chairman of the AMP NZ Office Trust Craig Stobo’s concerns in his column last week, describing him as “no particular friend of tax-deducting landlords and in his past life as head of BT NZ funds management he no doubt railed against the residential property sector.”

“The burden of these proposed taxes is therefore going to be borne by investors who have taken steps to provide for their future, and the businesses which are providing jobs for the current generation of workers - neither of which have much ability to absorb new costs in the current economic environment.”

Chaplin glossed over the fact that “AMP NZ Office Trust (ANZO) is New Zealand’s largest listed investor in commercial office property and owns arguably the country’s best office property portfolio.”

It is an utter misrepresentation of what Stobo’s interests are. Far from being a fund manager in some kind of “funds” vs “property” dichotomy who’s reluctantly against the tax changes for reasons of principle, he is the head of a massive property investor with a very direct and very large commercial interest to fight the changes.

And the quotes that he takes from Stobo are meaningless PR drivel anyway. When I go to the dairy to buy some milk, I don’t call it “taking steps to secure my future health and wellbeing”. Currency is a store of value for use in the future, so by definition, everyone who invests – and for that matter, everyone who works for money – are “taking steps to provide for their future”.

His investors are special only because they benefited from – or foolishly bought into – the price bubble created by tax exemptions. It doesn’t make them bad people, but it does make them bad investors. They’re not being punished for it, they’re just not getting bailed out.

And then, there’s the money line from Stobo – from the same playbook that the property industry has been reading off since the TWG report. Focus on the old people. It’s all about grandma. Never use the words “my” or “profit”.

“Listed property is an investment which is particularly popular with older investors, who are already finding it tough in this economic environment and depend on regular income from their investments,”

So, because some of his investors are old people, therefore we should not tax him. Hmmm. Drop the tax changes, or the old people gets it?

If this is true – that many old people are dependent on income from property funds – then it leads to a much bigger question. Why are they dependent on one asset class in the first place? Weren’t there people – anyone? – who warned them that all eggs in one basket was a bad idea?

A single change – e.g. Tax – affects every asset in the portfolio. Capital gains tax or any of its alternatives would have hit the profitability and value of property investments. Did the media, financial advisors and funds themselves responsibly acknowledge this risk? Because if the consequences of this tax change is really as catastrophic as you fellas suggest – and this tax change has been foreshadowed for so long – then how much fault falls on your shoulders?

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