OnPoint by Keith Ng

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OnPoint: Election 2011: GO!

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  • Kumara Republic, in reply to Steve Parks,

    Why are these types all so arrogant?

    Clinical psychopathy, that's why. And Damien Grant, like other privatisation fundies, displays the kind of cargo cultism that persists even though John Frum never turned up.

    The southernmost capital … • Since Nov 2006 • 5443 posts Report Reply

  • Steve Parks, in reply to DexterX,

    Interesting, I didn’t think you would be part of the productive base of the economy the part that makes or trades touchable thangs – working for the state – that’s communism isn’t it?

    Ah, so that’s what they taught you on that finance course.

    Matthews says “consistent CGT will raise quite a lot of money”, so where will that money come from? In my view it will come from rent

    We’ve noticed. It’s a view you’ve repeated ad nauseam. Matthew has provided a counterargument which you keep ignoring.

    Matthew, Ben and you Steve seem to all sing from the same songbook, I find it hard to differentiate between who is responding.

    Matthew and Ben are the productive ones. I’m the filthy commie. The devilishly handsome filthy commie.

    Wellington • Since May 2007 • 1165 posts Report Reply

  • Steve Parks, in reply to Steve Parks,

    [double post]

    Wellington • Since May 2007 • 1165 posts Report Reply

  • Steve Barnes,

    Mr X has proved one point at least. Landlords, over centuries, have tended to be unlikeable characters.
    For a very good reason, they are basicly parasites. If only we had council housing these people would be able to live productive lives.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • BenWilson,

    Matthews says "consistent CGT will raise quite a lot of money", so where will that money come from? In my view it will come from rent – that is the stuff that tenants pay and landlords collect.

    Actually, it comes from the capital gain itself, it's curiously accurately named. If there is no gain, there is no tax. Of course landlords can put rents up to cover the fact that their profits are now taxed, so as to try to squeeze out the same profit margin. But they don't actually need an excuse to do this - rents are skyrocketing not because of rising costs, but because of rising demand for property, and an undersupply. The question is not whether you can justify putting rent up, it's whether you can get away with it. Tenants don't give a shit about landlord's accounting problems - they just take the property they can afford. If no-one can afford, the landlord does actually have to put the price down, or have an empty property. It doesn't matter squat whether this means the landlord is actually losing money against their spreadsheet projections - they'll be losing a lot more if they're collecting no rent.

    Matthew and Ben are the productive ones.

    Why, thank you. But I expect you underrate yourself.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Sacha, in reply to Steve Parks,

    Why are these types all so arrogant?

    Because their argument is so powerful, etc, etc

    Ak • Since May 2008 • 19745 posts Report Reply

  • DexterX, in reply to Steve Parks,

    If feeling filthy makes you feel good so be it.

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • DexterX,

    I have covered these points before:

    The IRD Tax guide on rental property provides that if you sell an asset for more than its adjusted tax value the difference between the sale price and the adjusted tax value is to be included in your taxable income. So the gain ore achieves is already taxed.

    The CGT that is being contemplated is in effect a land tax and is likely to be recoverable annually and may be a calculation on the value of the ppty - from memory this existed in the early to mid 1980s and did affected rents.

    Regardless of what form takes CGT will have an effect on rents and will be paid from rents.

    Rents have increased because the stock of rental property was sold down, with the removal of depreciation and landlords exited the market.

    Given the current situation and the lack of available housing I don’t think landlords will be in a situation where “they’ll be losing a lot more if they’re not collecting rents.

    I feel a lot of what you say is circular and clichéd and has the hallmarks Labour Bureaucracy, the tax a spend mentality.

    Another thing that has been banged on about is developers/speculators and how evil they are taking profits, they are parasites - blah, blah, blah and this POV is rather cringe worthy and made me laugh - there are many people that develop property that have been caught out with the GFC and either wiped out or are under stress – these enterprises also employed people who have lost their work. Some of you will probably say good job.

    A factor that isn’t understood is the role that developers play in creating housing and the urban environment.

    Most successful developers of property get involved in property development as a sideline to their core activity, the cash flow from the core activity this enables them to ride out the hard times and then release the properties onto the market when the economy is expanding – which gives the expanding economy a boost. This land/ppty banking also helps to hold the value of ppty in a recession and this factor is beneficial to homeowners.

    So it might be that some one holding land that they intend to subdivide for 10 to 15 years before releasing it onto the market as a development. If you introduce a CGT and create a level of uncertainty the result will be you get fewer people developing in this way and you will compound the housing shortage.



    I think you don’t understand things or have a real perspective when you say:

    Remember, you evaluate a tax for long-term effects, not short-term ones, though the way you keep on evading the topic I have no faith that you a) understand long-term vs short-term effects or b) actually have the slightest real understanding of what you're saying.

    Who is the “you”, you are referring to.

    Any investment is likely evaluated on Discounted Cash Flow claulation and NPV Anaysis, invocme and any CGT tax will be a factor in the equation as are rents and the elve of return the investor is wanting to achieve. You might like to refernce this link:

    http://en.wikipedia.org/wiki/Net_present_value

    As I have said before:

    I don’t support CGT Labour are wanting nor the and asset sales the Nats promote as a solution as:
    1) they won’t help grow the economy
    2) they will increase the costs of living in rents and higher power prices

    I can’t see that either major party has too much to offer at present – what a choice.

    I see from deep red any body that holds a counter view to lets tax our way out of the recession is explained as being a psychopath, oh dear what next………….SCT & PC,

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • Sacha, in reply to DexterX,

    I have covered these points before

    And la la la I can't hear you is an unattractive response when people have asked you politely to provide evidence for statements that contradict respected experts in the field you're discussing. Such as this:

    The CGT that is being contemplated is in effect a land tax and is likely to be recoverable annually

    Ak • Since May 2008 • 19745 posts Report Reply

  • andin, in reply to DexterX,

    If feeling filthy makes you feel good so be it.

    I believe its said “feelthy comminist”

    And you need to have a Don Ameche pencil-thin moustache, the swathyness of an early Ricardo Montalban, and the voice of Speedy Gonzales to create the correct mental image in the minds of your dear readers.

    raglan • Since Mar 2007 • 1891 posts Report Reply

  • Matthew Poole,

    Dexter, FYI, the moderators do get tired of people who argue in bad faith. Try addressing the questions posed by others instead of continuously ignoring them and demanding evidence (provided) to support their positions.
    You’re very polite about it, but you have not actually answered a single question about an evidential basis for your position. You’ve done it so consistently that other people have noticed and started talking about it. I think you’re very close to being accused of being a sub-bridge dweller.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • BenWilson,

    >I have covered these points before:

    All of them have been rebutted multiple times before too. Talk to the rebuttals and this discussion can move on. It's not like it's uncontroversial, there's plenty of opportunity for good clash, if you could just actually address the rebuttals made.

    I haven't gone into this one yet, though, the point you make that rental property supply goes down if landlords exit the market, so that drives rentals up. It seems poorly conceived to me. I see only 2 scenarios here.
    1. A landlord sells a property, and another landlord buys it. Net effect on supply = zero.
    2. A landlord sells a property, and someone who was a renter buys it. Supply of rentals goes down by one property. But demand for it also goes down by one renter, who is now in their own home instead of renting. Net pressure on prices = zero.

    You're raising property developers as people who will be affected by CGT. I'm not convinced. As I understand it, anyone who is doing this as a business already pays income tax for gains (or if they do it as a company they pay company tax). Unless you're talking about people who are using the "no intention to make gains" loophole. Yes, those people will not be able to continue avoiding paying fair tax for their profits. How many people are doing this?

    But certainly if development had more incentives, that would apply downward pressure on rents. This is a separate issue. I'm open to any actual ideas you have on how to encourage development, which is the only activity that actually creates more property. It seems to me from all the people I've met in recent years who develop property that their greatest rising cost is compliance. This is a tough one, because most compliance issues have arisen for good reason. Essentially, they are quality assurance, and theoretically should mean that better value property is being made. But I've heard literally hundreds of anecdotes about absolutely crazily unjustified costs - basically thousands of dollars being charged for someone to come and look at something and tick a box on a form. Also, extremely lengthy delays in this process, which also come at huge cost.

    I'm not sure what central government can do with this - most of these costs are imposed by local government.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Matthew Poole, in reply to DexterX,

    The IRD Tax guide on rental property provides that if you sell an asset for more than its adjusted tax value the difference between the sale price and the adjusted tax value is to be included in your taxable income. So the gain ore achieves is already taxed.

    Again, theory is nice in theory, but rather trickier in practice. What the IRD and the law say and what actually happens is entirely different. If your odds of getting audited are sufficiently slim - and they are - then there's a strong incentive to under-report taxable income. The IRD acknowledge that it's a problem, and part of the reason they've been getting extra Budget funding for enforcement is so that they try and crack the problem.

    Could you perhaps point to something other than the IRD's compliance guides to support you assertion that there's no problem with avoiding tax on capital gains from property speculation? That's like pointing to the laws about DUI to support assertions that nobody drives drunk.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Matthew Poole, in reply to BenWilson,

    As I understand it, anyone who is doing this as a business already pays income tax for gains (or if they do it as a company they pay company tax). Unless you’re talking about people who are using the “no intention to make gains” loophole. Yes, those people will not be able to continue avoiding paying fair tax for their profits. How many people are doing this?

    Enough people are doing it for there to be a problem (of course, IMO, that people can do it is a problem) in the eyes of a number of learned commentators. Starting with Craig Elliffe, it seems; why else would he propose a broad CGT if there wasn’t a heap of extra tax to be caught?

    ETA: And you should’ve said “ anyone who is doing this as a business should already pay income tax for gains," since there’s a lot of avoidance going on.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Matthew Poole, in reply to DexterX,

    I think you don’t understand things or have a real perspective when you say:

    Remember, you evaluate a tax for long-term effects, not short-term ones, though the way you keep on evading the topic I have no faith that you a) understand long-term vs short-term effects or b) actually have the slightest real understanding of what you’re saying.

    Who is the “you”, you are referring to.

    In this case, you, specifically. Because you seem unable to separate short-term effects from long-term ones, and are using the short-term ones to argue against a CGT. If you have evidence (not just your oft re-stated opinion!) that there will be a long-term rise in the rate at which rents increase that is greater than the rate of increase without a CGT, I ask you, again, to post it!

    ETA: And again, the irony of that first quoted sentence, it burns.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • BenWilson,

    And you should’ve said “ anyone who is doing this as a business should already pay income tax for gains," since there’s a lot of avoidance going on.

    Yes, or perhaps "anyone openly doing this as a business already....etc</q>

    In this case, you, specifically.

    Well, since we're doing handy tips for writers :-), you actually used "you" to mean "one", first. I expect this is what Dex is getting hung up on there. It wasn't confusing, btw. Except maybe to someone with ESL.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Matthew Poole, in reply to BenWilson,

    you actually used “you” to mean “one”, first.

    True. Though after the first occurrence it was consistently "you" as in "DexterX" rather than "you" as in "one".

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Matthew Poole, in reply to Steve Parks,

    Matthew and Ben are the productive ones. I’m the filthy commie. The devilishly handsome filthy commie.

    I'm not terribly productive at present. Too much time wasted responding to Mr X and his inability to answer the question :P

    I would be a filthy commie, but I'm expected to maintain a high standard of personal grooming so I have to make do with being a clean, pin-striped commie instead. Well, during the working week, at least.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Sacha,

    Former Auckland C&R councillor (and supposed historian) Paul Goldsmith shows the type of fundamental ignorance likely to mark any discussions about Treaty issues this election year.

    Naturally the smug little twat from the prosperous Eastern suburbs reckons there's a level playing field for all but mainly his discussion of Auckland's new Independent Maori Statutory Board makes a good case for compulsory Treaty education for anyone seeking public office.

    They will be looking for taniwhas around every corner - adding yet more cost to progress and development in the city.

    Surely, it makes more sense for the Maori Board to be modestly funded and its influence limited to issues that specifically affect Maori and that have been overlooked by those who are duly elected.

    New Zealand needs to think very seriously about where it is going with its special treatment of Maori. More than 170 years after the treaty, as the population intermingles, we should gradually de-emphasise differences over race, proudly asserting the intrinsic worth of all New Zealanders, regardless of background.

    Instead, we seem to be going the other way, towards ever more differentiation on the basis of Maori ancestry.

    No good can come of it.

    The problem for Paulie and the other Actoids who drafted the enabling clauses is that if you apply a holisitic worldview, every issue affects Maori - and every decision has a relationship to the whenua as well as the tangata. Behold the howling of the dispossesed rich white folk.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Steve Parks,

    The CGT that is being contemplated is in effect a land tax and is likely to be recoverable annually and may be a calculation on the value of the ppty

    That’s not the form Elliffe & Huang wrote about, and it’s not the kind being argued in favour of here.

    I see from deep red any body that holds a counter view to lets tax our way out of the recession is explained as being a psychopath

    DeepRed was referring to the person arguing in favour of asset sales, which you’re against.

    Wellington • Since May 2007 • 1165 posts Report Reply

  • DexterX, in reply to Steve Parks,

    Thanks.

    The Labour Party conference raised it and also treasury have looked at the Land Tax version - they have done it before - given the chance any left or right Govt will do it again.

    The present policy direction to my mind is enough - refer my post on this - if the mark set by the Budget 2010 changes is overstepped there will be negative consequences in the form of a much worse accommodation crisis and higher rents.

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • DexterX,

    Posted in error

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • DexterX,

    Mr Poole in response to your numerous posts,

    When you say, “remember “you evaluate a tax for long-term effects, not short-term ones”- the evaluation of any measure is based on what your “purpose is” there are a range of scenarios and methods avilable. It look like you are telluing me what to do.

    If you want some info you could go to budget 2010 fact sheets on the removal of depreciation and the funding that is being allocated to IRD to ensure there is compliance.

    There are a range of budget info sheets on depreciation, LAQC and QC rules, and the over reach of Working for Families.

    With all that is being done to ensure that people (also those who "trade in property") comply with the law and pay tax on their effective capital gains I can't see the point of introducing a CGT/Land Tax.

    The budget forecast for the tax revenue from the removal of deprecation are approx $685 mill a year for the next 4 years and the tax revenue from audit activity is likely to be $210 mill – a portion of that will be derived from ppty.

    If you want to see the movement in rents go and search the Dept of Building and Housing.

    Some of the things you adamantly ask are inane, it is like being asked, “Who do you think will wing the 2011 election? An answer is provided and then one is asked to provide proof of the 2011 election, an event which hasn’t happened.

    I have real concerns you may have hit yourself in the forehead one too many times with your closed hand.

    I have said why I hold the opinion as to why I don’t support CGT and asset sales as:
    1) they won’t help grow the economy
    2) they will increase the costs of living in rents and higher power prices.

    Can’t you handle that other people hold different opinions.

    As this thread is about - Election 2011 GO - I hope we don’t get another Labour Coalition Govt in 2011 – Working people are still in recovery mode from the last 3 terms of well-meaning lost opportunity socialist nonsense and I wouldn't wish the present disorganised Labour lot on anyone let alone the "in" crowd of pitch fork wavers that support CGT.

    I have another question for you, why do you keep hitting yourself in the forehead?

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • BenWilson, in reply to DexterX,

    With all that is being done to ensure that people (also those who "trade in property") comply with the law and pay tax on their effective capital gains I can't see the point of introducing a CGT/Land Tax.

    BEN1. To make heaps of revenue.
    BEN2. To tax profit fairly
    BEN3. To discourage the whole idea of capital gain being productive business.

    I've numbered these points so you can respond to them unambiguously.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Steve Parks, in reply to DexterX,

    It look like you are telluing me what to do.

    No, he's asking you if you can answer his counterargument about the rent issue.

    Some of the things you adamantly ask are inane, it is like being asked, “Who do you think will wing the 2011 election? An answer is provided and then one is asked to provide proof of the 2011 election, an event which hasn’t happened.

    No, you’re being silly. The questions just mirror your own. For example: ’Who are the “Too many that are doing business for capital gain” and what is the proof?”’ You demand specific facts and figures to back up a claim. Unless, of course, you are the one making the claim.

    I have another question for you, why do you keep hitting yourself in the forehead?

    I see making witty responses is also not one of your strengths.

    Wellington • Since May 2007 • 1165 posts Report Reply

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