Posts by DexterX
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OnPoint: Election 2011: GO!, 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.
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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 pricesI 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,
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OnPoint: Election 2011: GO!, in reply to Steve Parks,
If feeling filthy makes you feel good so be it.
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OnPoint: Election 2011: GO!, in reply to Steve Parks,
There is a definite leaning in this thread that supports more taxation, We need a government that will tax it’s way out of the crisis only then will they be "dancing in the streets and loving everybody" - The Young ones..
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?
The state sector is pretty immune though it does get the odd shake up now and again just to make it look like the Govt are doing something.
A CGT is not required - the sale of power generation isn't required - I have said why neither is necessary. I don't think a lot of you actually understand what I am saying – but I don't mind that.
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.
I don’t think that taking money, from rent, out of circulation in the economy and giving it to the government is a good idea - it won’t solve the problem though it will make it harder for people renting.
In an equation where CGT becomes an input and rent is the output - the introduction of a CGT (Land Tax) rents will increase as a result. Landlords will need to collect more rent to pay for CGT and tenants will have to pay more rent to secure tenancy in a rental market with a shrinking stock of rental ppty.
For more reasoning refer to this
http://www.grantthornton.co.nz/Press/2009/housing-rent-rise-likely-with-capital-gains-tax.htmland also the herald link I posted earlier on accomoadtion shortages.
Obama didn’t want to kill off the hint of recovery and went with a smaller than expected CGT tax increase. The Nats would have been better leaving GST as it was and I don't think Bill English has claws though I can tell you Michael Cullen has a wide screen TV - Last time I was standing outside his house, in the rain, alone, watching him through binoculars he did posses one – it was I understand a moral dilemma for him that he solved by never turning it on.
In the UK they went with an increase from 18% to 28% they were thinking about 40% - and although this was touted by the Govt as good news. Rental accommodation in the UK, particularly London, is in crisis there is an ongoing acute accommodation shortage created by a lack of properties as landlords exited rental properties and rents are well up.
In NZ depreciation has been removed from property and there is now an accommodation crisis, particularly in Auckland.
I can’t provide you with any research that says what the effect of a CGT is, it hasn’t happened yet, though I do look at what happened in the UK situation and how rents in NZ have moved upwards following the removal of deprecation.
It is my opinion that rents will increase with a CGT. I have said more on why in earlier posts. To provide a simple analogy when the cost of steel production goes up the cost of steel products also rises.
I am interested in what Matthew considers are the taxes with a, “significant dead-weight impact could be reduced?”
Matthew, Ben and you Steve seem to all sing from the same songbook, I find it hard to differentiate between who is responding.
I do however rest assured that you have a shared conviction for the working poor and that should Labour win the next election, introduce a CGT and rents do go up you will all likely not be too bothered. So it really shouldn’t matter what I think.
I feel this thread is an exercise is in pseudoscience,
I am not looking forward to being proved right should a Labour coalition win the election and embark upon another great experiment.
I also think a CGT will have a depressive effect on the economy as a whole.
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OnPoint: Election 2011: GO!, in reply to Steve Parks,
Mr Parks - with the depreciation gone from ppty invesmtent in ppty is on the same basis as all other form of investment in NZ to my mind that ws all that was needed.
I don't have a dogma, I would hazard a quess that you are in safe employment a government or psudeo government type job perhaps and that might be why you just don’t get it.
A lot of has been said about speculation by many here with no understanding of what is speculation.
The view has often been expressed here that investing in ppty is speculation and it is not. Investing in ppty is not speculation and people investing in ppty in NZ did not creat the GFC. Investing in ppty does create work and consumption of goods and services.
What is happening with the price of gold from Nov 09 till now is a speculation and that bubble will likely burst sometime this year.
What inside job highlights is the unholy union between the finiacial services idustry and governments and why the crisis wil lhappen again and again and again. It is the union between financial services and the government that is the main driver in the GFC.
http://en.wikipedia.org/wiki/Financial_crisis_of_2007-2010.
There is a direct relationship between the declines in the standards of living(wages not keeping pace with price increases which we are all currently experiencing), and decreases in consumption and business investment (which includes export business reinvestment), which along with government fiscal policy are the engines that drive an economy.
The increase in GST has killed of a gathering recovery, and has in my mind been partly responsible for the double dip recession that I understand we are looking at. The “government’s books” may even have been in a better position if the increase n GST had not taken.
Unless the policy direction allows wealth/growth to be created and the economy to grow and with it wages then just forget about it – nothing can be sustained.
NZ households are currently paying down debt, which will intime
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 pricesIf you don’t get what I am saying – then you just don’t get it.
That is all, and thanks for taking the time to read this post if in fact you do.
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If you increase the inputs into an equation of which the net outcome is rent - IMHO you get a rent increase.
A lot of the left leaning thinking in this thread seems to think that the Govt should be Robin Hood and take from those that they think have and give to those more deserving and that when "we" take the CGT and give it to the Govt and it is
" invested in equity and expertise to grow businesses that are NZ-owned even if they're not based here"
and then to take some of
"the revenue from cgt go to debt reduction, and increasing spending in some areas".
All the tinkering the left leaners want done is cutting up bigger pieces of a pie that are getting smaller and smaller. The problem with leaning to the left or to the right is it is a crutch that stop one from thinking for oneself and seeing a different view.
With housing ranging from between 6 to 10 times the average salary depending on where you (want to) live.
It is interesting that as at 9 Sept 2010 average salary men $1,069 per week & women $868 and the medium income for all at $529 per week. Taking into account the cost of living it is has long been game over for a good half to three quarters of the population.
Unless the policy direction allows wealth/growth to be created and the economy to grow and with it wages then just forget about it – nothing can be sustained.
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 -
OnPoint: Election 2011: GO!, in reply to Sacha,
No, because if you get a concern that is exporting you encourage it by providing it with a tax break as regards the amount of reinvestment and development and what you get is more growth - that concern by virtue of the reinvestment able to increase their activity, the people they employee and the export receipts they bring back into the country.
The rate of growth in a concern is directly related to the level of reinvestment.
Providing a tax incentive is not a handout - the concern still has to go out and earn the money it reinvests in its operation it isn't getting a grant.
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A quote from the Labour party candidate based on the Oct 2011 conference:
“All commentators thought that NZ desperately needs to manage its currency and to support and help the productive sector. A capital gains tax was considered to be a vital part of the mix. Too many are doing business for a capital gain rather than development of technology. And change has to occur.”
I found this a bit naive. Who are the “Too many that are doing business for capital gain” and what is the proof? What “technology” did the people at the conference and the people posting in this blog in favour of a CGT want “developed” and what are they going to take to do “it” – whatever “it” is that they considered needed doing o grow the economy.
In my view it is naïve to think that the people that own and invest in realty will shift that investment into creating innovation in the export sector.
If you want to encourage reinvestment then you provide tax relief – not a punitive capital gains tax which will effectively be passed on to the working poor and beneficiaries as increased rent and living costs whilst also sending the “business talent” off shore.
The SCT & PC isn’t that much of a long shot – The geezer that developed 42 below was, I understand, from listening to Radio live Business on Sunday, involved in an enterprise exporting perfumed candles – and the basis of this was that with times tight globally people weren’t looking to buy luxury items, cars, boats, jet skis to feel good and that personal products like perfumed candles would provide a feel good factor.
This article in the herald gives a relevant look at debt levels and household spending;
http://msn.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10705683The reason’s promoted by political parties for doing or omitting to do things are most times BS.
In considering Ben Wilson comment "what effect might it have on property investment", and the obvious answer is "it would make it less attractive".
Property investment has been made less attrative by the removal of deprecation and as a result the rental stock was reduced – For the people that can stay owning rental ppty it will become more attrative,
I consider a CGT will have two major effects:
1) Shrink the rental stock further
2) To increase rents partly on account of reduced rental stock being well uinder the demand and the passing on of CGT to tenants.. -
OnPoint: Election 2011: GO!, in reply to Matthew Poole,
I can consider for decades to come there will be an accute accomodation shortage - so I don't see it getting better for renters.
I also feel immigration policy also plays a major part in the shortage and in sustaining the low age economy.
The only thing that will improve things is a a susutaioned lift in GDP and an increase in wages.
I don't see CGT as having a postiive effect on anything the smae way i don't see asset slaes having a positive effect - I see both as the wrong answer.