OnPoint by Keith Ng

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OnPoint: Why Rightwingers Should Support the CGT

56 Responses

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  • Angus Robertson,

    That said, I am rapidly wading out of my depth on economic issues, so take everything I say with a handful of salt.

    Ditto

    Auckland • Since May 2007 • 984 posts Report Reply

  • Kumara Republic, in reply to BenWilson,

    I actually think this move by Labour will be quite positive and powerful, and that National have either miscalculated or simply been outmaneuvered. I did not expect anywhere near the support the idea has received on this site. It’s nice to see an issue the Left is not divided on. It gives me hope.

    I liken the status quo preservationists' reaction to the CGT to the Sex Pistols crashing the disco party in the 1970s. Rattling the establishment to the core, dissed as the end of civilisation itself, but broke the establishment monopoly and ultimately proven right by history in the long run.

    Never mind the bollocks, here's the Capital Gains Tax!

    The southernmost capital … • Since Nov 2006 • 5441 posts Report Reply

  • BenWilson,

    Yes, it does seem like an idea that's been ruled out by arbitrary thinking from long ago. It might lead to the beginning of a sweeping change to our curious orthodoxy in NZ that is so damned unorthodox everywhere else in the world.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Gareth Ward,

    Half of me is thinking "damn, National's partisan kneejerkery means they have to attack this excellent idea, and odds on it's them back in charge of Government this time around".
    However the other half is thinking "at least now we have one of the major parties supporting it and so long as it becomes a cornerstone policy for them we'll see it at some point in the next couple of electoral cycles". This half is currently winning as I think that's a big deal - sometime in the next 6 (?) years a CGT will likely be part of our taxation mix and is then unlikely to be removed (as they all know it's a good idea, just nobody wants to be the first to do it).

    Auckland, NZ • Since Mar 2007 • 1727 posts Report Reply

  • BenWilson, in reply to Gareth Ward,

    I've got the same 2 halves, Gareth. But also in my mind about the second half is "National's partisan kneejerkery could bite them in the arse and erode their support on this one". So actually, both halves are positive.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Graeme Edgeler,

    If we introduce a tax on capital gains at 15%, does that mean that those people who are currently taxed at marginal rates for capital gains that IRD treats as income (house flippers, day traders etc.) will have their tax rates on such transactions reduced to the CGT rate?

    Wellington, New Zealand • Since Nov 2006 • 3215 posts Report Reply

  • Paul Campbell,

    I hope not - as I've pointed out elsewhere in the US the special lower CGT rate (25%) is only available to people who invest long term (2 years minimum) - house flippers, day traders, currency speculators etc need not apply

    Dunedin • Since Nov 2006 • 2622 posts Report Reply

  • merc,

    This seems pretty reasonable. I like the cherry picking idea, as South Africa did 10 years ago, http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10738073

    Since Dec 2006 • 2471 posts Report Reply

  • martinb,

    With the Greens and Norman coming out strongly on the CGT are we going to see a common desire for a focus on the productive side of the NZ economy push towards a new government, with perhaps some of that investment going towards NZ companies creating greener technologies for export?

    we wanna be more than 100% more than other countries!

    Auckland • Since Jul 2010 • 206 posts Report Reply

  • Craig Ranapia,

    I guess this whole thread is moot, because right-wingers have absolutely nothing to fear from this piss-weak effort:

    Labour hopes to swing public opinion behind its capital gains tax plan by including an exemption for hundreds of thousands of tradespeople and small owner-operated businesses.

    And it is understood there will be a five-year moratorium on the tax applying to gains from the sale of residential and commercial property in earthquake-stricken Christchurch.

    The exemptions come on top of those already leaked out in advance of today's launch of Labour's economic policy, which is being touted as a "bold" prescription for lifting New Zealand's economic game.

    Other exemptions will include the family home and inherited assets, while dollar thresholds will be set before gains on the sale of other personal assets are subject to the otherwise broad-based tax, expected to be set at a rate of 15 per cent.

    Sorry, but my cautious support of a CGT did not extend to estate protection for the middle-classes and wealthy. I know Key got mocked for saying this, but I predict the tax avoidance industry is going to love this. I'm just dubious that's what anyone means by a productive sector of the economy.

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • uroskin,

    15% CGT doesn't make sense as it also distort the market for investment. It should be levied at the personal marginal tax rate. And I don't think 'family homes' should be exempted either as there can be some creative accounting applied there too (who qualifies for owning a family home? All family members individually? And can they all own another home tax free too?) Plus family trusts should be busted open by CGT. And it should be applied retrospectively, after all Council rates don't take into account the price you bought your bach for but it's now rated at (unrealised) millions.

    Waiheke Island • Since Feb 2007 • 178 posts Report Reply

  • Sacha, in reply to uroskin,

    I don't think 'family homes' should be exempted either

    As people have said upthread, that's a purely political move rather than a logical one.

    Ak • Since May 2008 • 19740 posts Report Reply

  • Sacha, in reply to Craig Ranapia,

    Other exemptions will include ... inherited assets

    I hope they're bringing back death duties then.

    Ak • Since May 2008 • 19740 posts Report Reply

  • DexterX,

    NZ is a small economy which doesn't have a wide base.

    Any reform of the tax regime needs to address the over reach of WFF and the depressive effect that it has had on wage bargaining and growth in the economy.

    The CGT proposal avoids a lot of structural issues and creates imbalances - it will be ineffective as a result..

    It will introduce structual problems into the tax system with the top personal rate being 39% , the company rate will be 30%, The top trust rate will be 33%, and the CGT will be 15%.. It will be avoided.

    Presently 10% of the top income earners pay 70% of personal taxes.and if Labour get in this will go up,

    We have 90% of all families in NZ paying no income tax when you take into account WFF..

    It is bold poltical move; but it is also bold nonsense to think that CGT will promote growth in the economy.

    CGT will be able to be avoided by passing the said investment ppty/asset onto ones family as part of an inheritance.

    So when this all rolls out at the time in the distant future when Labour eventually get re elected - and it is found not to work in the way that "they" want it to - then what next? Poll Tax.

    Let us tax our way towards growth - Yeah right. It will appeal to Labour Stalwarts and not be trusted by swinging voters.

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • Sacha, in reply to DexterX,

    the over reach of WFF and the depressive effect that it has had on wage bargaining

    You may have the causality backwards. If pay rates as a proportion of total company profits and productivity improvement had even stayed the same over the past few decades, a wage subsidy would never have been proposed.

    Ak • Since May 2008 • 19740 posts Report Reply

  • Russell Brown, in reply to Sacha,

    the over reach of WFF and the depressive effect that it has had on wage bargaining

    You may have the causality backwards. If pay rates as a proportion of total company profits and productivity improvement had even stayed the same over the past few decades, a wage subsidy would never have been proposed.

    I'd have to say you're both right.

    Auckland • Since Nov 2006 • 22848 posts Report Reply

  • DexterX, in reply to Sacha,

    After 9 years of Labour back pay was not guaranteed and if you are under a collective agreement you lost the right to take industrial action.

    Add to this that workers in belonging to a union actually cede their right to be consulted on bargaining and a wide range of measures to union executives.

    The political interference from Labour over 9 years really “killed” of the ability of workers to get a fair shake - IMHO.

    You have a situation where even if there is a bargaining process agreement, which provided for workers are to be consulted, they do not need to be consulted. The union executive could reach an agreement.

    The industrial relations environment was poor under Labour and it is about to get a lot worse under National.

    The thing about WFF is that it was sustainable when the economy was fed by the borrowing fuelled growth that underpinned the GFC – but that was then and this is now.

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • Craig Ranapia,

    Hum...

    Collectables

    Collectables, such as jewellery, antiques, artwork, rare folios or stamp collections and the like will be exempt from the CGT.

    A CGT that included collectables would be intrusive, result in high compliance costs, and would not raise significant revenue.

    Why shouldn't right-wing rich-pricks support this? The yacht ("personal use asset", don'cha know?), mother's pearls and the McCahons are safe from the filthy taxman!

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • FletcherB,

    I love the fact people are complaining that boats arent included.... when has a boat EVER gone up in value? Where are all the people getting rich from boat speculation?

    dont forget that old joke.... the definition of "boat" is a hole in the water you pour money into...

    West Auckland • Since Nov 2006 • 893 posts Report Reply

  • BenWilson, in reply to FletcherB,

    Mine lost money before it ever even made it to the water.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Raymond A Francis,

    If this is not an envy tax but a way to allow/encourage citizens to make better financial decisions, why are gambling gains tax free
    Just crazy and why an exemption for small business but not agriculture, again "let's stick it to people who don't vote for us"
    And now never will

    45' South • Since Nov 2006 • 578 posts Report Reply

  • DexterX, in reply to Raymond A Francis,

    touche.

    Auckland • Since Nov 2006 • 1224 posts Report Reply

  • Kyle Matthews,

    We have 90% of all families in NZ paying no income tax when you take into account WFF..

    Umm, do you have a source for that?

    Since Nov 2006 • 6243 posts Report Reply

  • Islander, in reply to Kyle Matthews,

    I'd really love to know a source for that (totally outrageous )figure also...
    Raymond A Francis- envy tax? Nope. Just the justifable resentment at seeing a certain sector get away with paying very little tax - and getting a huge profit upon retirement & sale of their property. And the joy that they now could be stuck with the kind of tax the rest of us actually pay-

    Big O, Mahitahi, Te Wahi … • Since Feb 2007 • 5643 posts Report Reply

  • Sacha, in reply to Kyle Matthews,

    do you have a source for that

    Misinformation has flourished since the CGT announcement, helped along by Farrar and co and faithfully rebroadcast by the credulous. Danyl debunks some of it.

    Ak • Since May 2008 • 19740 posts Report Reply

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