Speaker: The Voyage: Dutch Disease – Fatal to Innovation
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Will have a look when I get home. I think tax working group provided some figures.
I don't think cgt comes close in amount raised and therefore in ability to change model
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Not much. Just more and funds to central govt.
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Stephen Judd, in reply to
I don’t believe forcing anyone who is not wealthy off land they cannot crowbar into constant dollar-making would be the way to change this :)
LIKE
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http://www.victoria.ac.nz/sacl/cagtr/pdf/tax-report-website.pdf
Here is the Tax Working Group's final report from 2010. They came down favouring land tax though at a lower level than I would aim it. They suggested .5% land tax could raise up to $2.3b. I would aim higher with the intention of lowering other taxes (income or GST) in a really meaningful way.
I recognise there will be adjustment pain for some but there ALWAYS will be when a fundamental shift in economic model occurs. I don't think the current system is fair, and concentrating on the pain felt by those who have a vested interest in the status quo gets us nowhere.
Maybe I live in too simple a world, but I reckon there is a good way to identify the 1%. They own all the land.
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Matthew Poole, in reply to
I reckon there is a good way to identify the 1%. They own all the land.
Maybe, maybe not. Our 1% is actually a very low-level club - income of a mere $350k will gain you entrance. We pay our politicians so much that the PM is a member by dint of his Parliamentary salary alone.
Land ownership in NZ is not anywhere near as concentrated as you seem to believe. Well over 25% of the population hold title to at least one residential property. Doesn't sound much like a way of identifying the 1% to me.
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Islander, in reply to
Maybe I live in too simple a world, but I reckon there is a good way to identify the 1%. They own all the land.
Nope. Kai Tahu *as an iwi* own a lot of South Island land - but we are many.
We sure as shit arnt any part of the "1 percent"- -
$350k? Seriously? I would have thought it MUCH lower than that. Would be interested in a reference.
But it also speaks to my concerns - we concentrate all our efforts on income without really trying to identify wealth beyond that.
I also think most of that 25% would be better off under my regime. 2% land tax on a $400,000 plot of land is $8k p.a. (for example). Could easily lower taxes for a lot of people by that much (say introduce a significant chunk of tax free income at the base).
On the other side, Shania Twain and James Cameron would suddenly start paying some NZ tax (in addition to the GST I am sure they already pay).
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Sam M, in reply to
Yep, I agree there is a need to address Maori Trust owned land - that is tricky. And conservation land as well, and I am sure there are others. There would be SOME exemptions. Though I'm not sure how they would be chosen. There are Maori trusts in the North Island who make a lot of money from their land.
But in some ways, it just speaks to the need to be able to accurately value the land (in pakeha economic terms, for this purpose!). If it has very low economic value, the cost of the impost will reflect that.
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I wish I could see past my narrow self-interest on this one :)
We are classically ‘asset-rich, cash poor’. Not because we sank loads of money into property: it’s a family property, and it was bought way-back when land prices- for marginal farming land- were very low.
Due to the boom in real-estate prices over the last 15-odd years, particularly coastal land- which bears little to no relation to productivity, and which I seriously wish had not happened- even a 0.5% land tax could force us off our home.
That might leave us well off. If our first life-priority were to always look for the best way to rationalise our finances, we’d have sold up, cashed in, years ago.
But we happen to love it, feel connected with it, and to have put a lot of ourselves into it, in ways which may not be in our ‘rational self-interest’ but which have been rewarding- enriching.
Previously it was mob-stocked for about 3 months of the year (by the current Minister of Ag, as it happens), and otherwise left as a real-estate investment. It’s steep, erosion-prone, with some good soil, but some poor soil too. Also very prone to drought.
We’ve planted more than 25,000 exotic/timber trees (ok, contracters did a lot of it) and 12,000 natives (much lower survival rate, though). We’ve built fences and tracks and sheds and a house; put in troughs and tanks and pipes. We’ve seen korimako and kereru return- an explosion of bird numbers.
We’ve put a fair swag of our single income into the place (it’s the opposite of profitable) and we still feel lucky. We are.
I very selfishly can’t see past the part of a land tax that would force us to sell it to someone much richer. Probably a ‘developer’ who would twist the council’s arm, and offer them parks and roads and other delights, til he/she could carve it up into dinky little bits and make gazzilions! of lovely $$$$$$$$$$$$
But- I also don’t believe Land Tax is the right model for land-ownership, or taxation. I want us to be able to value land for more than its ‘productive’ ($$$) return. I still want NZ to be a place where most people own their own home.
House-prices in the last 15 years have killed that. We have to stop the nonsense of borrowing billions from overseas to bid up each others house/land prices. Shifting those billions out of our house-mortgages and into ‘productive investment’ isn’t easy or painless, but it needs to be done. I don’t have a lot of ideas about how to best do this- but am convinced a broad CGT is the first step.
Wringing more and ever more out of the land? Not the way forward. -
I wonder if a different tack on property might be possible and I'd like to know why this would/wouldn't feasible. Two problems with a property credit boom are that we wind up as a country paying billions overseas in interest and our dollar rises hurting our exports. Now hypothetically consider what would happen if the money used internally for property was funded though a temporary 'quantitive easing' in partnership with offshore funding to keep things sane. So borrow 500k for your house in Auckland and 250k comes as magic government money and 250k comes from other sources. The magic government money earns interest (at the same rate as the other money) until it is repaid, and as capital is repaid it is destroyed. So at the end of the mortgage the magic money is incinerated and the books balance, but half the interest has stayed in NZ. The temporary increase in money supply has helped keep the dollar neutral during the boom and exports aren't as badly hit. In fact a property boom would provide a heap of tax dollars that could be used to address supply (maybe in some other universe I guess). Am I being naiive?
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Ian Dalziel, in reply to
Am I being naiive?
Well you're definitely not one 'i'ed about it...
" - )But you lost me at 'magic money'
after that it feels like a shell game... -
Matthew Poole, in reply to
$350k? Seriously? I would have thought it MUCH lower than that. Would be interested in a reference.
It was in a break-down of how various household compositions have been affected by National's tenure. Green Party, I think.
And lower? Really? 1% in the US is about USD750k. Our 1% level is extremely low by OECD standards, proving conclusively that we're a low-wage economy (and that Key's PM salary is about 1/3 above the 1% rate shows how over-paid our politicians are). -
Further to add, Norway was one of the few countries to have averted the Dutch Disease – by establishing the Folketrygdfondet sovereign fund – and they’ve never looked back.
Like him or hate him, Tony Benn had similar plans for Britain’s North Sea oil revenues, and Norm Kirk here in NZ with the Compulsory Super Fund. Both schemes became victims of political tunnel vision and didn’t survive their architects’ term in office.
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Andrew C, in reply to
A bad idea for several reasons:
At least part of the idea of a Financial Transaction tax is to STOP the speculation from happening in the first place (slims margins). So the fact it moves away etc and doesn't generate lots of tax doesn't mean it hasn't done its job, in fact quite the opposite.
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