A Capital Gains Tax?
Ok – hands up all those who think it’s a really, really neat idea;
The Dominion Post
Herald on Sunday
plus Academics, tax experts, economists, and Treasury (Source: Tumeke)
Hmmmm, not bad.
Ok, who is against it?
The National Party – which is hardly surprising, considering the vested interests that National MPs currently have, in property investments.
Landlords – fair enough, I guess. Turkeys are hardly likely to vote for an early Christmas, I guess. Not that I’m calling landlords “turkeys”. Most of them are quite nice folk. Although landlords might pause to consider; do they really want to be seen by the rest of society – who pay their fair share of taxes (some more than one form of tax) – as bludging of taxpayers, and expecting some sort of special, divine-inspired, tax exemption?
Believe me, folks; you don’t want to rark-up the Angry Mob. Just ask Ian Wishart.
ACT – Although in a speech which Brash gave in 1998 (as Reserve Bank Governor) he spoke about the tax advantages of property investment:
“It is not at all clear to me why, given an already-strong tendency for New Zealanders to invest in property, we should give special tax advantages to that form of investment.” – Source
Although what he sez/thinks now is anyone’s guess. We know he doesn’t like Maori. Which ain’t that helpful in this debate.
Basically, what the whole CGT issue boils down to is two points:
Point One: Fairness
We all pay taxes. Whether you’re the bloke/blokette running your local fish & chip takeaway – or Fletcher Construction; whether you are a sex worker or the Prime Minister; whether you have $1 or $1 million in a bank account – we all pay taxes.
So why a specific sector of the economy should be exempt from paying tax… well, there is no real clear reason. None that makes any sense. (Well, there is the matter of greed. That kinda makes sense.)
Point Two: Market Distortion
As sure as Evolution made Little Green Apples, if we allow one part of the economy an advantage over the rest, then the money will flood to where that advantage provides best return. As Ganesh Nana (BERL) said today on National Radio this morning (15 July), it’s like having holes on a sporting field. (Mixing of metaphors a bit.)
Hence why New Zealand has suffered housing booms; money moves to where investors can get the best, tax-free return, and that is property. So with Supply & Demand being what it is, prices rise, and we have a “bubble/boom”.
This means that effectively we are pricing homes out of the reach of our children. (Home ownership has dropped remarkably in the last twenty years, as affordability worsens.)
On top of that, the Reserve Bank – faced with rising house prices and creating inflationary pressures – is forced to raise interest rates, to dampen demand.
This makes like for our farming, industrial, and business sector hellish, as they cost of borrowings rises. The most productive sector of our economy pays the price because of a glaring anomaly in our economy.
So a capital gains tax makes sense. National opposes it, of course, because they don’t want Labour to gain benefit from a sound. sensible policy. So for the benefit of beingf re-elected on 26 November, National is prepared to play politics with this very-real fiscal problem.
Definitely not good.
Will voters support Labour and an introductionfor a CGT?
Considering how voters supported Muldoon in 1975, which saw the canning of Labour’s superannuation fund (bribed with our own money), I’m not terribly reassured. The public have a track record for making the wrong collective decisions, and then wondering why we are up Sh*t Creek with no paddle, as a consequence.
Go on, New Zealand. Prove me wrong.