National Tinkers while Auckland Property Prices Burn
When it comes to tax cuts for the rich; state asset sales; slashing public services; and corporate welfare – National can move at relativistic velocities that Einstein concluded were beyond the realms of physical laws in our Universe.
When it comes to social problems like child poverty; increasing greenhouse emissions from agriculture; and a housing crisis in Auckland (denied again, recently, by our esteemed Prime Minister) – the National government can tinker and prevaricate in ways that would do a two year old, at an early childhood centre, proud.
It has opposed, resisted, condemned, criticised, and generally done everything within it’s power not to implement any form of capital gains tax in this country. Suggesting to National that a CGT could be one tool (of many) to quell housing speculation in Auckland has been like inviting a Vegan to a spit-roast barbecue.
Belatedly, as is usual for this government, after considerable pressure from multiple political, community, business, and state sectors, Key has decided to move – albeit at a glacial pace, and with a tentative single step – to introduce a limited Capital Gains Tax.
Introducing a new bright line test to tax gains from residential property sold within two years of purchase, unless it’s the sellers main home, inherited or transferred in a relationship property settlement.
As Key explained;
“It’s not unreasonable to expect that if you buy an investment property and sell it for a gain within two years, then you should be taxed on that gain.”
Fair enough to. It is not unreasonable, especially when the rest of us have no choice but to pay tax on all our other earnings, whether it be as a wage-slave; self-employed; retailer; contractor, etc, etc, etc, etc, etc…
Even property investors admit it is fair, as NZ Property Investors’ Federation CEO, Andrew King, pointed out;
“As we have been saying for years, people trading property have always had to pay tax on their profits and this move will help to clarify this. This should finally put to rest all the unfounded comments from people who say that property has a tax advantage.”
But – two years is the “bright line”?!
So, property speculators/investors who sell their assets in, oh, say, two years and one day are safe?
I’m sure this has escaped the attention of every property speculator/investor in the country. Plus their accountants. Plus tax specialists. Plus the chap who mows the lawns.
Shhhh! Be vewy, vewy quiet! Don’t tell anyone.
As long as no one knows of the two year “bright line”, the law is “perfectly workable”…
Tinkering – best left to a National government. They are expert at it.
Fairfax media: No housing crisis in Auckland – John Key
Bowalley Road: The Least They Could Do
Gordon Campbell on the government’s belated moves on property speculation
No Right Turn: Winning the argument on taxing capital gains
The Dim Post: Progress
The Standard: CGT – the focus groups made Key do it
The Standard: Capital gains tax to be introduced
The Standard: Herald praises Cunliffe for CGT policy
Previous related blogposts
This blogpost was first published on The Daily Blog on 21 May 2015.
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