Labour conference votes to look more at Capital Gains Tax and wealth tax, but Policy Council seen leaning towards CGT; Luxon says Govt relearning 'laws of economics' from 35 years ago
Good summary of weekend ! On body of article was this an error ‘in which he said Labour would join AUKUS’. Clarified in sentence directly after and below.
Labour has drifted so far from its union origins, they are now just National with a faint whiff of socialism. The wealthy will never vote for them, yet they seem so loathe to risk alienating them. Very disappointing.
Labour needs to target the income from a cgt into things that benefit the blue 🔵 rinse set ie health and education. The message needs to be compelling.
They could invest some of the CGT tax take into offering everyone the first $10k you earn being tax-free which would be an automatic vote winner. Give the GST from rates to the councils as well stipulating it needs to be used on water infrastructure etc
Instead Hipkins comes up with removing tax off fruit & vegetables at the last election as his big prospective vote winner, what a joke & no wonder Grant Robertson walked away.
Labour needs to learn from the Democrats experience in USA. All their former voters in the rust belt want jobs and financial security. Also Labour in NZ has enough university trained MP's and should be looking to welcome people educated in the university of life as potential MP's.
An exceptionally powerful message is necessary to cut through the culture wars distraction ecosystem. Especially as the business cycle in NZ well very may be on the up by 2026. A mild CGT and timid third-way tinkering is not going to inspire.
There were quite a few union- and worker-oriented policies passed for further consideration in the manifesto process. Returning to awards via Fair Pay Agreements was also massive for unions even if it was immediately repealed.
With respect to National Infrastructure Funding and Financing Limited (NIFFCo) - rhetorically, why would a currency issuing government seek money from private ( profit taking) partners to build infrastructure?
Modern Monetary Theory teaches that a currency issuing government has a monopoly on the creation of its currency and creates new currency when it spends. It can create as much currency as it likes, the constraint on its spending is inflation. It can therefore afford to buy anything that is for sale in its currency if it so wishes, and has no need to borrow ( that which it solely creates) to finance its spending.
Modern Monetary Theory teaches that currency issuing Governments don't actually spend taxpayers money, but that requires a more technical argument. I see this as a way to allow private finance to profit from financing these projects, and this will be more expensive than if the govt financed these projects itself. The cost to govts of creating new money is zero, but private finance will require a return. Its also likely to end up imposing further user costs (eg road tolls) to "justify " the return of these costs to the financiers. Its also a way to be seen to be keeping the govt small which will appeal to many. Of course private contractors will do the work in either case and that will be good for them, for employment, for the govts tax take.....
I don't know why people continue to talk about a CGT. Just make it so that any business must pay tax on any profit it makes. So, a business that buys a rental property, earns rent, claims interest on the mortgage, etc should then declare the net sale price (property sale income less purchase price) as income. No CGT - just business income and expenditure.
This also gets rid of the fearmongering about the family home being liable because it isn't a business and so any gain when sold isn't taxable.
Fine, if they are genuine family homes. Running a property as a rental for 4 years, then moving into it for a year as the family home. Sounds like tax evasion to me.
Let’s go for wealth tax AND a CGT! Are we ready for an onslaught from Atlas affiliates trying to inspire fear regarding tax, it began with Nicotine Willis being ushered into the news item (on 1News) covering Labour’s conference
A good disincentive to land and housing speculation. I feel like a specific land and housing tax payable on sale (rather than on purchase like stamp-duty) if the proceeds of sale are not reinvested within x months into the same class of asset, might be good to make these strategic national assets unattractive to speculators.
For Labour to talk about CGT or any revision to the tax policies will require very clever messaging. The right and any one with property and/or land investments will scream blue murder at the very suggestion.
Can we trust Chippy to manage this? Todays RNZ Morning Report did leave me underwhelmed. To mention Dunedin Hospital build and other items then when challenged about taxes for him to say that tax policy has to be discussed and decided in the future is NOT what is required for good messaging!
They have had a year to sort this out! David Parker had a plan and policy outlined in a good, clear detail.
Why are Labour so useless when it come to messaging that explains why a tax realignment to pay for public services is necessary in NZ!
Here’s Hipkins’ full speech to the conference (22 mins onwards), in which he said Labour would [not] join AUKUS, and his news conference afterwards (1:11 onwards), in which he appeared to confirm a Labour Government would pull New Zealand out of AUKUS if National had committed to it in Government.
Can we talk about taxing church owned businesses and indeed churches themselves. Instead of taxing “ordinary” kiwis can we tax apple google etc and can we definitely tax church or religious owned businesses. Ok and maybe at least the second or third properties in a portfolio for capital gains tax. We do need tax it’s a basic contribution to any society and needs to fairer than our current system but perhaps there are other ways to broaden our tax base. Churches, decriminalising drugs and taxing them it doesn’t all need to be about the middle class or the mega wealthy, does it ?
Church-owned businesses. Fine. The Anglican and Catholic churches are very economically stretched due to falling congregations. Parishes have amalgamated and spare churches sold off. Many formerly rent-free properties are now sold into private ownership and paying their way. Anglican churches are losing their sweeping lawns in favour of building accommodation for those for low incomes.
Like Ben above, I am so sick of the navel gazing, and pontificating in relation to CGT when it is so clearly needed. Do you think ACT sat around dithering backwards and forwards before deciding the interest deductibility was a non-negotiable for them? No, they just did it. No more tax working groups, please. The right is so decisive, and is getting things done (albeit evil things).
Meanwhile, the left are just completely left in the dust. Labour should announce it’s going to remove interest deductibility if it gets back in, with whatever percentage we were at previously put in place, with the planned reductions to follow. At the very least, it will introduce uncertainty for investors and minimise their impact on the housing market (in some small way). These long lead in times means nothing ever happens. Is Labour just going to put interest deductibility in the too hard basket? I just want someone to show some leadership and direction in that party.
Agree ++. It seems they keep emptying the button box to enjoy sorting them out in different ways over and over again. Its so infuriating, so futile, so timid, so preschool. Their has to be action - adult action with enough backbone to deal with whatever happens. Please!
The only ‘fact’ in the whole piece on the economy was that his landlord friendly policies are good for renters because rents haven’t increased during his tenure. Never mind that properties are scarce which will inevitably mean that rents will increase in the long run. In the meantime all we get from Luxon is ‘ What I say to you is …’ and ‘ actually…actually….actually.’
I always find these “excluding the family home” carve outs annoying. Surely we need a tax base that targets something a little wider than then 1%. I’m not trying to trot out the old capital flight argument, more that if we want a CGT to change the incentives in our economy, then it probably needs to impact a larger portion of people.
It reminds me of Labour adding the new top income tax threshold. It wasn’t even projected to raise a billion. But we need billions!
I agree. I just want one rule for all property transactions. In NSW, stamp duty applies to all homes (including family homes). Even though it hasn’t helped reign in house prices, it has provided a critical funding stream for public services. I lived in Sydney for a year and the public services there put us to shame. In 2021, it added an unexpected 9.3 billion dollars to the tax take. We could learn something. https://amp.abc.net.au/article/100229554
Absolutely, this "one rule for all property" is so important is so important to stop this being just another way to game the system! Glad it's been successful elsewhere.
If that’s all Labour can come up with after a year of the conservative coalition pulling the country down around our ears and piling treasure in their own chests then I’m afraid I’m not inspired with confidence.
A mild, mild response to a radical reshaping of the country. Where’s the vision? National are demolishing the public health system, what’s Labour’s alternative?
Labour Party process is that party members put forward policy ideas for consideration and work. The party leadership knows better than to announce big ticket policies until that process and work has been done.
The problem is NOT because we've "forgotten the the lessons from 35 years ago", the problem is we are allowing generational trauma from that time to affect our policies today, without the will to adapt. We find ourselves stuck in a mental & economic rut because of it.
Also! Christopher Luxon has proven himself wrong. He has increased our government debt & inflation in NZ has still come down. I don't know why Kiwis don't realize that.
Yes. It is currently lower in Australia. And they didn’t have to endure the medicine as had shoved down our throats. What was the point of it all if inflation was just going to come down anyway.
The most important point to remember about the lessons from 35 years ago, is never, ever, repeat the recipe. The result then was half baked and diseased many people. Same recipe is producing the same result today.
The lesson from 35 years ago was that people were so disgusted with Ruth Richardson's austerity policies that they nearly made that government a one term wonder. Bolger, the PM was saved from defeat only through the distortions of FFP. If MMP had applied to the 1993 election, Richardson, Bolger, etc. would have been out on their arses after 3 years. Luxon & Willis are too arrogant & stupid to understand this.
A 'CGT excluding the family home' is just the status quo doing jazz-hands! If we were to implement a CGT today nothing would change. Any meaningful CG would be accounting/lobbying/hidden-awayed by the properly-wealthy, and so it would only be actually paid by the shrinking class of 'mum and dad' investors. And, for that pittance, we would pay massive amounts in compliance and policing, not to mention political risk... The flip side of us being the only "first world" [sic] country without a CGT is that we can clearly see how much capital gains taxation is failing to stem the growing wealth gap in similar countries. A (universal) land value and/or automatic financial-transaction tax is the actual adult answer to our tax question.
Good summary of weekend ! On body of article was this an error ‘in which he said Labour would join AUKUS’. Clarified in sentence directly after and below.
Sorry. My fault. Fixing now
Labour has drifted so far from its union origins, they are now just National with a faint whiff of socialism. The wealthy will never vote for them, yet they seem so loathe to risk alienating them. Very disappointing.
Labour needs to target the income from a cgt into things that benefit the blue 🔵 rinse set ie health and education. The message needs to be compelling.
They could invest some of the CGT tax take into offering everyone the first $10k you earn being tax-free which would be an automatic vote winner. Give the GST from rates to the councils as well stipulating it needs to be used on water infrastructure etc
Instead Hipkins comes up with removing tax off fruit & vegetables at the last election as his big prospective vote winner, what a joke & no wonder Grant Robertson walked away.
Yes, they had a literal majority in an MMP system and did nothing. They have drunk the neoliberal Kool aid. Just like National.
Labour needs to learn from the Democrats experience in USA. All their former voters in the rust belt want jobs and financial security. Also Labour in NZ has enough university trained MP's and should be looking to welcome people educated in the university of life as potential MP's.
An exceptionally powerful message is necessary to cut through the culture wars distraction ecosystem. Especially as the business cycle in NZ well very may be on the up by 2026. A mild CGT and timid third-way tinkering is not going to inspire.
There were quite a few union- and worker-oriented policies passed for further consideration in the manifesto process. Returning to awards via Fair Pay Agreements was also massive for unions even if it was immediately repealed.
What did Labour lose when Big Norm died too soon? Any wisdom to be scooped up from him?
This is true - but some would say that some unionsand union officials have also drifted from their union origins
With respect to National Infrastructure Funding and Financing Limited (NIFFCo) - rhetorically, why would a currency issuing government seek money from private ( profit taking) partners to build infrastructure?
I like the question.
Any answers for this economic illiterate.
Modern Monetary Theory teaches that a currency issuing government has a monopoly on the creation of its currency and creates new currency when it spends. It can create as much currency as it likes, the constraint on its spending is inflation. It can therefore afford to buy anything that is for sale in its currency if it so wishes, and has no need to borrow ( that which it solely creates) to finance its spending.
Excellent.
Maybe we could buy a banner and fly it over Wellington, Auckland once a week until 2026
This is just another technique of moving money from the poor (taxpayers for the most part) to the rich (private,profit taking company owners)
Modern Monetary Theory teaches that currency issuing Governments don't actually spend taxpayers money, but that requires a more technical argument. I see this as a way to allow private finance to profit from financing these projects, and this will be more expensive than if the govt financed these projects itself. The cost to govts of creating new money is zero, but private finance will require a return. Its also likely to end up imposing further user costs (eg road tolls) to "justify " the return of these costs to the financiers. Its also a way to be seen to be keeping the govt small which will appeal to many. Of course private contractors will do the work in either case and that will be good for them, for employment, for the govts tax take.....
So much tax navel gazing from Labour. Grass grows faster
I don't know why people continue to talk about a CGT. Just make it so that any business must pay tax on any profit it makes. So, a business that buys a rental property, earns rent, claims interest on the mortgage, etc should then declare the net sale price (property sale income less purchase price) as income. No CGT - just business income and expenditure.
This also gets rid of the fearmongering about the family home being liable because it isn't a business and so any gain when sold isn't taxable.
And a succession of "family homes"? A new one every five years?
Fine, if they are genuine family homes. Running a property as a rental for 4 years, then moving into it for a year as the family home. Sounds like tax evasion to me.
David Parker called it Capital Gains Income. Not sure why this wasn't mentioned. I'll have to ask my Labour Party insiders.
Then the law just has to be changed so anyone renting a property to others must have a company that owns the property.
Doesn't sound like a bad idea to me. It might make some people think twice before doing it.
Let’s go for wealth tax AND a CGT! Are we ready for an onslaught from Atlas affiliates trying to inspire fear regarding tax, it began with Nicotine Willis being ushered into the news item (on 1News) covering Labour’s conference
You forgot to add inheritance tax. And restrictions on political donations, including only registered voters can donate.
and re-look at stamp duty
A good disincentive to land and housing speculation. I feel like a specific land and housing tax payable on sale (rather than on purchase like stamp-duty) if the proceeds of sale are not reinvested within x months into the same class of asset, might be good to make these strategic national assets unattractive to speculators.
For Labour to talk about CGT or any revision to the tax policies will require very clever messaging. The right and any one with property and/or land investments will scream blue murder at the very suggestion.
Can we trust Chippy to manage this? Todays RNZ Morning Report did leave me underwhelmed. To mention Dunedin Hospital build and other items then when challenged about taxes for him to say that tax policy has to be discussed and decided in the future is NOT what is required for good messaging!
They have had a year to sort this out! David Parker had a plan and policy outlined in a good, clear detail.
Why are Labour so useless when it come to messaging that explains why a tax realignment to pay for public services is necessary in NZ!
Yes ,Until David Parkers tax ideas are made policy I will not be returning to Labour !
Is this missing a "not"?
Here’s Hipkins’ full speech to the conference (22 mins onwards), in which he said Labour would [not] join AUKUS, and his news conference afterwards (1:11 onwards), in which he appeared to confirm a Labour Government would pull New Zealand out of AUKUS if National had committed to it in Government.
Believe it when I see it. Problem for Laour is they are terrible at explaining on how it'll make government services and kiwis lives better.
You are correct, they have major issues with their messaging, & they need to do it in a brif "zingy" way for the message to catch on with voters.
But not so brif that’s its unintelligible, unrelateable, or uninspiring.
Can we talk about taxing church owned businesses and indeed churches themselves. Instead of taxing “ordinary” kiwis can we tax apple google etc and can we definitely tax church or religious owned businesses. Ok and maybe at least the second or third properties in a portfolio for capital gains tax. We do need tax it’s a basic contribution to any society and needs to fairer than our current system but perhaps there are other ways to broaden our tax base. Churches, decriminalising drugs and taxing them it doesn’t all need to be about the middle class or the mega wealthy, does it ?
Church-owned businesses. Fine. The Anglican and Catholic churches are very economically stretched due to falling congregations. Parishes have amalgamated and spare churches sold off. Many formerly rent-free properties are now sold into private ownership and paying their way. Anglican churches are losing their sweeping lawns in favour of building accommodation for those for low incomes.
Like Ben above, I am so sick of the navel gazing, and pontificating in relation to CGT when it is so clearly needed. Do you think ACT sat around dithering backwards and forwards before deciding the interest deductibility was a non-negotiable for them? No, they just did it. No more tax working groups, please. The right is so decisive, and is getting things done (albeit evil things).
Meanwhile, the left are just completely left in the dust. Labour should announce it’s going to remove interest deductibility if it gets back in, with whatever percentage we were at previously put in place, with the planned reductions to follow. At the very least, it will introduce uncertainty for investors and minimise their impact on the housing market (in some small way). These long lead in times means nothing ever happens. Is Labour just going to put interest deductibility in the too hard basket? I just want someone to show some leadership and direction in that party.
Agree ++. It seems they keep emptying the button box to enjoy sorting them out in different ways over and over again. Its so infuriating, so futile, so timid, so preschool. Their has to be action - adult action with enough backbone to deal with whatever happens. Please!
Can anyone decipher what luxon is saying? I am unable to wade through the waffle to the facts
What he's saying to you is...
Quite simple to follow Luxon - there are no facts, it is all waffle and falsehoods
The only ‘fact’ in the whole piece on the economy was that his landlord friendly policies are good for renters because rents haven’t increased during his tenure. Never mind that properties are scarce which will inevitably mean that rents will increase in the long run. In the meantime all we get from Luxon is ‘ What I say to you is …’ and ‘ actually…actually….actually.’
I always find these “excluding the family home” carve outs annoying. Surely we need a tax base that targets something a little wider than then 1%. I’m not trying to trot out the old capital flight argument, more that if we want a CGT to change the incentives in our economy, then it probably needs to impact a larger portion of people.
It reminds me of Labour adding the new top income tax threshold. It wasn’t even projected to raise a billion. But we need billions!
I agree. I just want one rule for all property transactions. In NSW, stamp duty applies to all homes (including family homes). Even though it hasn’t helped reign in house prices, it has provided a critical funding stream for public services. I lived in Sydney for a year and the public services there put us to shame. In 2021, it added an unexpected 9.3 billion dollars to the tax take. We could learn something. https://amp.abc.net.au/article/100229554
Absolutely, this "one rule for all property" is so important is so important to stop this being just another way to game the system! Glad it's been successful elsewhere.
Agreed. All properties should have stamp duty and CGT as a minimum.
If that’s all Labour can come up with after a year of the conservative coalition pulling the country down around our ears and piling treasure in their own chests then I’m afraid I’m not inspired with confidence.
A mild, mild response to a radical reshaping of the country. Where’s the vision? National are demolishing the public health system, what’s Labour’s alternative?
I despair. They just don’t get it.
Labour Party process is that party members put forward policy ideas for consideration and work. The party leadership knows better than to announce big ticket policies until that process and work has been done.
The problem is NOT because we've "forgotten the the lessons from 35 years ago", the problem is we are allowing generational trauma from that time to affect our policies today, without the will to adapt. We find ourselves stuck in a mental & economic rut because of it.
Also! Christopher Luxon has proven himself wrong. He has increased our government debt & inflation in NZ has still come down. I don't know why Kiwis don't realize that.
Yes. It is currently lower in Australia. And they didn’t have to endure the medicine as had shoved down our throats. What was the point of it all if inflation was just going to come down anyway.
The most important point to remember about the lessons from 35 years ago, is never, ever, repeat the recipe. The result then was half baked and diseased many people. Same recipe is producing the same result today.
The lesson from 35 years ago was that people were so disgusted with Ruth Richardson's austerity policies that they nearly made that government a one term wonder. Bolger, the PM was saved from defeat only through the distortions of FFP. If MMP had applied to the 1993 election, Richardson, Bolger, etc. would have been out on their arses after 3 years. Luxon & Willis are too arrogant & stupid to understand this.
A 'CGT excluding the family home' is just the status quo doing jazz-hands! If we were to implement a CGT today nothing would change. Any meaningful CG would be accounting/lobbying/hidden-awayed by the properly-wealthy, and so it would only be actually paid by the shrinking class of 'mum and dad' investors. And, for that pittance, we would pay massive amounts in compliance and policing, not to mention political risk... The flip side of us being the only "first world" [sic] country without a CGT is that we can clearly see how much capital gains taxation is failing to stem the growing wealth gap in similar countries. A (universal) land value and/or automatic financial-transaction tax is the actual adult answer to our tax question.