30% of dairy farmers in Southland & Otago still without power five days after wild winds flattened power poles; Locals surprised & farmers scramble for diesel generators; Labour goes for CGT-lite
Whatever you think of a CGT it wouldn’t raise much if any revenue. For most of the last 40 years interest rates were dropping - all you had to do for capital gain was hold an asset. Now we live a a world of fluctuating interest rates so holding an asset is not a one way bet. Along with the exemptions this shift means there is no stable CG tax base
Yet the current Min of Finance claimed this morning that Labour's CGT would "put the economy at risk." This seems unlikely, if it is actually going to be ineffectual.
To be fair, the persistently-bored-sounding MoF spouted an awful lot of drivel this morning, including the strident implication that *every* small business and KiwiSaver account in the country was going to be utterly devastated by this hurricane of tax ripping through the economy and eviscerating (perhaps, up to, if we're lucky) 0.3% of GDP...
If the CGT "lite" will be so ineffectual why did the present regime hasten to scrap the Brightline test and reinstate tax deductions on interest on loans for residential investment properties worth billions of dollars in lost revenue for the government. And let's face it, the attraction of investing in residential properties for so many has historically been the expectation of a massive capital gain on sale.
the BIG failure of Hipkins is that the Labour party is not going to stop residential rental property owners from being allowed to deduct their mortgage interest from their income before their tax payable is calculated. That is now about 3 BILLION dollars a year of lost revenue for the government.
If they do, they have to also freeze rents, otherwise renters will carry the cost, like last time. However that in itself would deter landlords from buying up homes, so first home buyers might stand a chance again.
Interesting to see you here Bill. You can’t claim to be politically neutral if you are the actual former prime minister! It’s not right when you say a Capital Gains tax won’t raise much revenue. In fact a CGT will raise a consistent amount of revenue over time. Every year!
It will challenge our generation, Bill, with the vast number of extra homes owned past the family property. These houses are the resting place of cash missing the tax collectors. We (our generation) have been greedy and, as Bernard has said so many times, we now have a housing market with an economy clipped on. I would go further if I were still in the Labour Party and push for a death duties tax of 15%. That would mop up much of what our generation have gained from tax free capital gains and repay the state for what should have been paid through as fairer tax system.
To be fair, if I hadn't received a moderate inheritance from my parents I'd probably be renting or homeless right now, and I'm not the only pensioner in that situation. Inheritance tax can come with considerable fish hooks and many, many opportunities for avoidance. It would need to be very carefully draughted to avoid these potholes.
My small family inheritance came from the UK, where it is taxed, but the family home is exempt up to a certain amount (I think equivalent now to about NZ$1.4M). That allows for reasonable residences, at today's prices, to pass on untaxed (usually enabling mortgage paydowns for the family), and taxes properties which have accrued excessive capital gains benefits equivalent to multi-property owners. So there are ways to apply such a thing with due sensitivity. ...CGT light is a good start. (And an intro in 2027 gives fair warning!) Remember the introduction of GST? !!!
Labours tax policies are weak & disappointing. I think that's bad news for NZ because it just means a continuation of our dumb & non-productive focus on 'wealth' creation via selling houses to each other. Where are the entrepreneurs? Where are the 'Captains of Industry'? Where are the innovators?
Exactly Nick. Like the Democrats in the US and Labour in the UK, they just don't 'get' that they need to be bold (more 'left') rather than perpetuate the neoliberal status quo in an effort to appeal to an imaginary 'centre'. They, like Labour in UK, will find that they end up going down the austerity route, ultimately.
TBH I don't understand taxes well - not isn't my area.
I do notice that CGT seems like a perfectly normal unsurprising thing to have, and that the countries that tend to win the "happiest population" score are represented in the wealth-tax-having countries. (Can interpret that more than one way)
Zack Polanski had an old economics dude on his podcast who gave a nuanced and well thought -out (or so I thought) plan on how to tax ' wealth' immediately and relatively easily (in actual logistical terms) for better wealth distribution in the UK. More detailed than what Gary Stevenson offers, though I think Gary is trying to build popular momentum with a catch phrase, rather than hone in on practical specifics.
I would have liked to see a more robust CGT confined with at least some form of wealth tax. This just looks a bit pitiful and I've got to say I'm disappointed.
Capital Gains Lite again. No wealth tax. Rich win again over the 80%. No climate strategy! What do farmers have lots of? Answer :Roofs!! Animals should not have to suffer because intellectually challenged and captured group has not invested in cheap energy to look after their animals they love??
Solar panels and batteries! The smart farmers who care about their animals have done this. Not a huge expense for a million+ dollar asset. Electrify Aotearoa.
The farmers were surprised? Guess if our leaders pretend (or truly believe) climate change doesn't exist, and our media collaborate by never making the connection between extreme/more frequent weather events and climate change (as you always point out, Bernard), no wonder they are surprised.
Labour’s CGT is a start. May I ask what IS much revenue ? I remember where I was when Jacinda Adern announced “ no capital gains tax on my watch “ I found this comment arrogant just as I find not much revenue comment entitled. We need a govt that taxes to pay for the basic needs of every citizen, most especially a house to live in . It has come down to this in our country because of the timidness of governments of all ilks to disenfranchise the limited few who are wealthy . Why ? Is Labour timid - of course they are - its coming up to electioneering they would like to be able to implement their policies in this yes we can no we can’ t political system . Until politicians grow up we will always have timidity . By the way Chris free Drs visits for everybody does sound a bit weak . Good luck getting to see a dr How about more doctors who are better paid Really please get real !
The media only published the weaker part of the policy in the main headlines. The CGT is actually going to fund wider health measures as well, but of course that's at the bottom of the page as always.
Nicola Willis has been demonstrating her lack of business and taxation knowledge this morning on RNZ as she is claiming that Labour's CGT will impact small businesses in terms of the impact this will have on their business premises.
Firstly the overwhelming majority of small businesses rent rather than own the premises they operate from, and secondly business premises are considered business assets by whoever their owner is meaning they will be accounted for and already taxed relevant to appreciation, depreciation and R&M. Nicola is either intentionally lying or just economically pig ignorant.
Why would anyone ask the Minister of Finance about anything even vaguely economic - she is utterly clueless. More importantly has the Green Party been asked about this clayton's capital gains tax (compared to their own proposal).
Exactly. I'm also not interested in what David Seymour has to say about it - wish MSM would stop ringing him up at the opening of an envelope. What does Chloe say, please?
I think what you are ignoring Bill is that tax policy is also about directing investment into 'good' areas (eg productive; innovative; etc) & away from 'bad' areas like trading residential housing between our selves. If, as you say, a CGT won't raise much revenue, then it seems to me that we need some form of wealth tax to increase revenue raised, & to discourage the parking of wealth in non-productive parts of the economy
Climate change: Your comments are all valid but completely misunderstood by a part of our residents especially the farming community. The result is that some of them are hit hard with last week's weather event but would it change their mindset??? On the other hand apart from a farmer they are also abusiness owner and they should apply risk assessments and mitigation. It is clear those minimal management tools aren't either well understood by the same group.
CGT light: It is not bold enough. It should apply to each home owner who increases its mortgage for consumption purposes. The difference (increase) between old and new mortgage should be taxed as income (from the house)! Several EU jurisdictions work like that and those countries don't have an additional CGT when selling the house. The left (Democrats; Labour; Labor) should realise the only way to fight off populist right is to tax the rich.
Southland Farmers are amongst the most climate-denying in the country, and consequently don't see the need for any mitigation or provision for weather events. You could call them the thick end of the wedge.
The way the CGT has been reported is deliberately making it sound trivial IMO. What is funding is the whole health system, of which the free doctor's visits is only a part.
I'm glad you are keeping the nature pics. They are often the bright spot in a morning dose of depressingly awful news from Aotearoa and just about everywhere else.
I'm unsurprised—and yet still incredibly angry—with Labour over their CGT nonsense. Did they even bother in their discussions to consider what they might want to achieve? They must have known that National et al. were going to full-force-attack *anything* presented, so why not present something actually brave? All those doctors' visits could have been funded by cancelling a single one of the coalition's ridiculous roading projects. Instead, when my neighbour sells their holiday home for a price that includes a new 28% tax obligation, the value of my family home increases by the same amount (tax free). So, higher house prices; an easy target for National's criticism (and one people like me won't bother to defend on their behalf); and nothing they couldn't have offered us anyway! It's 1995 again Labour! You're heading for defeat, again, by a wet fart with Winston at the centre of it 🙄
But why? Even if it's not just GP visits, health (like education) costs what it costs. They are outcome-driven. All other health-related questions aside, Labour have promised free doctors' visits as part of this policy, based on securing 'extra money' from a CGT. So, what happens if no one sells their rental properties? We have to start paying to go to the GP again?? In reality, they are "hoping" to bring in $800m-odd from a CGT; and they are "planning" to offer 3 free GP visits a year to citizens. Those things are unrelated... If they were not heading down the same sort of populist-adjacent path that UK Labour have, they would have included family homes, taxed wealth/land, or—at very least—promised that every extra cent went into building public housing or something else where 'extra money' scales things beyond baseline outcomes.
Of course this will not be the only health funding. You're looking at a part and criticising the whole. This policy wouldn't have even been announced yet if some clown hadn't leaked it - and we're still a year out from elections so the full package isn't yet clear.
Whatever you think of a CGT it wouldn’t raise much if any revenue. For most of the last 40 years interest rates were dropping - all you had to do for capital gain was hold an asset. Now we live a a world of fluctuating interest rates so holding an asset is not a one way bet. Along with the exemptions this shift means there is no stable CG tax base
Yet the current Min of Finance claimed this morning that Labour's CGT would "put the economy at risk." This seems unlikely, if it is actually going to be ineffectual.
To be fair, the persistently-bored-sounding MoF spouted an awful lot of drivel this morning, including the strident implication that *every* small business and KiwiSaver account in the country was going to be utterly devastated by this hurricane of tax ripping through the economy and eviscerating (perhaps, up to, if we're lucky) 0.3% of GDP...
She's worried it'll mess up all the hard work she's done to destroy the economy
If the CGT "lite" will be so ineffectual why did the present regime hasten to scrap the Brightline test and reinstate tax deductions on interest on loans for residential investment properties worth billions of dollars in lost revenue for the government. And let's face it, the attraction of investing in residential properties for so many has historically been the expectation of a massive capital gain on sale.
the BIG failure of Hipkins is that the Labour party is not going to stop residential rental property owners from being allowed to deduct their mortgage interest from their income before their tax payable is calculated. That is now about 3 BILLION dollars a year of lost revenue for the government.
As far as we know so far. This was not a complete policy announcement.
If they do, they have to also freeze rents, otherwise renters will carry the cost, like last time. However that in itself would deter landlords from buying up homes, so first home buyers might stand a chance again.
Cool, we should do it then.
Interesting to see you here Bill. You can’t claim to be politically neutral if you are the actual former prime minister! It’s not right when you say a Capital Gains tax won’t raise much revenue. In fact a CGT will raise a consistent amount of revenue over time. Every year!
It will challenge our generation, Bill, with the vast number of extra homes owned past the family property. These houses are the resting place of cash missing the tax collectors. We (our generation) have been greedy and, as Bernard has said so many times, we now have a housing market with an economy clipped on. I would go further if I were still in the Labour Party and push for a death duties tax of 15%. That would mop up much of what our generation have gained from tax free capital gains and repay the state for what should have been paid through as fairer tax system.
To be fair, if I hadn't received a moderate inheritance from my parents I'd probably be renting or homeless right now, and I'm not the only pensioner in that situation. Inheritance tax can come with considerable fish hooks and many, many opportunities for avoidance. It would need to be very carefully draughted to avoid these potholes.
My small family inheritance came from the UK, where it is taxed, but the family home is exempt up to a certain amount (I think equivalent now to about NZ$1.4M). That allows for reasonable residences, at today's prices, to pass on untaxed (usually enabling mortgage paydowns for the family), and taxes properties which have accrued excessive capital gains benefits equivalent to multi-property owners. So there are ways to apply such a thing with due sensitivity. ...CGT light is a good start. (And an intro in 2027 gives fair warning!) Remember the introduction of GST? !!!
"interested in everything"
that is a vast amount Sir
what about the Holy Spirit and the teachings of Jesus as written in the 4 Gospels and Revelations ?
Labours tax policies are weak & disappointing. I think that's bad news for NZ because it just means a continuation of our dumb & non-productive focus on 'wealth' creation via selling houses to each other. Where are the entrepreneurs? Where are the 'Captains of Industry'? Where are the innovators?
Exactly Nick. Like the Democrats in the US and Labour in the UK, they just don't 'get' that they need to be bold (more 'left') rather than perpetuate the neoliberal status quo in an effort to appeal to an imaginary 'centre'. They, like Labour in UK, will find that they end up going down the austerity route, ultimately.
The innovators are buying up old houses to rent because that makes more profit than starting a business, under current tax setings.
Gosh a lot of countries have a CGT in some form https://taxsummaries.pwc.com/quick-charts/capital-gains-tax-cgt-rates
But just for starters, right Craig. TOP did their home work back in the day, and an asset tax is needed. As Gary Stevenson says: tax wealth, not work.
Hey Tracy. Would that be this chart? https://taxsummaries.pwc.com/quick-charts/net-wealth-worth-tax-rates
No so many this time.
TBH I don't understand taxes well - not isn't my area.
I do notice that CGT seems like a perfectly normal unsurprising thing to have, and that the countries that tend to win the "happiest population" score are represented in the wealth-tax-having countries. (Can interpret that more than one way)
Hi Craig! Me either (understanding tax)
Zack Polanski had an old economics dude on his podcast who gave a nuanced and well thought -out (or so I thought) plan on how to tax ' wealth' immediately and relatively easily (in actual logistical terms) for better wealth distribution in the UK. More detailed than what Gary Stevenson offers, though I think Gary is trying to build popular momentum with a catch phrase, rather than hone in on practical specifics.
See here: https://youtu.be/a27AfFTOW3o?si=60m-de17BbHRqOKI
We need this here, plus a well- thought out plan to shift incentives from investing in residential property to investing in NZ companies/industry.
I would have liked to see a more robust CGT confined with at least some form of wealth tax. This just looks a bit pitiful and I've got to say I'm disappointed.
combined ?
Yes, it's unfortunate that Substack doesn't yet allow post edits.
Tap the 3 dots to edit post.
Morning!! Didn't you love the engagement shown by your Kaka community Bernard?!!! Whoop whoop. We love you two!!
Hi Bernard
Capital Gains Lite again. No wealth tax. Rich win again over the 80%. No climate strategy! What do farmers have lots of? Answer :Roofs!! Animals should not have to suffer because intellectually challenged and captured group has not invested in cheap energy to look after their animals they love??
Solar panels and batteries! The smart farmers who care about their animals have done this. Not a huge expense for a million+ dollar asset. Electrify Aotearoa.
Patrick Medlicott
The farmers were surprised? Guess if our leaders pretend (or truly believe) climate change doesn't exist, and our media collaborate by never making the connection between extreme/more frequent weather events and climate change (as you always point out, Bernard), no wonder they are surprised.
Note: yes yes yes, not ALL farmers, of course!
Don't forget that Southland is the home of Groundswell.
‘Scuse my ignorance - I had to look up Groundswell. May I say I was not surprised to find it was founded by two old white privileged boomers?? 🙄
Dan Corbett, (TV1 News) gives a very clear explanation, but not one the coalition or the GSwell farmers would welcome.
Labour’s CGT is a start. May I ask what IS much revenue ? I remember where I was when Jacinda Adern announced “ no capital gains tax on my watch “ I found this comment arrogant just as I find not much revenue comment entitled. We need a govt that taxes to pay for the basic needs of every citizen, most especially a house to live in . It has come down to this in our country because of the timidness of governments of all ilks to disenfranchise the limited few who are wealthy . Why ? Is Labour timid - of course they are - its coming up to electioneering they would like to be able to implement their policies in this yes we can no we can’ t political system . Until politicians grow up we will always have timidity . By the way Chris free Drs visits for everybody does sound a bit weak . Good luck getting to see a dr How about more doctors who are better paid Really please get real !
The media only published the weaker part of the policy in the main headlines. The CGT is actually going to fund wider health measures as well, but of course that's at the bottom of the page as always.
I guess the weather events are a surprise if you are a climate denier.
Nicola Willis has been demonstrating her lack of business and taxation knowledge this morning on RNZ as she is claiming that Labour's CGT will impact small businesses in terms of the impact this will have on their business premises.
https://www.rnz.co.nz/national/programmes/morningreport/audio/2019010223/nicola-willis-stands-in-for-pms-weekly-interview
Firstly the overwhelming majority of small businesses rent rather than own the premises they operate from, and secondly business premises are considered business assets by whoever their owner is meaning they will be accounted for and already taxed relevant to appreciation, depreciation and R&M. Nicola is either intentionally lying or just economically pig ignorant.
Why would anyone ask the Minister of Finance about anything even vaguely economic - she is utterly clueless. More importantly has the Green Party been asked about this clayton's capital gains tax (compared to their own proposal).
Correct Andrew. Willis is beyond useless.
Exactly. I'm also not interested in what David Seymour has to say about it - wish MSM would stop ringing him up at the opening of an envelope. What does Chloe say, please?
Here is her press release - good stuff
https://www.scoop.co.nz/stories/PA2510/S00204/greens-respond-to-labours-cgt-announcement.htm
I think what you are ignoring Bill is that tax policy is also about directing investment into 'good' areas (eg productive; innovative; etc) & away from 'bad' areas like trading residential housing between our selves. If, as you say, a CGT won't raise much revenue, then it seems to me that we need some form of wealth tax to increase revenue raised, & to discourage the parking of wealth in non-productive parts of the economy
Green policies = Fairer Society
imho
Climate change: Your comments are all valid but completely misunderstood by a part of our residents especially the farming community. The result is that some of them are hit hard with last week's weather event but would it change their mindset??? On the other hand apart from a farmer they are also abusiness owner and they should apply risk assessments and mitigation. It is clear those minimal management tools aren't either well understood by the same group.
CGT light: It is not bold enough. It should apply to each home owner who increases its mortgage for consumption purposes. The difference (increase) between old and new mortgage should be taxed as income (from the house)! Several EU jurisdictions work like that and those countries don't have an additional CGT when selling the house. The left (Democrats; Labour; Labor) should realise the only way to fight off populist right is to tax the rich.
Southland Farmers are amongst the most climate-denying in the country, and consequently don't see the need for any mitigation or provision for weather events. You could call them the thick end of the wedge.
The way the CGT has been reported is deliberately making it sound trivial IMO. What is funding is the whole health system, of which the free doctor's visits is only a part.
I'm glad you are keeping the nature pics. They are often the bright spot in a morning dose of depressingly awful news from Aotearoa and just about everywhere else.
I'm unsurprised—and yet still incredibly angry—with Labour over their CGT nonsense. Did they even bother in their discussions to consider what they might want to achieve? They must have known that National et al. were going to full-force-attack *anything* presented, so why not present something actually brave? All those doctors' visits could have been funded by cancelling a single one of the coalition's ridiculous roading projects. Instead, when my neighbour sells their holiday home for a price that includes a new 28% tax obligation, the value of my family home increases by the same amount (tax free). So, higher house prices; an easy target for National's criticism (and one people like me won't bother to defend on their behalf); and nothing they couldn't have offered us anyway! It's 1995 again Labour! You're heading for defeat, again, by a wet fart with Winston at the centre of it 🙄
The reporting was skewed - the whole of any CGT earnings is to go to health.
But why? Even if it's not just GP visits, health (like education) costs what it costs. They are outcome-driven. All other health-related questions aside, Labour have promised free doctors' visits as part of this policy, based on securing 'extra money' from a CGT. So, what happens if no one sells their rental properties? We have to start paying to go to the GP again?? In reality, they are "hoping" to bring in $800m-odd from a CGT; and they are "planning" to offer 3 free GP visits a year to citizens. Those things are unrelated... If they were not heading down the same sort of populist-adjacent path that UK Labour have, they would have included family homes, taxed wealth/land, or—at very least—promised that every extra cent went into building public housing or something else where 'extra money' scales things beyond baseline outcomes.
Of course this will not be the only health funding. You're looking at a part and criticising the whole. This policy wouldn't have even been announced yet if some clown hadn't leaked it - and we're still a year out from elections so the full package isn't yet clear.
I forgot to mention it yesterday but "Timeline Cleansing" photos are a great feature of the Kākā!