By Alex Tarrant
Labour is trying to get back on the front foot over its tax ambitions, saying any tax changes resulting from its Working Group's recommendations won't be put in place until 1 April 2021, after the 2020 election.
The move comes after a series of attacks, including a "let's tax this" campaign ad from National, after Jacinda Ardern had said she was keeping the right and ability to introduce recommendations before 2020 if that was what Labour thought was required.
Meanwhile, Labour finance spokesman Grant Robertson acknowledged that a revenue-neutral set of proposals from the Group - if this was what it came up with - could see income tax rates cut if new tax bases were identified or other existing tax rates were raised.
He refused to be drawn on what extra changes to the tax system outside Labour's existing bright line test extension there could be to help 'fix the housing crisis', declining to comment on the possibility of a tax on vacant land.
Labour released a document bringing together all previous announcements on tax policy, while confirming a Tax Working Group next term will not be allowed to make recommendations on a capital gains or land tax on the family home/land, or an inheritance tax.
“We know it is important to get this right, so we will balance the need for certainty and urgency by ensuring that any potential changes will not come into effect until the 2021 tax year. This gives multiple opportunities for public input, and a general election before any new tax would come into effect," Grant Robertson said.
Legislation would likely be put in place before the 2020 election, although changes would not come into force until 1 April 2021, allowing the public to have their say by way of the election.
"To avoid any doubt, no one will be affected by any tax changes arising from the outcomes of the Working Group until 2021. There will be no new taxes or levies introduced in our first term of government beyond those we have already announced." (Read already-announced changes below.)
Read the policy document here. An announcement from Grant Robertson and Michael Wood is further below. Watch a media stand-up with Robertson in the video above. Read National finance spokesman Steven Joyce's response further below, and TOP leader Gareth Morgan's reaction.
In the media stand-up Thursday morning, Robertson made a number of comments. These included:
- A set of revenue-neutral proposals is possible, particuarly as the Group is being put to work on fairness across the tax system
- That this could mean income tax rates are cut if there is a corresponding new tax base found (or rise in other taxes)
- That the Group's terms of reference are to review “balance and fairness in our tax system, with a particular focus on making sure that we crack down on property speculation.”
- And that this had been the position since Ardern had become leader
- He would not be drawn on other potential tax system changes to address housing, other than extending the bright line test - when asked about whether he could see the Group recommending a land tax on vacant land
Change of priorities?
I asked Robertson whether the Group’s direction of travel had changed slightly – all the talk under Andrew Little was about fairness across income, assets and wealth. Now the main reason for setting the Group up appeared to be to ‘help fix the housing crisis’. Was there an actual change in stance?
“No, I think it’s a focus,” he replied. “That is where we believe the most important rebalancing of the tax system has to happen. There are loopholes in our tax system that encourage speculation on property. I think all New Zealanders understand that when they go to work every day, pay tax on every cent of income that they earn, that they want that fairness to be seen across the system.”
The terms of reference of the Working Group remained “balance and fairness in our tax system, with a particular focus on making sure that we crack down on property speculation.”
I put to him that the bit on ‘assets and wealth’ appeared to be gone – with the Group not allowed to consider the family home or an inheritance tax. “Nothing has changed in the way that we’ve been doing this since Jacinda became leader,” was the response.
Housing crisis
“We cannot sit around and let the housing crisis get worse and worse as Natinal have done over the last nine years. We’ll do the work, we will make sure New Zealanders see it, and if they don’t want it, then they won’t have to have it," Robertson said.
I put to him that Labour had already ruled out CGT on the family home and land tax on the family section, and that Labour had already announced the bright line test to five years. So what else was left that could be imposed with the express intention to tackle the housing crisis, from a tax system point of view? Tax on vacant land?
This was the job for the Working Group, he said. “We have put forward our policies this election…about a direction of travel towards rebalancing our tax system. The Working Group’s job is to see whether or not there is more that can be done in that area.”
I tried again: What else could be recommended other than tax on vacant land? He disagreed that's all that was left. “We’ve still got the issue of what happens with speculation more generally in the property market and we’ve got to make sure we do everything we can. We owe it to New Zealanders to make sure they can get in, buy their first home, make sure that our housing market is not part of a speculators dream. We have to do something about it," he said.
Wouldn’t that be tackled by extending the bright line test? “The bright line test only goes out to five years. The question for the Working Group is, is that enough?”
Capital Gains Tax & wealth
Robertson was also questioned on whether a capital gains tax would apply to other forms of capital than housing. “We’ve ruled out capital gains tax on the family home, we’ve ruled out a land tax on family land under the family home. We want the Working Group to be able to find a way of rebalancing the system,” he said.
In 2011 and 2014 Labour was talking about collectables and other elements of wealth. Will the Working Group be looking at those as well?
“What we are signalling is, the Labour Party’s policy is that our focus is on fixing the housing crisis. That is our focus. The Working Group have been given the mandate to get a fairer and better balanced tax system. We will then look at the recommendations. A future Cabinet may or may not take up all of those recommendations, as has been the case in previous terms," Robertson said.
The Group’s ambit was to get a “fairer and better-balanced tax system with a particular focus on moving ourselves away from property speculation.”
Revenue-neutrality
I asked Robertson, of all the recommendations Labour might legislate for, would he expect them to be revenue-neutral?
“That will be one of the things that I think the Group will certainly be looking at,” he said. “It’s quite clear that if we are rebalancing the tax system, a revenue-neutral outcome is one of the outcomes that is quite likely. But, we want to give the Working Group the ability to come back to us, and come back with what they believe is best for New Zealand. But, revenue-neutral outcomes could indeed be one of them.”
So we could see a reduction in income taxes if new tax bases were recommended?
“That is indeed one of the possible options. If we are looking at a rebalancing of the tax system, it may well be a revenue-neutral outcome. That is one of the things the Working Group will be able to come forward with.”
Progressive, fair tax system
Robertson had earlier opened the press conference saying Labour was committed to a progressive tax system where everyone pays their fair share. Labour had committed to not increasing personal income taxes, corporate taxes or GST. National’s tax cuts would be reversed to fund spending promises for health, education and housing.
He called out the National Party for spinning lies about Labour’s tax policy, particularly on income tax. “New Zealanders will not be paying more in personal income taxes in the future under a Labour government than they are today.”
Robertson also said the major focus of Labour’s tax plan was to crack down on speculators “who are exploiting loopholes in our tax system. In particular, that means cracking down on negative gearing, and also extending out the bright line test that the National Party brought in, that effectively taxes the capital gain on a property that is not your family home that is being sold.”
He touched upon Labour’s plans to crack down further on multinational tax avoidance, and Labour's policy included the proposal to get rid of secondary tax.
But it was the comments on Labour’s planned Tax Working Group that were the most awaited. Robertson said the party was still committed to setting the Group up to look at delivering “a fairer tax system and a better balance in our economy between speculation and productivity.”
'We've listened to New Zealanders on this'
The Working Group’s work was “urgent and important,” he said. “That’s why we need to get it underway. But we also need to balance that urgency with the certainty that New Zealanders need from their tax system.”
While a Labour government would undertake the review and take chosen recommendations through the legislative process before the 2020 election, no outcomes would come into force until 1 April 2021, he said. This would give New Zealanders certainty over Labour’s plans, he said. This was also the position National was in this election with its tax package.
Put to him that this was an admission that Labour had taken a political hit from National’s campaigning, Robertson said: “What we’ve done is, we’ve listened to New Zealanders who want to be involved in this process.” The timeline for the Working Group provided for numerous opportunities for engagement, he said.
On legislating for any changes before 2020, but allowing for an election before the changes actually come into effect in 2021, I put to Robertson that the latest position was a compromise between the previous stance under Andrew Little, and Jacinda Ardern’s more recent stance of maintaining the ability to impose recommendations before 2020.
“It is Jacinda Ardern’s stance. She is seized of the view that we have to urgently address our housing crisis and that our tax system plays a big part in fuelling that crisis. We will have done the work, we will have passed the legislation, but nobody will be paying any tax as a result of the Working Group’s outcomes until 1 April 2021," he said.
Why did Labour wait so long to make the decision? “We have listened to New Zealanders. New Zealanders want to be involved in this process. It’s quite clear that when it comes to taxation, we need to provide both certainty, but also that sense of urgency.”
He later said it had become clear through the election campaign that Labour realised it needed to balance its sense of urgency with the desire of New Zealanders to have a say on the process and recommendations.
Already announced:
Labour in the policy document drew together what it had already announced, including on negative gearing and secondary tax:
- Reverse National's proposed tax cuts and re-invest that money in a fairer package of support for families and in core public services such as health, education, housing and police
- Crack down on housing speculation by extending the bright line test to five years. This taxes the sale of properties other than the family home
- Create a level playing field for families to buy their first home by removing a tax loophole that speculators use to avoid paying tax – as recommended by both the IMF and the Reserve Bank
- Set up a Tax Working Group, to ensure that there is a better and fairer balance between the taxation of income and assets, in particular the capital gain associated with property speculation. The outcomes of this Working Group – if any – will not take effect until the 2021 tax year
- Introduce tax incentives to encourage research and development
- Eliminate Secondary Tax as part of IRD’s Business Transformation Programme
- Take strong action to ensure that multi-national companies pay their fair share of tax.
Read the announcement from Labour below:
Labour is committed to a tax system where everyone pays their fair share and where we start to address the imbalances that have fuelled the housing crisis, says Labour’s Finance spokesperson Grant Robertson and Labour’s Revenue spokesperson Michael Wood.
"Today Labour has released its full tax plan, bringing together a number of previous announcements and more detail on the Tax Working Group. Given the amount of misinformation being spread, it is important that we have all the information in one place.
"Labour will not make any changes to personal income tax, corporate tax rates or GST.
“What we will do is reverse National's proposed tax cuts and use the billions of dollars to make 70 per cent of families with children better off and invest more in health, education, housing and other public services.
"Our policy also cracks down on those who are exploiting weaknesses in the tax system by speculating in the housing market. Labour will end the practice of negative gearing, and extend the current bright line test that taxes the capital gain on the sale of a property other than the family home to five years.
"We are establishing the Tax Working Group to explore other options to make our tax system fairer, particularly in terms of the balance between taxing income from salaries and wages and property speculation.
"To be absolutely clear, under Labour the family home and the land around it will never be taxed. There will also be no inheritance tax.
"Labour will not shy away from the hard issues such as fixing the housing crisis and we are determined to do what is right, but we also know we must take New Zealanders with us as we do that.
“We have heard the call for New Zealanders’ voices to be heard. We will involve the public at every stage of the Working Group, as well as Cabinet and Parliament's consideration of any changes that arise from it.
“We know it is important to get this right, so we will balance the need for certainty and urgency by ensuring that any potential changes will not come into effect until the 2021 tax year. This gives multiple opportunities for public input, and a general election before any new tax would come into effect.
"To avoid any doubt, no one will be affected by any tax changes arising from the outcomes of the Working Group until 2021. There will be no new taxes or levies introduced in our first term of government beyond those we have already announced.
“Other highlights of Labour's plan include ensuring multinationals meet their tax obligations, a Research and Development Tax Credit and the fast tracked abolition of secondary tax as part of the Business Transformation Programme at IRD,” says Grant Robertson and Michael Wood.
Read Steven Joyce's response below:
The Labour Party has postponed two new taxes but has left five more in place that would slow down the New Zealand economy and restrict growth, National Party Finance spokesperson Steven Joyce says.
“They’ve postponed the introduction of two taxes but have reaffirmed their intention to impose a water tax, regional fuel tax, tourism tax, income tax increases, and bringing farming into the ETS,” Mr Joyce says.
“In particular, Labour keeps denying they are putting up income taxes but they have today confirmed again that would legislate to remove the tax threshold changes that occur on April 1. That means someone on the average wage would be $1060 a year worse off if Labour becomes the Government.
“They’ve begun the long march back but they’ve got a long way to go.
“This is about the fifth version of their tax policy in the last month. They are just too vague on a whole range of policies and it shows.
“It’s interesting that it was a “captain’s call” to allow for a capital gains tax but the captain was nowhere near the back down.
“We know that Labour desperately want to put a capital gains tax and an inheritance tax on farms, small businesses and the family bach. They have had it in their policy for two elections and they have only dropped it this time because they were rumbled by the public.
“The public simply can’t trust Labour on tax.
“The big puzzle that remains is why Labour wants to restructure the New Zealand economy.
“Even Labour agrees that by nearly all measures New Zealand’s economy is performing well. They need to explain why they are proposing such a major change in economic direction in tax policy, trade policy, industrial relations, spending and debt.
“Voters have a clear choice in this election. They can keep New Zealand moving forward with a strong National government or change direction and go backwards under Labour.”
TOP leader Gareth Morgan:
The Opportunities Party Leader Dr Gareth Morgan says today’s decision by the Labour Party to abandon any major reforms of the tax system until 2021, is a betrayal of those who have already cast their votes expecting any real change to the worsening statistics around social equality and the housing crisis.
“Scared by the latest poll results the old establishment party of the left has abandoned struggling New Zealanders by kicking any change to our broken tax system for touch until 2020,” says Dr Morgan, “This leaves TOP alone in having a fully costed plan for a Fair Tax system that will benefit 80% of all New Zealanders by giving workers a 30% income tax cut, and finally closing the tax loophole that lets the rich get richer, while condemning future generations to a miserable future as part of a divided treadmill economy.”
Gareth Morgan believes the abrupt U turn by Labour on tax is also a major betrayal of the tens of thousands who have already cast their votes in the 2017 election and may well now be regretting their decision to back a party which offers no alternative to the destructive tax policies being pursued by the current Government.
Today’s announcement makes it even more important that thinking voters make a choice for real change this election.
Care, Think, Vote for a fair tax system.
461 Comments
I'm interested to hear what Labour supporters are going to say. A good number spent weeks vilifying anyone who dared say that not reveling tax plans was an issue. Now that the Party has spoken I am sure they will fall in line and say that it is wonderful - in fact this was the Party's plan all along and anyone who criticises this is just an "old dino" anyway.
It looks desperate though and shows that don't actually have a plan - just what's trending on Facebook and Twitter.
Updated:
After reading the comments below I think my suspicion is confirmed. No matter how it is spun it shows what many suspect - Labour isn't ready to govern.
Procrastinating, prevaricating, equivocating, vacillating, call it what you will but unfortunately for them, this reveals about Labour, a naivety and absence of political nous which is rather unsettling. Cannot avoid the perception that they might just be as hapless & hopeless in government as they were in opposition.
Well Boatman, at least some of us may have played our small and vital part in getting the reds to retreat from their latent tax grab. So there will be three years one hopes before that can threaten again.! Either way NZF is a bet each way, for some sort of equilibrium. Keep on ticking!
I'm a Labour supporter. I think it's a shame but if it gets them over the line I'm okay with that. And you can throw as much shade at me as you like. Playing the long game is what matters and making life fairer for all kiwis is what matters most to me. And I'm a business owner and employer. I am not concerned about eventual CGT on businesses even if it affects us when selling our business down the track. I just want the next generation to get a fair crack.
Good on you NickBOP. Its sad that too many of the masses are working too long hours to be able to really follow the issues that are so important to most NZ citizens. Too many are likely to be influenced by the negative attacks of National and one hopes we do not get more years of their horrendous past policies. It is noticeable that the specuvestors have plenty of time to support their parasitic ambitions.
Silly comments of various notwithstanding, we do see a certain irony here:
1. On the first hand, a party suggests a working group to make recommendations. National supporters howl in outrage and spread talking points as fast as their fingers can type, flailing around with accusations of lying etc. The party suggests taking the recommendations to the electorate to allow the electorate to vote on them. The usual suspects howl once more about whatever they can.
2. On the other hand, a party promises no new taxes. Then goes and introduces 18 new or increased taxes in three terms. Not a peep, except the usual supportive talking points. No outrage at the dishonesty and broken promises.
It really makes it clear. National doesn't even have to worry about promises they make at election time, because too many of their own voters simply will not hold them to their promises, but instead seem easily swayed by simply being part of the right club.
I suspect we'll see the same if National gets in. Come next term, they'll be saying "Ah, well. we're entering a recession now and these are special circumstances, so we won't be able to do those tings we promised" and their blind supporters will nod and repeat the mantra "Hmm, yes, sound fiscal management, sound fiscal management, sound fiscal management..."
I'd love to see us reach the stage where we as an electorate are prepared to hold our politicians accountable for their speech, actions and ethics.
A lot of them are increased fees. There's a difference between a fee and a tax.
http://www.labour.org.nz/at_least_15_new_taxes_under_national
I'd say that unemployed, unemploydable etc. beneficiaries are the ones with all the time on their hands and it's too bad they are too stupid and lazy to go out and earn some money so that taxcinda has more people to tax, instead they just act as parasites on the economy.
I'm not so sure. I think the majority of migrants to New Zealand vote National (someone show me some data if this isn't correct).
We've got about 140,000 migrants arriving each year from memory (gross, not net).
Are there that many old people passing away each year?
Based on the Facebook trolling of National announcements I'd say it's not a foregone conclusion that immigrants vote National. At least two groups featured prominently - Ethnic Indian Fijians and Philippinos. I also noticed a Brazilian Vegan trolling the Greens. You lefties seem to be fond of absolutes. Migrants come in all persuasions.
"The WTV-Trace Research Chinese Poll found 71.1 per cent of ethnic Chinese will vote for National if the election was held tomorrow, a 2.4 percentage point drop from its previous poll".
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11919332
Ok, your turn for some data. Ready, set, go
One poll ; of one particular nationality . Labor dispute the validity of that poll BTW - cannot both believe it and not believe is as it suits your argument.
I am pretty sure that if I did a poll of Pacific Islanders in South Auckland I would get a different result
I said (guessed) the "majority" (i.e. more than 50%) vote National. I'm not making an argument or making an attack on anyone. I'm interested in data.
If that poll was wrong and the figure is actually 60%, that's still the majority of Chinese New Zealanders isn't it? Also, New Zealand doesn't have much migration from the Pacific Islands these days compared to other countries.
It seems totally unfair considering national just turns the tap up and gets a monster of votes . Could backfire tho because there's a big chance that the only way national gets in is with peters. Immigration down, overseas investors out or no to used homes putting overseas investor into adding to new homes supply and more rentals. All things that bring house prices down and making it more affordable, ya,
I agree entirely NickBOP. She can't do any good for those people who really need it by warming the Opposition benches. The first priority is to get into power. What the last two weeks has shown me is that middle class NZ likes the idea of a better and fairer society (hence her ratings shot up) but are not willing to pay a bit more tax to finance it (hence her ratings dropped under the barrage of tax threats from National). A sad indictment of us as a nation actually rather than her. We are the fickle ones.
i think its shows that many of us were willing to pay a little extra to create a better society - but were not willing to write a blank cheque. And the excuse of i have just taken over does not cut it - they have had nine long years - and she has been deputy for a considerable time now - so they should have been able to say what , when and how much they wanted -
Also requires not asking them to compete for wages with masses of imported labour from the Third World for stagnant wages while competing with imported millionaires for jobs. Also requires not structurally pushing up the prices of assets in a bubble so all money flows into them instead of productive pursuits that create jobs.
What a flip flop - making policy on the fly. Labour are panicking and will say anything to try and cover their true intentions. Get into government in any way possible and then progress the redistribution/tax agenda.
Still - thinking and responsible people need to remain vigilant - these lefties are tricky.
All it shows is labour listens. Which National certainly doesnt.
National are not fit to govern, they have created the most homeless people NZ has ever seen, ques in hospitals, chaos of traffic where a 50 minute drive takes 1hr 30, house prices at 10+ times income, the most unaffordable they have ever been, we have money laundering, education rorts, immigration where we can fill up the city of CHCH in 5 years, unskilled labour steaming in creating a low wage economy, low wage inflation, low productivity, over crowded houses the list is endless.
I smell fear.
The weird thing is I should vote for National, which I have the last 3 times, as I have a business. But I cant live in a country that has all these issues. My quality of life is something I cherish, and after living in the UK and seeing the issues they have with an enormous population. My money can buy stuff, but it cant adjust my quality of life within my country.
The simple fact is I will always be able to afford to buy stuff, but do I want all the issues that a large population brings. Definitely not.
Agree - National's promise (admittedly, could be broken again) to up the First Home Buyers Grant seems specifically designed to push prices up. Just head-shaking that they'd go with this policy if they're interested in affordability. I suspect it's a sign they are not.
I wish I had all of the answers. I can't see National making concessions on the inward flow of offshore capital, selling New Zealand is in their DNA.
Equally, I hope Labour give very careful thought to how they stop foreign buyers, because something Jacinda said recently suggested tax residency was a criteria. If that's how they attack the problem I don't think they will be super effective (i.e. they need to plug trusts, companies, buying on behalf if they are serious about it).
"The problem with Labour is its total preoccupation with Taxation , and little else , and sensible New Zealanders dont like this. Boatman, this has to be among the most hypocritical statements I have read in this pre election debate. It is you and your ilk that are the most concerned with having to pay a fair share of tax.
By fair, you mean do nothing monkey brains, paying zero (that's 0 for monkey brains) tax, and get everything for free, especially extra services specifically targeted at them. While someone with 30 years of work history, doing long hours, has to work even harder so that the monkey brains can get even more free stuff. If a hard working kiwi was also smart enough to save some money instead of living from dole day, to dole day then you want to tax them extra for being so smart with their money.
And the only good that will come out of all these posturings is, National will be careful in the next term and will really try to help the common man. After 9 years of the flamboyant JK era, Bill will bring the party down to earth, and try to connect more with the wider NZ. Thanks Jacinda.
I have my doubts. They will make noises about it and be careful about appearances, but I've seen little to suggest they'll take meaningful action.
Claim to be a "data driven" government, yet they've suddenly defunded the "Growing Up in New Zealand" longitudinal study, for example. Yet, as I understand it, this was previously a PM's Science prize winner and is delivering a massive amount of useful information.
Most of National's policies are simple setting of targets with no implementation plan in behind.
Like the "on the hoof" poverty reduction target set by English in the first debate.
And like the target stated in the 2008 election to increase exports as a proportion of GDP from 30% to 40% by 2025.
We aren't even at the 30% we had when they came into power - in other words, they are going backwards because they have/had no plan;
https://croakingcassandra.com/2017/09/13/mr-joyce-tries-to-defend-new-z…
That is a very worthwhile analysis that everyone should read.
I didn't hear them come out and say they were 'wrong', in terms of using those words. I would be refreshing if they did, and infact I think if they had said they were wrong,, they would get a lot more sympathy. But this sort of thing is coming across to me as a flip flop, and appears that they are making things up on the fly, and changing policies in reaction to polls. They have had 9 years to solidify tax policies, and what is on and off the table, and when they would come in. They obviously had to do this though, becuase how can someone vote in a party when we don't know what the actual taxes could be. Voters wouldn't be able to make an informed decision, as 'not eveything had been put onto the table', using labours words
It is also interesting that Labour supporters are complaining about all the new taxes that National have brought in, and I saw one of them list the taxes. But infact I didn't see any 'new' taxes, they were increases to existing taxes. That highlights the problem with new taxes, where they start off small, but they get increased over time, and government s don't seem to need much of a mandate to do this, as the tax already exists.
What I don't understand is why Labour aren't looking at taxing high income earners more, to raise more revenue, especially as high income earners are less likely to be labour voters anyway.Our income tax on high earners is very low compared to the rest of the world, and that would create some equality in terms of narrowing the divide between high and low income earners. If you are earning a 500k - 5 million a year, those people aren't going to miss that extra bit of tax they pay, as they would already have so much discretionary income.
Except is NZ heading down the right path? Also we are not spending enough on housing, infrastructure and health and education to keep up with the high immigration and population growth. I don't like how labour has flip flopped, but I do think we need change of some type, as I think there are many areas that in desperate need of catch up. Also don't like how national denied there was a housing crisis, when it is significantly worse when they first came in, and back then they called it a housing crisis. .
No that answer isn't good enough. If you're going to get up on your high horse about Labours tax plan (or lack of it), I wan't to know EXACTLY what Nationals immigration and population plans are....
Its an important issue and I need to know what I'm voting for. So please tell me EXACTLY what Nationals immigration and population plans are. Or can we just say that National has no plan - so like Labour, they are just making things up as they go?
You can't get all high and mighty about one issue, and avoid all others as being insignficiant...so which is it, we're into the details of all policies, or just those that best suit at the time?
So I take it that you wouldn't possibly be voting for National then given that, as you put it that on this policy they have 'NO idea, no proposals, no plans, and constantly changes from one end to the other?!'....or do you prefer to sit hyprocritically on your high horse? Because its going to be a large fall at some point in time....
Wow, could we be about to have a government that actually listens to people's concerns, what a refreshing change that would be from one that has been completely cloth eared until backed into a corner. And yes, to those who were wondering much of this WAS going to be put to the vote in 2020 anyway.
Because they would like to show that they are doing something while being totally disconnected from its effects ... rental market yields are very tight and this big imbalance of claiming some of the expenses against other income will weigh inevitably on Rents ... the arrogance is in assuming that such a move will force investors to sell ... and that is the stupid thinking .
One way to fix the housing crisis would be to stop all subsidies and temporary accommodation payments for a period of 6 months......would cause significant pain for those that are struggling....but more importantly the landlords who have running tight margins would have to shutdown and sell up and suddely there'd be a bunch of new supply on the market....house prices would drop to more affordable levels.....
Would take a pretty tough line from a political leader to see thousands of people living in the streets - but it would be one way of dealing to landlords...........
It would 'reset' the system - back to what is real and sustainable....not this one sided rort that is taking place now that can only last for so long....
Yup resulting in more subisidies and motels to be paid for by the average tax payer....this system is so messed up....no wonder the Eco Birds and keywests of this world don't want changes...its a rort...One day we're going to look back at this and say 'what a bloody mess......why didn't we do anything to change it'......well it was politically unpopular with the 'haves'...thats why.....
Woah woah woah, I'm sure one of you spruikers were banging on about how negative gearing isn't a thing and hasn't been a thing. It's inconsequential anyway, as if you parasites need an excuse to up rent, "the sun's risen, we need to raise rent", "looks like rain, we need to raise rent".
But of person with such great human qualities as Eco Bird would never say one thing one day, then say the opposite the next.
Then take to a political party who backs down from a one position to take another.....wouldn't that make that individual somewhat hyprocritical?
You can still negatively gear. You just wont be able to claim the loss against your income. Whats the big deal with that ? The loss is attached to the entity that loses it, you dont get to transfer it to the personal tax you pay. If that entity makes a profit in the future then you can offset that previous loss against your profit.
This in turn forces the rental market to be run like a business rather than a way to minimise personal income tax. Makes perfect sense to me.
Still making up policy on the fly then. They sure as shit haven't worked through all the financial implications of this change, and they are still committed to taking $1000 per worker per year when they cancel the legislated 2018 tax cut.
Just how will they finance all their massive spending promises? Huge borrowings or printing money? Either will leave NZ economy in much worse state.
Looks like they need another 3 years in opposition to do their policy homework.
@Didge , I do care about everyone in NZ.and we need to improve everyones lot in life
But I am a baby boomer and have already voted............ for Winston
You need to understand we paid excessively high taxes in our best earning years , over 50% tax , interest rates were at over 20%, cars were simply not available unless you had funds overseas , which was impossible due to exchange controls .
It was very hard back then and we did not have easy credit , mall shopping , multiple car ownership, island holidays and morning Latte's .
I dont want to go back to those hard times with taxes that were punitive , just for doing a hard days work
I am older than you boomers, so I have lived through it all including some very hard times. However, the last nine years are among the worst for society in general that I have seen here. New Zealand has gone dangerously backwards in quality of life and Neoliberalism has been a huge contributor.
Parliamentary democracy works best when we have strong opposition who present a viable alternative to current govt. Labour who have swooped to the left in mimicry of Corbyn style lunacy rather than cleaving to the centre as they should have have been languishing in the un-electable 20's% for most of the last 3 years - unpopular with 3 out of 4 NZers. They are now running a disorganised and amateurish campaign around a hastily installed Ardern and with this latest policy shambles are still not presenting as a viable alternative to national. NZ needs better. I can only hope that they get some fresh talent elected in this election and re-invent themselves for 2020
I would like for them to now allow the working group to be completely independent and able to investigate any and all forms of taxation including an FTT and what Gareth Morgan proposed - everything. Things are going to need to change in the future so we might as well look at everything.
Lucky birds have big brains....oh hold on...the Eco Bird must be from one of those intelligent parrot species...you know those ones that are good at repeating one line sayings they get taught..."Eco Bird want no capital gains tax"...here eat some National bird feed...
that only exists because it has to, because rental prices are stupid. if there was no accom. supplement, landlords would ultimately be forced to ask for less becuase nobody would rent @ that price. therefore the rentals yields would be lower.
your logic is so backwards its laughable.
Many investors negatively gear.
House price $1,000,000
Debt $1,000,000
Interest: $50,000
Rent $40,000
Cash loss $10,000 (ignoring costs for simplicity)
Tax adjustment: $3,300
Adjusted loss: $6,700
Inflation 2% (assume house price only matches inflation)
Capital gain: $20,000
Change in net position: +$13,300
Assume rent rises by inflation of 2%, property is cash flow positive after ~13 years.
Investors asses future income, not present income, that is how they derive fair value. Perceived future income is used to project perceived future capital value. Investors buy property with an assumption that rents will rise over time and by virtue of that process that capital value will rise over time.
Look at it this way, if you could buy a property geared 100% and have it make a profit then everyone would be willing to pay more than that, as such its almost axiomatic that property at 100% debt is going to run negatively for some period of time, however it will eventually be positively geared. How negative you go simply changes the time horizon for the break even and that is what investors are trading off, they can pay more but it means on average they have to hold it longer.
So what you're saying is that your property portfolio that you worked so hard for yada yada yada yada, you can't actually afford? You're claiming 15-30% back against your income because you've "bought" something you can't afford, what happened to standing on your own two feet? You can't surely expect the Govt to tax hard-working kiwis more so that we can pay for your financial mismanagement can you?
"Today the government introduced new legislation that all expenses and costs in all businesses will now not be tax deductible hence any income sources before salaries, maintance and costs of running a business will be taxable" "The labour finance spokesman said the cost of goods and services in New Zealand will remain the same price" Get your pipe, fill it up, and start puffing.
The only (rational) reason to use negative gearing is for speculation on capital gains. If the operating cost was determining the rental prices, then the past year would have seen a huge increase in rent prices in Auckland. The intelligent long term oriented landlords are not negatively geared. The high risk speculators are negatively geared. The latter have contributed strongly to the overall price appreciation, and will contribute in a similar manner to the price depreciation when their cash flow is not resulting in increased wealth on paper. In other words, negative gearing contributes to asset price bubble formation and bubble destruction. Investment property gains and losses should be ring fenced, and a CGT should apply to any investment property regardless of time of ownership.
No the main reason to use negative gearing is to obtain an income stream that is expected to rise. So while its negative today it wont be negative say in 10 years.
I agree negative gearing should be ring fenced and that a CGT should apply but your reasoning is mistaken. Many intelligent long term investors are/were negatively geared at some point.
It's an interesting point you raise keywest, and one that I would love to see some stats on, i.e. what happens to rents when landlords' costs increase. There is certainly more to it than saying "obviously rents go up", because that ultimately depends on how much renters can afford, and what their other options are (supply and demand of rental housing).
If my business was yet another sushi shop for example, and the cost of rice increased, I couldn't just pass that onto customers, because they just won't buy my sushi, so the effect of raising the costs just means I go out of business.
The problem is that landlords are operating in an environment where they think that they can't lose. But in any other business, you know that there's a reasonable chance that it isn't going to work out and you shutdown because the business isn't viable....but try telling that to a landlord (who claims to be running a business). Its a one way gravy train because housing isn't something you can't go without.....its some what criminal really...costs go up...landlords raise rent...government has to pay out more subsidies....what a daft system...
Plus, it's certainly no certainty that my sushi prices won't go down. If another competitor opens up next door, I may be forced to lower my prices. My own costs are irrelevant.
The effect is that the value of my business falls.
Taking that into the rental housing situation, a lot depends on the supply of housing, because if landlords' costs increase, and renters have a lot of choice, then landlords cannot just pass on the costs to renters. The effect is just that the value of the investment falls - i.e. success.
I am not talking about me, I am talking about the New Zealand housing market, you know the issue you keep banging on about, and some how making it more expensive on a daily basis and I mean 15 to 30% more expensive to operate is going to Make it cheaper for everyone....honestly I can't stop puffing the pipe, am probably going to get fired today
That could be ended via ring fencing as compared to ending negative gearing.
BTW, the paper loss thing tends to result in deferred tax as compared to tax dodging. I'm still a fan of a comprehensive CGT, including the family home. Maybe something similar to USA, where there is a limited exemption allowing for a single family home sale with a 5 year bright line and maybe $250g maximum profit exemption (family home included).
I had previously asked/waited for something concrete from labour, essentially 9 years of planning and still nothing concrete, only a .....nothing changes but we are working on it approach.
Still the future is a Myth!
So they are actually siding with National's current tax regime for their next term in govt what good is that now? This Labour party seems to be so far fetched from what a true Labour party should be, are we voting for 2 National parties??
I have no interest in voting for a good attitude and we are working on it approach, what have they been doing for the last 9 years?? The Jacinda Hail Mary thrown in to the mix just a short time ago as the party/leader was going down the loo!
No, they are not.
Here is their tax policy: http://www.labour.org.nz/tax
" Are we voting for 2 National parties??" Yes! Or.... 2 Labour Parties. It just depends on "who's in" and 'who's turn it is it next". The whole thing is a sham.... and....we know it!
It['s why Donald Trump got in. And why Nigel Farage stood so tall. And why Gareth Morgan is giving it a go. Heaven Help the established parties if the sole survivor, Donal Trump, DOES make a go of it! "They" will be seen to be what they are....redundant.....
Nor does Labour have a clue what Labour wants to do .................... all they say they want to do is introduce a huge raft of punitive NEW taxes , but say they have no idea how much or who will pay these taxes .
And they have the audacity to ask us to vote for this stupidity ?
Hang on, hang on, what are the National backers going to attack with now? The term Taxinda will not work very well now. Or to quote Boatman "TAX TAX TAX TAX TAX TAX TAX TAX".
Maybe they will have to start being more positive and talking up what a good leader Honest Bill is, and his great team of Paula Bennet, Nick Smith, Steven Joyce, Gerry Brownlee. Maybe mention they have the full backing of the Communist Party of China would also help, with their man Jian Yang on board.
They they can go on to say should all aspire to be like John Key, selling our piece of paradise to a Chinese buyer making millions tax free. Those without land to sell, well they should have been born earlier, when NZ was owned by NZers.
I still don't get the big fuss over tax changes. NZ has such a low amount of tax compared to other countries and the country is in clear need of more funding in key areas like roads, general infrastructure, hospitals, mental health etc. I am happy to pay more tax if these means these areas are addressed.
Do any of you National supporters have jobs? You seem to have time to comment on here all day long!
Labour were sick of their tax policy being used against them by scaremongers. Now what do the scaremongers have to use? I'm sure you'll think of some more lies...
Luckily Labour have plenty to use against National - dirty rivers, housing crisis, homelessness, packed hospitals, traffic chaos, lack of investment, massive population growth, no wage growth.
I think you have cracked what their jobs are JJ - what will we call them - "Nats Dirty Politics B team" ? All they can come up with is the same old shrill shite. Any fool can see that changes are needed - we cannot continue stumbling our way ahead while leaving behind a major part of our society simply to benefit the chosen few.
This decision by Labour is indeed refreshing and is nothing to cause anyone to pooh their pants. Remember all the TWGs National instigated - how many recommendations were acted on?
Goodness me, what a shambles. If I was a Labour supporter I’d be annoyed as they have dropped their guts and pulled right back on tax. This was supposed to be their game changer yet nothing will happen now until after the 2020 election. Do they actually have any plans or are they making them up as they go?
Where are they going to get all of the money for all of these social reforms?
They are all over the place and a disappointment to their supporters.
This is what will happen before the 2020 election, it's all laid out pretty clearly...
Come'on guys, you know how to use the internet, there is no need to play dumb.
Can we please have a political party that thinks long term and stands by their (hopefully well thought out) policy? We have had 9 years of a government kicking the can down the road leaving devastation in its wake and it now seems clear the major opposition party cant stomach actually standing for anything, rolling over at the first sign of a drop in polls.
Yes, Brock, the noise is so deafening, it's hilarious.
What it does indicate to me is that CGT was never the real concern of the highly indebted property speculators - the real concerns are the existing Labour policy intentions to crackdown on speculating for tax free capital gains in our housing market;
Ban foreign speculators from buying existing homes
Labour will ban foreign speculators from buying existing New Zealand homes. This will remove from the market foreign speculators who are pushing prices out of reach of first home buyers.
Tax property speculators who flick houses within five years
Labour will extend the bright line test from the current two years to five years. This will target speculators who buy houses with the aim of making a quick capital gain. Current exemptions from the bright line test will continue.
Create a level playing field for first home buyers
Speculators will no longer be able to use tax losses on their rental properties to offset their tax on other income which gives them an unfair advantage over people looking to buy their first home.
I always thought the above was going to be enough to end the "landlording-at-a-loss" party.
Given the squealing in here, I am now confident that party is over.
New Zealand will be so much better off for it!!!
She's aware. Said she'd renegotiate with SK (it looks like the stuff up there is an omission, as SK has the provision on their side and our negotiators didn't put the reciprocal one in for NZ property). Hence, she's hopeful that they'll agree to that mirrored reciprocal. If they don't, I imagine we'd walk away from that agreement, as it constrains our ability to take up/use the provision to ban Chinese nationals from buying property here.
I assume Chinese nationals are a much larger player in our housing market, so we need to be able to exercise our rights under that agreement. That objective will likely take preference over the FTA with SK.
This should have been their position from the start (I say in hindsight). This has just detracted from their current clearly stated tax policies regarding housing, and it would be good to see the effect of these policies after a full term anyway before confusing the effects with more policy.
However, I do understand where they were coming from, in that if the tax working group gives them some suggestions, they don't want to be hamstrung by setting bottom lines.
It raises an interesting question as to how people like to vote. In a representative democracy, theoretically people should vote based on their values, and choose someone that aligns with their values to represent them. Having to set out exact policies like Labour have been forced to, makes us more of a direct democracy, where people are voting directly for the policies that they want.
Yes, but Values and Vision alone is not enough in today's fast track and expensive life .. voters expect a Party that can plan its vision and show how to implement it .... it is child's play to say that we listened to people's concerns every other day and changed the direction or delayed the Action - that is flimsy bunch of amateurs and cannot really be trusted to lead --- they need some fresh blood that can think out that Vision rather than show stars ...
Yes you certainly have to show that you have a plan and the ability to deliver it, in order for people to trust and vote for you, but the point is that the polls have effectively forced Labour to hamstring themselves if they get into power.
Whether or not you think implementing a CGT during their term is good or bad (bad imo), Labour now cannot do it. Which means that their ability to act in their voters' best interests as they see fit (representative democracy) has been limited.
Surely, an elected government should have the ability to have a tax working group give them suggestions, and then be free to implement those suggestions. This is why we have elections, so if people don't like what they did, then we can vote them out.
They shouldn't have even mentioned it, because probably no one would have asked them. Are we now going to ask whether or not the next government will make any changes whatsoever that is not exactly stipulated in their current policy?
Their tax policies are not new, they just changed few things since Little was campaigning on them... plus it is not a specific policy that is painting this lack of planning and flip flopping ..the Labour policy in totality is what determines the shape of a Gov to vote on ...and that is not looking good ATM.
Lets get to the bottom of this ATM idea Eco Bird. Exactly how much more tax is Labour intending to raise than National? How much is that per capita? What extra (or improved) services will tax payers get for this extra money? If you cant answer these questions then please stop going on and on about what you have no idea about!
thejoneses. Depends whether you believe Robertson can run zero budgets, a number of core government services will require no increase in operating allowances, heroic GDP growth assumptions will be achieved, increased tax enforcement resources will deliver the same net return ratio they do at present (no law of diminishing returns in Robbo's world), debt servicing costs won't rise significantly and the estimates of international corporate tax that Labour (but few others) believe is achievable, will materialise.
If you buy into that creative narrative, then no, Labour won't be raising more tax. Oh - possibly apart from the kick the rural sector in the teeth water tax. That's still going to be imposed .... well at this stage anyway; maybe by tonight it'll have been deferred to 2021 through another 'we've been listening to kiwis captains call'.
Ok, so you have compared that with Nationals planned and costed budget of all their lolly scrambles as well? How do the two compare? I mean it is National supporters who are so worried about the budgets and taxes, I would expect they would be well informed about them.
I've always voted for the party that most reflects my individual values/ethics in their campaign rhetoric/public statements and I look into the actual policies published to verify that the rhetoric is backed up in written statements that remain on-the-record as a means to hold them to account and judge their performance in office.
I suspect most of the population vote that way and most of the population believe that that is what makes for good democracy.
In short, values and vision are first and foremost in most voters minds.
I would challenge that Kate - perhaps it is your academic experience that has you thinking most voters have values and vision foremost in mind. Outside of academic circles I believe most voters vote for what is best for them as individuals/families. e.g. Labours vision of housing (based almost exclusively on Auckland's situation), does nothing for young farmers shut out of the ability to progress to farm ownership. It also does very little if anything, for young provincial business owners.
Jacinda swept in like a breath of fresh air. But air doesn't have a lot of substance to it. Jacinda has never appeared to me to be a team player, it was almost always 'I will decide', 'I will do this/that etc'. The fact that Labour has gone back to basically what Andrew Little proposed - take it to the electorate in 20/20 suggests that, within Labour the Jacinda star has slipped. I have always felt that she is being used to get Labour in power and within 18mths would be rolled. I now feel that if they do get in, she will be rolled much more quickly. Interesting times.
Many voters arguably can also be made to vote against their own best interests. E.g. the Tea Party in the USA and the whole alignment of the evangelicals and Baptists with the right earlier on through James Dobson, Francis Schaeffer, Billy Graham etc. All you have to do is convince them on ideological grounds and they can be made to ignore the fact many policies from their "side" may well undermine their own prospects.
OK, how is National's policies going to ensure that young farmers in NZ will be able to buy farms?
The way I see it, National is firmly behind the corporatisation of the farming sector. Fewer and fewer owners buying up more and more farms. Businesses like the Crafer Farms. Farming capital gains rather than food. Subsidising big irrigation schemes to raise the income of some large farms. Selling off farm land overseas so land prices stay high. It is what National stands for - big business. They love sucking up to the wealthiest, which is why they effectively gave Peter Thiel millions of dollars in a terrible business deal and then citizenship to boot.
As far as I can see, to own a farm these days is as much of a lifestyle choice as an investment as the land prices are so high you are pretty much working for the bank if you have not inherited a farm from your family, and I don't see that changing any time soon.
Agreed, I work with some in the sector and they are bemoaning the fact the traditional path from sharemilker to owner-farmer is falling by the way in the face of corporatising of farms and - more significantly - the buying up of farms by foreign (and often part state-owned) organisations. Farmers may be NZ's "backbone" right now, but we're increasingly selling off our backbone into foreign ownership.
With food security set to be a major issue in coming decades this just seems like madness. Incredible naivety. I bet in a few decades we'll some former politician numpties saying "But there was no way we could have known..."
Very interesting discussion. I think the thing is CO, you are not identifying what a vision is based on underlying ethical values. In your example, you mention Labour's vision on housing. But their housing policy is not their vision - it is simply a means to action/achieve their vision and shape our society based on their values.
The Labour vision is one of social equity/social justice - a fair New Zealand.
Some other commentator here said, "life isn't fair - never has been, never will be". I'd say Labour would agree with the first half of that statement - that life/our social order isn't fair in NZ - but they believe it can be, or that we can at the very least move in that direction based on a fundamental value premise of fairness.
What is National's vision for New Zealand? The tag line is: "Less debt, more jobs, strong, stable government". I'd summarise it as, competitiveness.
https://www.national.org.nz/our-values
They believe that the individual is the master of his/her own destiny - and for NZ to be successful we have to compete as individuals and as a society for a bigger share for ourselves and for our country.
I think it is hard for people raised within Western philosophy/republicanism to suppress that innate human quality of competing to survive (and, thanks to rampant commercialism, to get ahead). There is a need to step back from our everyday competitiveness to contemplate the bigger picture.
Kate - this is where I think capitalism and democracy create a moral dilemma...we're individually going around competing with each other (capitalism) while at the same time trying to do the best for the majority (democracy)....and yet capitalism creates haves and have nots....which politically doesn't work...it creates division and conflict...its inefficient because there's no common goal or purpose other than trying to beat each other while trying to do the best for everyone...its like trying to have children but being opposed to sex...it just doesn't work out that well in the long term...(i.e. we need to work together on this thing to get the output (baby) but hey its not in my best interest to help you with that because its better for me to read a porno instead and help myself.....eventually the system fails because the two points are in positions of conflict..)
The government is supposed to be the balancing factor which ensures the system is kept within limits. Limits on environmental degradation, inequality and so on. That is why when right wing governments get in who are in the pocket of big business and believe in small government we get increasing degradation of the environment and climbing inequality.
Yes, big (privatised/corporate) business and small government is basically the catch cry of neoliberalism;
We also seem to have strangely inconsistent philosophy.
At the moment it's inconsistent in that we have a generation of politicians in power for whom helping hands to the young seem to be an evil (despite having received them, themselves), but helping hands to folk once they hit 65 (at least for their own generation) is a valid entitlement.
We don't have a pure "own two feet" capitalist philosophy, but more a weirdly slanted socialist one. I think a big problem is a core of selfish politicians who received much from society but resent having to give back to it for the next generations.
Yes, Rick, inconsistent in a practical sense as well. We're considered a modern welfare capitalist state, but even Wikipedia notes that inconsistency;
Based on the decommodification index Esping-Andersen divided into the following regimes 18 OECD countries (Esping-Andersen 1990: 71):
Liberal: Australia, Canada, Japan, Switzerland and the US;
Christian democratic: Austria, Belgium, France, Germany and Italy;
Social democratic: Denmark, Finland, the Netherlands, Norway and Sweden
Not clearly classified: Ireland, New Zealand and the United Kingdom.
Labour want to model us on "Social democratic" but National can't quite get themselves there (despite having retained Clark's "communism by stealth" WFF tax transfer policy).
Independent_Observer, yes, you are spot on about the moral dilemma - and love the analogy :-).
I think the answer lies in creating a greater sense (and understanding) of community. In teaching, I emphasise the concepts of bonding and bridging capital;
http://blogs.worldbank.org/publicsphere/bonding-and-bridging
I see one of the responsibilities of government to provide the foundations and initiatives which promote that bridging capital. For starters, teaching these concepts as part of civics education in our secondary schools would be a great starter. Labour have a policy to introduce the subject into the curriculum but the focus sounds to be on participation as opposed to understanding/philosophy;
The decline in voting rates among young people is concerning for the future of New Zealand’s democracy. Only 62 per cent of 18 to 24 year olds voted in the last general election. For young Māori, the voting rate was only 55 per cent. Civics courses equip young people with knowledge of how government and society functions, and the role they can play in shaping it. Labour will ensure these courses are taught in all secondary schools, including by working with the Electoral Commission, and ensure that all students participate.
But, at least it's a stated policy to start teaching it as part of the secondary curriculum.
I don't think there is a moral hazard between capitalism and democracy at all. I think IO confuses democracy with socialism. Yes there is a conflict between capitalism and socialism. But democracy doesn't necessarily mean spreading the wealth, it just gives us what most of us want; it could be socialism or it could be really right wing libertarianism.
I agree with teaching civics at school. Democracy relies on education.
B-rocker - Here's a quick google search hit: http://www.radionz.co.nz/news/national/307458/10-percent-richest-kiwis-…
Based on this you could draw the conclusion that 90% of NZ'ers brains aren't working properly....they're voting in a manner and supporting a system that makes the rich richer and the poor poorer......why if I was in the 90% majority in middle/poor status in NZ, would I vote for a party that supports conditions that allow the 10% to take more and given less? Surely the 90% would rally together and say - heck we want some of that from the 10% thanks....but they don't....
So as you say - if democracy just gives most of us what we want - you could also conclude that most of us want the rich to get richer and to generate greater inequality and as a result poverty....lovely folks aren't we? Quite irrational....but that's democracy....giving what most of us want....excessive wealth for the 10%, inequality and poverty for the remainder...
Democracy definitely requires good education, which is why I support civics education in schools. But that has to do with education, not democracy.
Further, there are many differing views on political ideology. If I'm poor, I don't necessarily vote for the Greens for their redistribution policies, because I'm educated enough to realise that that's not the best way for my long term future.
Now that's an interesting question! Why do so many people (seemingly) vote in ways that are not in their interests - in other words, how did we get to such a degree of inequality in (some) Western democratic nations?
Well, it all has to do with the fact that the representatives are there to represent our interests, but they do not have to act as our proxy (that's the essence of representative democracy for you).
Would deliberative/direct democracy be better - yes. But how to implement?
To add to the "how to implement" question - I think we need to move from GDP as a measurement (of democratic success) to GPI. This illustrates the problem with GDP as the basis of all our socioeconomic targets;
IO's explanation/conception of democracy: "trying to do the best for the majority (democracy)" is robust. From an ancient/historical (Greek origin - rule by the demos, or all citizens) and the subsequent Western democracy adaptation being representative democracy - rule by a majority of those elected by the "demos" (all citizens) to represent our interests (but not to be our proxy).
To constrain the representatives (i.e., to counter the 'tyranny of the majority'), liberal representative democracy employs a constitution to implement those safeguards with respect to the minorities within the citizens governed.
You are right that capitalism and socialism - both economic concepts/systems to do with control of the means of production - can underpin democratic forms of governance.
And you're quite right that a democracy could exist that did not 'spread the wealth' (i.e., that did not employ redistributive taxation mechanisms). In fact that's very thing that reflects merchantilism - the economic system to control the means of production in the pre-Enlightenment era (i.e., before Adam Smith/capitalism);
https://en.wikipedia.org/wiki/Mercantilism
I refer to it as the "let them eat cake" era :-).
Yes he gives that definition of democracy, but then confuses that definition by suggesting it means wealth distribution, when it doesn't.
You bring up a further interesting point about safeguarding minorities via a constitution. Is this also what MMP tries to do as well?
Kate - I'm definitely getting into the weeds here....wouldn't you say that a families wealth would define their well-being? Unless we're allowed to go bush, live in a tent and not function as a member of society (which sometimes sounds nice). Being a functional member of society requires wealth to achieve any sort of wellbeing e.g. education, housing, food, clothing, healthcare, retirement..(although sometimes homeless people appear happier than many of the wealthy people you meet - and you see the personalities of the so called 'winners' on this site who have made money through property - clearly people with a high degree or 'well-being' as it might be viewed from the outside).....And our current 'democracy' is gifting greater well-being to a minority (top 10%).....so in a sense its not really a democracy at all (its not improving life for the majority - it's improving life for the minority).......or it is..at least its called that....the people do have a vote...but they don't realise they're voting against themselves....which to me is highly irrational...but guess we're only human as they say....
In New Zealand society as it stands, yes (but with some reluctance/qualification as there are many wealthy people, or individuals from wealthy families that contribute to our dreadful suicide statistics).
To me wellbeing = happiness, and wealth isn't happiness. That's where GDP measures wealth and GPI measures wellbeing, or happiness. In 2009, Costa Ricans were ranked #1 on the Happy Planet Index (a measurement methodology akin to GPI).
https://www.theguardian.com/environment/2009/jul/04/costa-rica-happy-pl…
Which gives me hope that one of the poorest countries by GDP can do so well where its citizens happiness is concerned.
IO - Democracy is about giving everyone a vote. Whether the people choose right or left wing tax policy is their choice. If the people choose right wing policies, this is not a failure of democracy, it just reveals that you think the people voted wrong.
As I have said, education is key to ensure people understand what they are voting for, and arguing that people should vote based solely on the topic of inequality is an uneducated position.
Bit scary when we say democracy is about giving everyone a vote to decide whether we want to choose a right or left wing tax policy - and as you say that education is key to ensure people understand what they are voting for....but then you realise that the right wing finance minister isn't even educated to do his job and the whole country is going to vote based on what he's saying and the policy he's proposing....yikes....
B-Rocker. The tax policy, or the fundamental categories/system of taxation is the same between left or right. Where income tax is concerned that is a progressive income tax system. The only difference between the two is at what income the progressivity falls.
So if you're voting based on tax brackets - it's got nothing to do with political ideology (left vs right) but rather you're voting based on your own take home pay.
Not saying that's right or wrong, it's just what it is.
Kate - I then get back to my point that the average voter thinks they voting for what is best for them - but they have no idea - but even worse the finance minister has little idea either. (I'm being a bit extreme in this statement but...) We literally have the blind leading the blind with democracy coupled to capitalism - at least in this form of neo-liberalism...but as long as you're over 18, you get to vote...and we shall vote for the 10% to get richer...And while I do that i shall sit on my moral high horse and say that Labours tax working group is an outrageous idea because I'm in the young Nats, or a property speculator, or a diary farmer.. and we like making the 10% richer!.....(we're in trouble....)...
I think you are right CO. I think being leader has gone to her head. Note the making up policy on the hop abortion decision. You could see she had an epiphany during the debate and off she went. Same with super at 65. Her handlers are probably shaking in their boots. What next. Who really turned this tax working group thing around. Interesting times all right. I had planned to vote labour. But I had no idea what their real plans were. Slamming the rural base is loony tunes. Food will go up in price. Dont want that for my grandees. Oh dear more immigration it is. Bugger
Just read this in full and it seems reasonable to me:
- Don't increase thresholds and use the extra for family support
- Increase bright line to 5 years
- Remove negative gearing
- R&D tax credit is back
- Change secondary tax to calculate correctly rather than flat rate
- Crack down on multi-national tax manipulation
- Allow Auckland Council to apply a regional fuel tax to fund transport infrastructure
- Water royalty, 1-2c per 1000L
- $25 tax on tourists
- Tax working group to look at new forms of taxation
Impact on the majority of NZers will be negligible. I also like the idea of using the time to have a decent conversation around taxing capital gains. Would be nice to have some numbers to back it up.
Yes, it is reasonable, and a step forward.
For all of the rabid dogs commenting here it's probably $20 a week. Sickening greed. But nothing that the narratives around the dole and socialism and tax and spend can't overcome.
We tell ourselves all of these nice narratives about the sort of country we are, and although this election presents 2 imperfect options, that's essentially what this election comes down to.
I suppose it's like how we tell ourselves we're such an innovative country and yet we're as unproductive as hell. We could be so much better. Thanks to democracy, we'll get exactly the Government we want and deserve :)
Perhaps the landlord could just vaporise and that added 'cost' on the taxpayer disappears...renter becomes an owner...landlord doesn't get tax breaks for doing more or less nothing.....renter becomes a home owner....sounds like a great solution for the country as a whole...essentially landlords are becoming a deadweight loss to the market so the sooner they disappear the better off the country will be...
How does less rental stock become cheaper for the renter, I got a C- in Eco 101 and even I know reduced supply = higher price, also the cost of owning a home is at least 30-50% more expensive than renting...e.g deposit, interest, rates, insurance, maintenance All paid for with after tax dollars, I haven't smoked a pipe for so Long and am getting ready to jump! Let's not forget that owner occupiers probably have less occupants per sq meter than rented flats
I don't know where to start keywest....do you think a house vaporises when a landlord sells it to a owner occupier who was previously renting? It's a one for one swap...a landlord leaves the market and a renter becomes and owner occupier....landlords have been putting upside pressure on capital value of residential housing (its artifically inflated the market along with low interest rates...). It's a recipe for disaster..
As Independent Observer points out above, having houses moved from the vulture class to the home owner class does not reduce the number of available houses at all. Indeed, it will result in a better society where there is a better chance of more houses built. The vulture class do not want to see more houses built, it cuts their rent opportunities.
How do any of those policies make it more expensive for a landlord to make a profit?
The high cost of property and the large debt involved together with limits to what renters can pay is what limits profitability. In which case it sounds like most rental properties aren't viable businesses without taxpayer subsidies and capital gains.
I don't know, maybe some landlords will sell up as the capital gains train inevitably exits the station and landlords are finally made to provide homes which are healthy to live in. Then as the big sell off happens, the value of houses will drop and tenants will be able to afford their own hoses to live in with their own wages. Then the now ex-landlords will have to find something productive do do with their lives instead of riding on the backs of others. Wishful thinking maybe?
Just highlights that many of the National talking points being repeated shrilly are summarised here: https://i.imgur.com/pUMEike.jpg
"There will be no new taxes or levies introduced in our first term of government beyond those we have already announced."
So what does "has been announced" include then? ETS? Fuel Tax? Water tax? Tourist tax? Income tax increase? Milksolids tax? Voters would like some clarity please.
Here you go... it's all spelled out for you.
What is the beef with Tourist tax about ? Personally I think its a good idea
That $25 on top of the $2000 you just spent on the airfare is a real consideration - I mean thats 3 or 4 days food living on 2 minute noodles for the average back packer ..... nah Ill go to Zimbabwe instead, save my 25 bucks.
Get a grip.
What's wrong with a tourist tax? According to Our Lord and Saviour John Key, a tourist levy (use that word to try to avoid the broken promise of new taxes) will not make a blind bit of difference to tourist numbers and is all part of "user pays".
However, Key said it would not make "a blind bit of difference" to tourist numbers.
"Either the taxpayer pays for it, or the user pays for it. Given half of it's gonna be paid by foreigners coming to New Zealand, I would have thought that'd be an appropriate place to put that."
You're not saying Key was wrong, are you?
Frequently. Key was one of the most talented politicians this country has had, but wasted a lot of opportunities.
NZ tourism industry will extract whatever money tourists are willing to spend out of them via the usual means of providing goods and services, and govt receives a mighty cut of that through the usual taxes. Adding new taxes/charges with their extra administration costs is an inefficient way to collect extra revenue that only serves to grow bureaucracy and admin costs.
I'm guessing that curbing immigration numbers is the issue for which NZ First has the highest level of concern about at the moment.
National has a policy of no change.
Labour has a policy of limited change.
Labour is the more likely coalition partner on that issue.
Who knows what concessions National might make to get into power. But the thing is, with National, they have a significant recent immigrant voter (and funding) base. They will offend that funding base if they do make concessions.
My guess, it would be very, very difficult for Peters to trust them on anything they agree to by way of change to immigration settings - unless of course they give him that Ministerial job and full, free reign.
Here's Labour's current policy - all aspects which align to NZ First policy:
Student Visa: Limiting visas and ability to work for low value courses, a fall of 6,000-10,000.
Post Study Work Visa - Open: Remove work visas without a job offer for lower level qualification graduates, a fall of around 9,000-12,000.
Work Visas: Regionalise the occupation list and ensure that employers hire Kiwis first, a fall of around 5,000-8,000.
Estimated Reduction Total: 20,000-30,000.
The NZ government is sovereign and can renegotiate or leave any FTA or other agreement it likes. The problem is with the South Korean FTA which National got us into. South Korea is 3% of our total trade. Good article here - http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=118…
Thank you that is an excellent article. I suppose National has no intention of renegotiating the agreement, they really sent us up the creek without a paddle. Kiwis are in a no win situation, being sold out under National or taxed to death under Labour, I'm not sure which is worse.
You can do a calculation here;
Yes, what we need is Joyce lying about budgets, Paula taking away human rights, O'connor suggesting "Jacinda Ardern wants old, disabled to commit suicide" , English Beneficiary bashing, and the government leaking Winston Peter's private superannuation details. You know, campaigning the National way!
MSD cleared of leaking Winston's details - not many groups left after the IRD cleared their team also.
Who could it have been?
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11922751
Labour are out to raise taxes and fairness has nothing to do with it. They are targeting groups that wouldn't vote for them anyway. Landlords are being targeted and it makes no sense. They are going to ring fence losses on an investment property to the property. If I have 2 properties and one makes $5000 pa and the other losses $10,000 they are going to make me pay tax on $5000 and the fact I have lost $5000 is not considered. It is like taxing a diary based on the profits of one product and excluding losses made on other product. It is a horrible mess. The only time the losses can be offset is if I make a capital gain on that property. It is a very unfair environment. I don't mind the bright line test being extended so much but 5 years doesn't seem right. A lot can change in 5 years. Anyone who purchases an investment property should have to explain how they plan to make money from it. Anyone subsidising the rent to pay the interest portion of the mortgage and have no plans do reduce the mortgage could be considered to be seeking capital gains as a primary method of getting a return on investment. Anyone who is paying down debt and is improving the property to increase the rental return over time could be considered to be in it for the long haul.
I have an investment property but the reason for having it isn't really investment. Due to family reasons the house isn't suitable at present. When things change we want to be able to move back. If I sell it, I may not be able to afford to buy another similar house when the time comes. My objective is to minimise the cost of keeping it. It is well maintained and we charge the tenants a fair rent. The tenants are happy and we are happy. I don't see why I'm branded evil and deserve to pay more tax and have less rights over my property. I haven't made any money while it has been rented out and probably haven't made any capital gain.
well put Dave, and that is exactly the results of waging wars against various sectors of society which has encouraged behind the scene - creating that hatred, vicious enviness towards Landlords and boomers etc .... some idiots follow that trend blindfolded because they feel were left behind and gradually wisdom gave way to stupidity and cheap political gain without thinking about the possible dangerous implications of such thoughts and moves ...
I'll be worse off under labour as I'll lose more money. I'm not making any to start with. Next it will be the tenants complaining I put the rent up. I'll have to do a bigger increase because I won't be able to do it again for 12 months. I'll have to do it each year just in case. I wasn't actually planning on doing it at all until my costs changed. Hopefully the tenants will get an increase in the accomodation supplement if they get it.
"Labour will end the practice of negative gearing"
Negative gearing is to let PAYE earners get the same treatment as companies. What they are proposing only hurts middle class property investors, not the very rich who will still be able to write off losses from one of their companies against the profits of another.
Why? Why should companies have more rights and pay less tax than individuals?
What's to stop one switching income to company rather than as PAYE - then they can do exactly the same thing, write off the losses of one company in the group against profits of another before paying tax?
"2.8 The Income Tax Act 2007 permits the sharing of losses between companies that are in the same “group of companies”, that is, they have at least 66 percent common ownership. If a company has made a loss it may elect to make the benefit of the loss available to another group company that is in profit."
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