As could be expected, the National Party has attacked the findings of the Tax Working Group with both barrels - Leader Simon Bridges and Finance Spokesperson Amy Adams both launching assaults.
Bridges is not holding back, calling the final recommendations a "monster" and "an attack on the Kiwi way of life".
Here's the Bridges statement:
More costs as tax monster unleashed
The Tax Working Group has gone much further than a Capital Gains Tax with a raft of new taxes targeting hard-working New Zealanders, National Leader Simon Bridges says.
There are eight new taxes including; an agriculture tax, a tax on empty residential land, a water tax, a fertiliser tax, an environmental footprint tax, a natural capital enhancement tax, a waste levy and a Capital Gains Tax.
“This is an attack on the Kiwi way of life. This would hit every New Zealander with a Kiwi Saver, shares, investment property, a small business, a lifestyle block, a bach or even an empty section,” Mr Bridges says.
“For farmers, who are the backbone of our economy, this is a declaration of war on their businesses and way of life. They would pay to water their stock, feed their crops and even when they sell up for retirement.
“Labour claims this is about fairness, but that’s rubbish. The CGT would apply to small business owners like the local plumber, but not to investors with a multi-million dollar art collection or a super yacht who won’t pay a cent more.
“The TWG has recommended one of the highest rates of Capital Gains Tax in the world. The Government would reap $8.3 billion extra in its first five years from ordinary Kiwis - small business owners, farmers, investors, bach and lifestyle block owners. After 10 years it would be taking $6 billion a year from Kiwis.
“It will lead to boom times for tax lawyers and accountants and even Iwi advisers, given recommendations for exclusions that include Māori land in multiple ownership.
“We believe New Zealanders already pay enough tax and the Government should be looking at tax relief, not taking even more out of the pockets of New Zealand families.
“National says no to new taxes. We would repeal a Capital Gains Tax, index tax thresholds to the cost of living and let Kiwis keep more of what they earn.”
Here's the Adams statement:
Massive tax grab will hammer NZ economy
New Zealand might have been expecting a capital gains tax to be announced today but the full suite of taxes proposed by the Tax Working Group would threaten the very viability of large swathes of the NZ economy, National’s Finance Spokesperson Amy Adams says.
“The new taxes proposed today will create a compliance mine field, massive distortions in the market and weaken our international competiveness at the very time the Government acknowledges the international economic risks are growing,
The proposal from the Government’s handpicked Tax Working Group doesn’t line us up with other countries as has been claimed, instead it would impose one of the most onerous capital taxation regimes in the world with 100% of the gain taxed at full marginal rates, limited relief for capital losses, no inflation adjustment and limited rollover relief.
“The Capital Gains Tax proposed by Sir Michael Cullen and the Tax Working Group will hit every small business owner, KiwiSaver account, farm, family bach, lifestyle block and investment in New Zealand. It will act as a massive disincentive to save, invest or build a productive business.
“There is nothing fair about saying owners of baches and lifestyle blocks will face a tougher CGT than corporates.
“It would add significant complexity to our relatively simple tax system, likely exempt Iwi assets, require all eligible assets to be re-valued within five years and further drain New Zealand’s already shallow capital markets.
“New Zealand doesn’t need a Capital Gains Tax and the Government has to date failed to confirm this would be a revenue neutral package. The CGT alone would raise an additional $32 billion over ten years and there is no evidence any offset will be of the same magnitude.
“On top of the Capital Gains Tax, other new and increased taxes, include a vacant residential land tax, a water tax, a fertiliser tax, an environmental footprint tax, a natural capital enhancement tax, extending the waste tax.
“It is quite simple, a country can’t tax itself to prosperity.
“New Zealanders already pay enough tax and National believes if you want New Zealanders to succeed on the world stage the tax burden should be reduced, not increased.
“National has promised to repeal the Capital Gains Tax, index tax thresholds to inflation, repeal the Regional Fuel Tax and not introduce any new taxes in our first term. Our full tax package will be released closer to next year’s election.
“The longer the Government dithers over its response to this report, the more our economy will be hurt by the fear and uncertainty these recommendations will rightly cause.”
And here's a tweet Bridges sent;
This Tax Working Group report is an assault on the Kiwi way of life. I will fight it every step of the way.
— Simon Bridges (@simonjbridges) February 20, 2019
17 Comments
I haven't a clue about the proposed taxes. But Bridges says ""an attack on the Kiwi way of life"". Well that way of life is great for a retired home owner like myself but it is crap for my working children who despite working hard and being better than average educated have almost no hope of ever buying a house to live in. It will not be good for them nor good for the government when they retire in 30 years time still renting.
Where to put the blame: well maybe back to Helen Clarke opening the immigration floodgates without understanding the implications but when John Key achieved power he said house prices was his priority and then did nothing for nine years. Why should I believe the same National party with Simon Bridges in charge will act?
The wider issue is that wealthy folk have allowed the little people - "Mom and Pop Investors", "Hard-working Kiwis" to circumvent taxes - this isn't about allowing Mom and Pop to keep money in their pocket, what it does is legitimise the obscenely wealthy's actions, who have far more than Mom and Pop can ever dream of, to do the same thing.
"Hey we're not the bad guys here, you can do it too!" (just not as well as us...)
'Hey don't you dare close my loopholes, "just think of the Mom and Pop Investors", those "Hard-working Kiwis" "Trying to get ahead"'
It's a load of bullshit. On which note here's a cracking unaired interview between Rutger Bergman of Davos fame and Tucker Carlson of Fox News Entertainment infamy. https://www.theguardian.com/society/2019/feb/20/historian-who-confronte…
You know what will really show those property investors? Absolutely fisting people who have Kiwisaver or a small business they need to sell to fund their retirement! That'll show those baby boomers who have already cashed up and taken the easy capital gains on offer, by just brutalising a totally different group of taxpayers.
A few dollars in the pocket of a lucky few, but for everybody in KiwiSaver or with a few shares, a tax bill that will wipe that out any tax cut and impose huge compliance costs. Don't underestimate the compliance costs. A lot of ordinary people will need to fork out anything from $500-$2000 to accountants on top of their extra tax bill. Shares are already a high-risk investment. Knocking 33% off the return makes term deposits and bonds very attractive. It's a tax on risk and would make investing in new businesses much less attractive. Just a point: if yields fall and bond prices rise, will that constitute a taxable capital gain? What sort of political idiot would jeopardise their grip on power for something as daft as this lot of nonsense? A tax that may be a negative in some years, I'm thinking 1986, 1995, 2008? Will need to borrow big time to fix the Budget black hole then.
This is all about the gains on property, especially in Auckland, over the past few years due largely to capital flight from China, which was warmly welcomed by the Nat govt.
I’ve read the recommendation alternatives for asset determination on valuation day, the 5 year retrospective, the median calculation etc. It seems to me it would be a bonanza for paper shuffling and advisors especially where asset class value is basically opinion. I can’t see where any of that can add one jot or tittle to the earning capacity of the country.
As a wealth distribution/social engineering strategy so far I haven’t seen much to project revenue neutrality or demonstrate how the increased taxes find their way into increased wages?
Messing with Kiwisaver again seems a really bad policy avenue when millions of Kiwi wage earners have entered savings contracts on the basis of current rules.
Of course these are only recommendations from wise people. We’ll see how real politik sees them play out.
Biggest problem by FAR is it incentivises one to pour funds into a bigger more expensive residence.
Better to have a $ 2 million house - no CGT than a $ 1 m residence and $ 1 m investment property subject to CGT. The worst part is that it is a self fulfilling prophecy. Spend up large on your residence and it will push the value up of all similar residences.
This effect has been seen and well documented in Australia where their domestic residence is excluded from asset testing for super.
Live the life of Reilly in the big mansion - use the super payout to settle the mortgage and then appear on Centrelink's doorstep with no financial assets and qualify for full super.
The ONLY solution is to include ALL properties without exception.
Then a simple land tax calculated annually on the last line of your rates notice is the way to go.
Incentivises investment into productive enterprises.
All assumes we need incremental revenue and that it will be spent wisely ! Track record to date os not good !
I wish that Simon would tone down the rhetoric. I don’t think I’m alone in suggesting that it’s not helpful, not insightful (even considering it’s probably been well rehearsed) and simply comes across as rather petulant and reactionary. I really think he thinks he is the reincarnation of JK which unfortunately he most certainly is not. As a National supporter his efforts to exemplify statesmanlike behaviour that would endear him to the converted are falling well short of the mark. That said, at times he makes some good points but one is easily inclined to overlook any of them due to his clumsy and often sophomoric outbursts.
I just feel he needs to be himself, whatever that maybe, as I suspect he does have his own personality that would serve him better rather than this mimicry (at least as I see it). If the current persona is genuine then I’d suggest his handlers have some much needed work to do.
No national. Your policies have been a sustained attack on kiwis for a generation. Neo liberal economics has failed to deliver. It has rewarded those with mates in high places, and pushed the average kiwi onto near slave wages. Aucklandersonly feel wealthy because of your failure to recognise a houseing issue, and now you are trying to say this is an attack. No. This will eventually allow our children into reasonable homes, allow farmers to buy land, allow us to think of a future because it will slow, or stop capital gains growth. That’s not a bad thing. Then we can invest our future on proper growth. In machines to make us more productive, not slave labour to make more productive, in proper education, not MacDonalds education that casualises the workforce or offshores it. You have missed a ground swell, and you so called blue green buddies won’t help. This is now about the future of the generation born after 2000. Not old white people. BTW I’m an old white person, but I’m supporting these changes for my grandchildren
" Neo Liberal " economics was dumped upon kiwis by Roger " Dodgie " Douglas and Big Daddy David Lange ...
... and unless my memory fails me completely , they weren't exactly paid up members of the National Party ...
The Gnats merely continued and built upon their neo-liberal orthodoxy ... trickle down theory ... tee heee heeeeeee ....
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