Prime Minister Chris Hipkins has ruled out implementing a capital gains or wealth tax after the election in any Labour-led government.
In a statement released alongside various documents relating to Budget 2023, Hipkins revealed officials were working on a potential wealth or capital gains tax that could offset an income tax cut.
However, he nixed the idea in a captain’s call.
“While work was already underway on a potential wealth tax and CGT as part of a tax switch in the Budget I ultimately made the call not to proceed with it. We simply didn’t have a mandate to implement those tax changes,” he said in a press release.
The Prime Minister is currently in Lithuania for a NATO summit.
Hipkins said the Labour party would draw a line under speculation about tax policy and rule out both a wealth tax and capital gains tax.
“I’m confirming today that under a Government I lead there will be no wealth or capital gains tax after the election. End of story,” he said.
Coalition scrap
This will come as a disappointment to necessary coalition partners, the Green Party, which has pitched a guaranteed minimum income and tax cuts funded by a wealth tax.
James Shaw, the party’s co-leader, said in a statement that this was not a decision Hipkins had the authority to make.
“Political leaders don’t get to decide what will and won’t happen after the election. That’s the job of the New Zealand public,” he said.
Governments had been “tinkering at the edges” and refusing to tax the wealthy for too long.
“If political leaders are not willing to take those decisions on behalf of the people of the country you purport to lead, then why be in politics at all,” he asked.
Shaw claimed a majority of New Zealanders supported a wealth tax, and the Green Party would argue for one in coalition negotiations. He didn’t say it was a bottom line, however.
No big shake-up
Hipkins said it was not the right time for a big shake-up of the tax systems, when many Kiwi households were struggling to get by.
“New Zealanders I talk to want certainty and continuity right now, and that’s what I’m delivering with this policy”.
A Labour government would be focused on the basics and not on “experimenting with a wealth tax”.
Hipkins also hit out at National’s promises of tax cuts, which he claimed were unaffordable and inflationary.
“Some people might call it boring, but the times call for restraint and simple and smart policies which grow our economy, help drive inflation down and provide targeted help to those families who need it the most” .
Further details of Labour tax policy are yet to come, but big changes have now been ruled out.
Nicola Willis, the National Pary’s finance spokesperson, said she’d been warning for months the Government had been designing a new set of taxes.
“Earlier this year they took a wealth tax plan all the way to Cabinet. This would have put a wrecking ball through our fragile economy,” she said in a tweet.
280 Comments
I have no problem with death duties per se, but the are notoriusly hard to administer fairly.Hipkins has probably identified these issues with wealth taxes
- the most mobile capital and individuals scarper under a wealth tax regine. We rely on these people to invest to innovate, and invest, to create wealth, which gives us a dynamic and growing economy
- the least mobile capital, such as farmers, often do not earn the cash to pay the tax. However, their primary production is a key part of nz export income, and creates jobs and income as it is converted into higher value products.
We'd be throttling golden geese.
Yes, it's their job to take from the rich and give to the poor, but we should also bear in mind that in coalition with the Green and the Maori Party they would be forced also to take from the hard working part of the population and give to the spongers of all kinds.
Taxation only cancels the governments currency after its spending and so no taxation is ever given to others.
https://www.levyinstitute.org/publications/can-taxes-and-bonds-finance-…
https://www.levyinstitute.org/pubs/Wray_Understanding_Modern.pdf
I’d encourage you to look at the Greens tax calculator. You’ll find that anyone earning under 125,000 (or higher if they have dependent children) will be financially better off under their policies.
I would suggest that the middle class will be better off under their policies.
They do incentivise having children a lot, which is another debate. I’ve got 4, so I won’t complain
This is a good example of why I don't think this tax will work. Liquidity. Yes, she's wealthy on paper (her house is worth a lot!), but her income is limited. How does she pay a $75K tax bill? Every year.......? I suspect this is a situation that many Kiwis will find themselves in. They were never "property investors". They bought a house to live in, at a time when it was affordable and, thru no actions of their own, find that asset has accumulated, significantly, in value. If you want to tax that "wealth", then do so when that wealth is realised.
The other problem with a Wealth Tax is that the very wealthy will be able afford the clever accountant who can make them look very poor on paper at tax time.
This is why I prefer a Capital Gains tax. The tax occurs at the time where the "wealth" is realised. Not just houses, but stock and other investments as well. The US got this mostly right. I wish Labour would have followed their example.
The Greens tax calculator is intentionally misleading and I am surprised no-one in the media has pulled them up on it.
It doesn't ask if any assets are held in a trust which they plan to tax at 1.5% p.a. If it did, you'd find a lot of middle class people would be worse off that the current calculator claims would be better off.
True.But not all that far ahead of who annually collates, records, monitors and audits all the relative assets and how each of those assets is valued.Add to that the complexity of value not actually realised but only perceived. If the realisation eventuates at less than what was perceived, assumedly in fairness, there would be a tax rebate. Only identities who are entirely clueless about the reality of market circumstances, could dream up a proposal such as this.
Got to be in power some how?
Short term thinking to remain in power is not what strong leaders do. Got to be able to educate and change the mindset of public for a greater good.
Not just go with the flow.
I think NZ needs to understand that going with the flow only leads to drowning in the end and only who swim against the current reach new shores and achieve greater good.
This all lies and rests on an assumption that our society has at any point been defined by the populace. Most of it's been planned and we just choose the administrators.
Way unlikely to change without mass consensus, which is the opposite of where society is heading.
Then the "many" that you describe would be wrong Chris. The Government have to ask the RBNZ to print money (RBNZ doesn't just get to print money if it feels like it). And by doing that, the Government caused inflation (it's only transitory, it will only get to 3%. It will only get to 4%, 5% etc). And to control inflation, the RBNZ have had to increase interest rates. The Labour Government have borrowed billions and printed billions. And caused the mess you see today. A mess that will take a generation to dig us out of.
The problem is not solely that they printed money, it is that we do not have anywhere near the necessary tools to control capital flows back out of the economy once it's there. The money created simply juiced the tax free low interest speculative housing market, and the necessary response is the only tool we have to tax that money appropriately; the OCR.
Like it or not, there will come a time where deficit spending will once again be necessary to stimulate the economy (like over the next couple of years). Do we want another asset bubble followed by handbrake OCR, or do we want other tools and taxes which give greater controls over preventing the inflationary bubble happening in the first place and distributing that money more effectively throughout the economy? We seem to only want the upside of government spending, without the realisation that it must get sucked back up somehow. For now, OCR and PAYE.
It is also caused by rapidly increasing the population without actually investing in additional infrastructure and services for all the extra people. Let alone not having enough houses for the to live in. What they are doing is false economy and kicking the can down the road for another government to solve. I can see a repeat of the 80's and 90's occurring.
By shifting the tax burden off property and off rent-seeking monopolies - above all, off the financial sector - this policy has raised America's cost of living and doing business, thereby undercutting its competitive power and running up larger and larger foreign debt. Michael Hudson.
"That point arrived for the U.S. economy in 2008..." Not just the US economy - every economy.
Anyone who has a brain should be able to fathom that everything since then has been in a forlorn effort to save the unsavable. Any talk of "It's worked! Look we got thought with ZIRP and now we are normalising things, and it will soon be back to normal" is deluded.
This makes them less electable. The polls will go down further from here. How could they even think about and include this in their planning when they have absolutely no mandate for this, is completely unbelievable and shows they cannot be trusted with anything. They have done a lot of woke rubbish but in the end that does not cost lots of people lots of money. This does and there will be a backlash as a result. This could be the final nail in the coffin for them, regardless of Chippie 'ruling it out'
That's exactly right. No one asked for 3 Waters or any of that other raced-based looney ideas. There was no mandate for any of it. But, at the end of the day, people (Labour voters) would just stick with them because it does not affect them 'much'. 3 Waters might because if implemented by this government then it will cost a fortune and everyone will be paying heaps for water, and then it will be a problem. Right now they are telling people it will cost less, which is a lie. So, having no mandate for any of this stuff is not as big a problem as saying, hey look, when you sell your house, you are going to have to pay us 100K or, since you have a trust we are going to punish you by doing x. These are massive problems, and people will take a lot of notice of that. It's great that they have admitted to this, this is a complete disaster for them and reveals what they truely are......and besides, all their woke stuff and 3 waters is going to be rolled back, if Chippie does not cancel it at the release of the next terrible poll. However, we now see that these 'cancelled' policies have a habit if creeping back after leadership changes in the same government. Also a bad look.
Obviously, you don't understand. Parties campaign to implement certain things if they are elected. Then when elected they are supposed to do whatever it was they said they would do. Wishful thinking I know, but, they never campaigned on any of this stuff, so therefore no mandate, which they duly admitted to being the reason why they could not implement a wealth tax or CGT. No mandate, just as chippie said in the press release.
Agreed, all this "Captain's Call" (barf, I hate that term) does is creates a bad perception for Labour:
- If you wanted meaningful tax reform, you now either have to look at Greens, TPM or TOP.
- If Labour bleeds votes to the harder-left parties (Greens/TPM) that will surely factor into the voting calculus of more moderate voters who could float between Labour and National - suddenly the tail that wags the dog has become bigger and bushier, and more unhinged in its wagging behaviour (reference the Greens policy manifesto)
- TOP is a bit different - the risk here I guess is that they pick up 1-2% extra but don't cross 5% and Raf fails to win in Ilam.
- Comparing National with Labour, National now looks like Evander Holyfield - "The Real Deal" - whereas Labour is now National-lite with the added benefits of scandals aplenty, co-governance, and an obsession with emptying the prisons of violent criminals and denying that crime even exists (not a comment on whether 'tough on crime' works btw, just another matter of perception)
- It is another piece of evidence (if any more was needed) that Labour will just do whatever it wants when in power regardless of what was campaigned on ... not that I think any party would be any different, but in politics perception is so much. Does this announcement make the average person trust Labour more, or less? I think the answer is obvious. Do you expect me to believe for a nanosecond that if Chippy needs TPM and the Greens who want wealth/capital gains taxes they won't be back if they had already been planned?
- If Labour does scrape across the line with Greens & TPM, this is a recipe for chaos - imagine how pissed off all the "moderates" who bought into Chippy's latest decree will be if a wealth/capital gains tax did wind up going ahead, and imagine how pissed off Greens/TPM supporters (and more importantly, MPs) will be if they don't get what they want. Hardly a recipe for stability. Comparatively, National & ACT are more aligned on most matters.
This announcement really seems like a lose-lose from Labour. Maybe their internal polling is worse than the public polling lets on, and this is a desperation play. It seems very out-of-character.
Ludicrously, arrogant, ignorant statement by Shaw. Governments do get to decide what will happen post election and the people have no say about that until the next election. Ardern’s second term demonstrates that point exactly whereby an unprecedented outright majority allowed introduction of unheralded legislation, annd about which, the people are looking likely to now have their say and boot them out. Delusions of grandeur is an old cliche, but nothing else describes the Greens better than that. They really are pathetic.
by Stuart Mason | 12th Jul 23, 12:05pm
Odd strategy to kill something 2 months ago and not go public with it, given that the government obviously thinks this will make Labour more electable rather than less come October.
Maybe they were keeping this information in reserve as ammunition should their polling go bad. Which it just has.
"We almost did something stupid but decided not to" isn't the huge flex Chippie thinks it is.
It does however tells me he has at least three factions in his cabinet (Maori Caucus, Ultra-radical tax everything wing and some moderates) and that we also haven't been hearing much from Grant Robertson lately.
Not a great time to be slumping in the polls, it seems.
Grant Robertson appears to have completely checked out. The Chipster is standing on the frontline looking over his shoulder realising all his mates have abandoned him. That will be the difference come election time. National & Act will roll out their alternative team, Labour will have Hipkins standing alone wondering where the hell his colleagues went.
I don't think there will be any capital gains (with the exception of a few successful businesses) before he's rolled for the next leader, looking at the swaps. You would have to tell everyone their net worth dropped >100k each year. Why make an issue of it when there's no revenue to be collected? Everyone will try value their house at 2021 prices.
As for the wealth tax it's probably not going to be well received to bring it in when people feel their wealth is going down (TDs are already taxed).
The reason may be that Labour are working on a tax switch and they will bring it out later in the election build-up to get voters back from the Greens. Perhaps they will take another policy from TOP and bring out a Land Tax now that Chippy has put the boot into a wealth and GGT.
I was having a conversation with someone, they told me they couldnt sell their investment property because of brightline, I did point out they could sell it, just have to pay a bit of tax.... Personally I dont care, wealth tax, cgt, knock yourselves out. We have much bigger problems than that, anyone voting based on a potential tax position needs to pull their head out of their arse.
Not that I believe either of the big parties have the answers to anything.
Hipkins truly is the 'Last Moderate'. There is nothing left to 'moderate' or 'tinker' with. We face immense historical challenges, which everyone reading this is aware of, yet there are no heroic figures who attempt to tackle them in establishment politics. This 'moderate' and 'centre-handed' approach to everything, this 'politics without radicalism' is so bankrupt of ideas, delegitimised by repeated failures and hamstrung by the media driven state.
The immense reform must come, but it is going to take a Caesar snapping the spine of the media run state to make it happen.
Imagine if more Kiwis stuck around and voted for change rather than buying a one-way ticket to Aussie at the first sign of economic trouble. I suspect our major political parties are well aware of the lack of fight in us Kiwis and therefore don't bother doing the right thing.
Not blaming the average simpleton on the street who have been fed lies for far too long by charismatic politicians. After all the chants of "Let's Do This", comrade Cindy made a complete mess of this country, said screw this and moved to Boston.
Surely you realise that:
- Voting for change
- Buying a one way ticket to *Aus
are not mutually exclusive?
One can continue to vote for change from their new Australian locale - and be more comfortable economically there until such time as change is realised. At which point they may or may not return, depending on how they feel things are going.
It’s not one or the other.
Exceedingly good post, Von Metternich!
Pretty much sums up our lack of choices. Or put another way ... Why the wealthy now own NZ.
Why...because...?
Around 30 years ago we got rid of ticket clipping wealth envy taxes such as death duties because after a century of forelock tugging to the UKs iniquities NZdrs saw that they didn't support people who worked a lifetime to create security for themselves and their families. Also part of the electoral mandate for the original introduction of GST.
ABSURD.
Labour could have differentiated itself from National and helped those most in need.
Instead NZ gets to carry on its unproductive history of giving the rich tax subsidies. This is BS.
Any one want to fund a new Productive NZ party with a focus on maximising wellbeing per capita.
I’m sick of this.
"In responding to a National Party claim that extending capital gains taxation as recommended by the Tax Working Group would mean that “the average person’s KiwiSaver” would be worse off, Tax Working Group Chair, Sir Michael Cullen said that the analysis failed to take into account the important TWG recommendations which would actually reduce tax on most KiwiSaver accounts."
https://taxworkinggroup.govt.nz/resources/twg-responds-kiwisaver-claims…
Like I said - cherry-picking.
"In responding to a National Party claim that extending capital gains taxation as recommended by the Tax Working Group would mean that “the average person’s KiwiSaver” would be worse off, Tax Working Group Chair, Sir Michael Cullen said that the analysis failed to take into account the important TWG recommendations which would actually reduce tax on most KiwiSaver accounts."
https://taxworkinggroup.govt.nz/resources/twg-responds-kiwisaver-claims…
You're right. Details do matter.
Except that National will:
1. Reinstate interest deductibility to investors
2. Reduce the bright line test
3. Allow foreign property buyers
4. Encourage lower density housing
5. Tell the reserve bank not to consider sustainable house prices.
6. Likely increase immigration more to ensure an extreme housing deficit.
1. Reinstate interest deductibility to investors - ensure horizontal equity and will reduce rents by increasing number of rentals in the market
2. Reduce the bright line test - ensure quicker turn-over of properties, increasing the efficiency of property sales. I know people currently who are holding things they'd prefer to sell due to this. Also, when combined with (1), you see people in Qtown moving long-term rentals to airbnb when they'd prefer to sell
3. Allow foreign property buyers - has a marginal effect on property markets. Also increases prices and ensures quicker turn-over, neither are bad...
4. Encourage lower density housing - where suitable. Though this is misleading. It's more choice. MDRS is a blunt tool which doesn't make any provision for the increased infrastructure required with density. Enabling an opt-out can ensure density doesn't result in future slums.
5. Tell the reserve bank not to consider sustainable house prices. - this is a no brainer. RBNZ already considers financial stability.
6. Likely increase immigration more to ensure an extreme housing deficit. - misleading and not based on evidence. Immigration peaked under Ardern pre-covid. Only party that isn't openly pro high immigration is NZ First.
A productive NZ is not achieved by the rich parking capital in the nearest tax free hole.
Thats what’s happening now and it’s been a disaster for NZ. We have really low productivity and this is part of the reason why.
Capital needs to be finding the next productive use for it, not for example bidding up land prices which is completely unproductive.
Yep, and we are looking at a nine-year National/Act government at least.
They won't be able to do anything in the first term really. They will roll back all of Labours rubbish raced based stuff and all the other crazy stuff that has been done. Bring out the razor gang and start to get rid of the fat in the public service and put the emphasis on results. We will see those results close to the end of the term. Crime will be a big focus. That will be enough for a second term, but a larger majority.
The second term will be about improvement, and we will see better results coming through, they will only have to remind people at the election how bad Labour actually was, and how things have come back to normal. People will remember this Labour government for a long time, and that reminder will mean Labour have no chance in that election either.
Then they will be into the third term.
This Labour government are so bad, they should have only lasted one term, but Covid came along and gave them a second. In that regard, Covid was an absolute disaster for New Zealand.
You are dreaming mate. National governments never actually reverse the damage done by Labour, they accept 90% of the changes, tinker 10% around a bit to make them more functional. You are utterly kidding if you think the insanity pushed by Labour hasn't built a huge constituency in the Bureaucracy, who need to be purged and flushed out before any reform is possible.
He is the one person leading a government agency who shouldn't be cut.
He is an exceptionally wise police commissioner and understands the implications of consent based policing very well. Police exist as the armed force of the state to suppress and crush the masses where necessary. He managed to maintain the legitimacy of the police throughout the Protest and limited the resentment and hatred of the police through the entire ordeal. Trust in the Police is at its core vital to the legitimacy and function of the Police. If you don't trust the police, you have no recourse to justice other than your own force of arms. The responsiveness and availability of Police is extremely important to that trust.
Prior to the 20th century, Police were more or less viewed as paid bullies of the rich and powerful. Given how worthless they have become in the face of present criminality issues, they are slowly regressing back to this role. With time, it is likely you are just going to have to bribe cops implicitly to receive law enforcement and public safety. My father was a cop when I was a boy and we always received a healthy serving of free food from the Fish and Chip Shop as back scratch insurance. Now, almost every store needs private security guards as human furniture to deter criminality.
The reality is the policies around managing the underclass render our police useless.
I’d have to agree. The police need to be separate from government and especially government influence. If you doubt this then the other extreme is Nicaragua, where corruption is rife the government owns the police to do their bidding, and should one disagree with the regime the police will do as theyre told by those in power. I respect the commissioner.
Yes, it means a lot less people are required to do a lot more work. I recently heard of a real example, with some people dealing with OT, the child protection people.
They wanted 200 dollars for daycare for a child that they were helping our through OT, which was a legitimate ask. OT said no, many phone calls and emails later, OT decided they would have a meeting to discuss the matter. That meeting lasted four hours with four people. Then they agreed that the rules said the money was allowed, and they paid.
First thing to be done is that people like that need to be fired. All four of them. Replaced by one person that knows the rules and administers the money. 75% saving right there, no loss in services, possibly an improvement if you hire the correct person. No doubt this situation is repeated throughout the public service, and that is where you cut and re-organize.
And based on one anecdote, you write off the entire Public Service. This is the sort of propaganda that brought us to where we are today in this failed neoliberal experiment we live in.
Do you disparage road workers leaning on shovels, while also complaining about potholes?
It's an example. There will be plenty more. The point is that people come up with this garbage that reduced spending means reduced services, and that is crap. Quality spending, better management, better services. This current lot has massively expanded spending in all sorts of areas, and services have gone backward (the performance targets got removed you see). What you are saying is that reduced spending means reduced services, but also it is confirmed that massive increases result in worse services too. So, the problem is the people providing the services. They must have targets set, within certain budgets, or they are out. End of story. All the Maori stuff needs to go, that's a duplication of services and is unnecessary virtual signaling that is of no value, so it all needs to be cut. There are departments on top of departments that provide no value whatsoever. All need to be cut. We cannot keep borrowing money to prop up endless departments of people that provide nothing but feelz, it's insanity.
I don’t disagree, but it’s all a drop in the ocean of boomer benefit. At 17bn a year and rising it’s the single biggest line item expense and yet is never talked about when talking about need to cut expenses.
means test it like Australia, raise the retirement age to 67 (increase it 2 years every decade in line with life expectancy increases)
... that's a pretty normal response from someone with no clue. Start calling people a racist and hope that it deflects your own ignorance. It's a losing argument as people are coming to the realization that when anyone screams racist these days, it is most likely that the person is not racist, and the person doing the name-calling is just an idiot.
So Labour need The Greens to win the election, and the Greens want a wealth tax. Hipkins doesn’t. So what happens there?
So, if I wanted to vote Green, partly on the basis if their wealth tax policy, I am probably wasting my time?
Don’t know if this is very smart, Chris
Every dollar you “have” was issued on behalf the government. Tax and interest are simply controls to make sure that money which is issued is balanced back to negate inflationary and deflationary pressures.
The current inflationary period is mostly due to a lack of appropriate tax and interest, hence the rise in interest rates. Nobody is stealing your money, it was never yours to begin with. Even the interest rate you pay the bank is a form of tax. Proposed tax on rent, land, cg, wealth, are ways of controlling the inflationary pressures that the creation of that money has caused. In the long run, provides the ability to stimulate the economy more effectively without relaying so much on the OCR to clean up afterwards as speculation on the issue of currency is bypassed thanks to: tax.
What happens next. I'd say there are a couple of options
1. Hipkins breaks a promise to stay in power
2. NZ goes back to the polls
There is a 3rd Nuclear option - align with National - just need to decide which Chris will be PM - it would be the ultimate Co-governance option :)
Realistically. Labour will give the Green's some environmental concessions. They will give the Maori party some Maori Party concessions. The government will be one characterised by mediocracy & pork barrelled politics. Our economic position will continue to deteriorate over the next few years. Who knows how it will play out. NZ has issues though.
I won't be leaving NZ yet. I pay a very great deal in income tax, GST and other taxes. I would have returned to the United States if a wealth tax had been implemented, which would have killed investment in NZ--even though I have lived and invested here most of my life. And I know many immigrants who have businesses in NZ who see it the same way. It is tiresome talking with people who are envious if you have worked hard, invested and saved. The Greens are the party of envy and will wreck the NZ economy given the chance.
If you live in Australia, NZ's wealth tax wouldn't affect you even if you held NZ shares or businesses.
It was my time in Australia that had me shift from National voter to Labour voter because I saw a capital gains tax as a good thing. They have tax money to pay for stuff and have lower GST, Lower fuel tax, and a tax free income threshold. This announcement is disappointing.
The tax won’t be used for that. Your thinking is very simplistic. The Gov created $55B out of thin air for LSAP, if needed they could have redirected some of this to other areas. Governments of all colours waste money. Greater accountability is needed eg Provincial Growth Fund (NZ First), and bribes to get Maori vaccinated IIRC it was $200M (not for vaccines, not for reimbursement of vaccinators but back pocket payments).
My error. The quote below is from Ministry of Maori Affairs. It was $120m. The additional costs may have included vaccines/administration costs.
A total of $72.08 million, covering 85 contracts, was approved by Ministers in the final two months of 2021, with approximately $53 million already paid out to kaitono.
Since the fund was established, the Māori first dose vaccination rate has increased from 69 to 90 percent and the second dose rate from 49 to 86 percent for people 12 and older.
When the fund was originally established, $58.5 million (of a total $120 million) was allocated for vaccination support (not including $1.5m departmental expense).
High demand and opportunities identified by providers resulted in an additional $13.5 million reprioritised to support vaccination uptake, leaving $46.4 million to be allocated in Phase 2 to support short term resilience initiatives (up to 31 May 2022).
All proposals have been reviewed by the Senior Officials Group from Te Puni Kōkiri, Te Arawhiti and the Ministries of Health and Social Development. An Inter-Agency Panel of officials also ensured proposals complement the $204 million Care in the Community response.
So this confirms that Lab/Green coalition isn't a thing. This also confirms that the likes of TOP wouldn't touch Labour either given the land tax they are pushing. Does Chippy think they will get a landslide majority parliament again with this last hail mary? I call it how it is, a further nail in the coffin for Labour. They're scrambling to please and don't have the money left in the coffers for the usual election lolly scramble as they usually would so they are all out of ideas and revisiting the rest of the playbook.
NZ is in dire need of tax reform. It isn't an option but a necessity. Shift focus to productive enterprise and off non-productive assets however possible. ACT and TOP will be getting a lot more votes than people think (have said previously), with TOP looking they may need to shift who they lie with come election time. An interesting lead up indeed!
Agree. It may keep the vote of some centrists who would otherwise vote National I guess. But it further disenfranchises centre-left voters such as myself. Also many centrists are probably moving to National anyway. Not sure if there is much if any net gain, politically.
re ... "NZ is in dire need of tax reform. It isn't an option but a necessity. Shift focus to productive enterprise and off non-productive assets however possible."
100% Agree!
I just wish our politicians were smart enough to realise this critical set of facts! But no. Pandering to already wealthy and short-sighted seems to be the name of the game. Totally disgusting.
why does Labour continue to attach this policy to their Leader. It's not the failsafe option they think it is.
For those who don't want more taxes specifically wealth and CGT - they become cynical and think that Labour will switch leaders and it will come to fruition.
For those who do want more taxes specifically Wealth and CGT - they then push for the leader to change so that the tax comes to fruition.
Why cant the party just rule it in or rule it out - rather than sit on the fence and/ or play hide behind the leader.
Average (UK) pay jumped by a record 7.3 per cent in the three months to May compared with a year earlier...But once adjusted for inflation growth in total and regular pay fell over the period by 1.2 per cent for total pay and 0.8 per cent for regular pay. The pay hikes will fuel fears that Britain is in the grip of an inflation spiral. (Evening Standard)
And how different are we and every other economy fighting each other for the workforce to relieve our critical worker shortage? We aren't and to expect that our CPI rises will magically be tamed is wishful thinking. Yes, there'll be periods of enthusiastically greeted respite, but the trend is clear.
Its probably not so silly as it first looks.
It might mean Labour clawing back votes from NACT. They may lose a few votes to the Greens, but the overall left vote increases.
However, it raises the prospect of the Greens and TPM, (and TOP) remaining on the cross benches.If National can claw back votes from ACT, they would be in a position to offer the other minority parties enough to get supply and confidence to govern.
Residential property investors call themselves business people yet they generally do their best to avoid tax. Why don’t they see that as not being fair. If the government had more tax coming in we might have better roads, schools and hospitals. Why are people so selfish. Stuff my fellow man.
From 2012 - 2017 individual tax take increased from $25b to $35b which is a 40% increase, when wage inflation was an abysmal 2%.
Might as well also point out Labour are collecting 700% more in individual tax than Muldoon was during "Think Big".
New Zealand doesn't need a wealth tax, and doesn't need a capital gains tax. One solution to solve New Zealand's problems.
Tax Equity Release as income.
If I have equity built in asset and I use that equity to buy another asset, I am spending that equity and therefore it must be income. If I sell an asset and purchase another, no brightline, no capital gains... free to do as you please. This means to buy houses you either do it with taxed income, or you sell to buy. One house into the market and one out. People becoming rich by piling up fifty houses over 10 years through the fact that that they are not taxed on the equity accrued, is just plain dumb especially when they used this untaxed equity to outbid people using taxed income.
The bright line tax can never work, because people never need to sell...
"People becoming rich by piling up fifty houses over 10 years through the fact that that they are not taxed on the equity accrued, is just plain dumb especially when they used this untaxed equity to outbid people using taxed income"
No they're not, they're become rich because successive governments have ensured there is a shortage of housing leading to outsized capital gains. You are focused on a symptom here, better to treat the cause.
You're assuming rational markets here. I think this dynamic can *cause* housing shortages, as well as being caused by them. It's reflexive after a point. If house prices have been going up for 20 years, banks are confident lending out cheaply with property as collateral, thus encouraging property speculation, which drives up demand, et cetera...
Is there a shortage of housing, or do some have too many and some have none? If you had to sell a house to buy a house, you would go a long way to solving the problem, without capital gains, wealth and Brightline taxes. Sure the banks will hate it, but they are not our banks and offshore NZ hard earned income. Sure it will bring the housing market down initially, but let's have it now and be done with the BS that has gone on for the last 50 years. I know, I am a property investor, and current policy settings will only end in societal disaster. Think bigger, what caused the problem, change it.
I also like the idea of taxing equity release for the purchase of additional properties.
Taxing equity release is not happening based on some "decreed" market value (as would happen with land value tax, where you are paying tax on the basis of what some algorithm/quango/combination of both thinks you *could* sell your property for) but rather an actual transaction that has taken place.
The real issue with how leveraged, equity-release-based property investment has resulted in inequality and a broken economy is because you've been able to utilize equity as a sort of untaxed 'phantom income' to give you a whole lot more purchasing power than you would have otherwise have had.
You might think twice about borrowing $500k against the house to buy another rental if you had to cough up 30% in cash on that $500k equity release.
If you buy a house and then sell to re-buy a bigger house, downsize, relocate or whatever then no problems.
Yes, the equity/leverage spiral and the wealth effect are the elephants in the room that eg. the RBNZ don't have adequate means to deal with directly.
I'd like to see more carrots and more sticks used to force/encourage banks to lend on useful enterprise rather than property. It seems like there are many ways that could be done, with your suggestion being one of them.
Debt to income limits would also solve this issue too. A blanket DTI of 5 means an Investor with $150k HH Income can borrow $750k.
- $800k house with $400k mortgage,
- 1 rental worth $580k @ 60% LVR / $350k mortgage earning 5% gross ($29k).
- DTI = 4.2.
If they leverage their house 80% LVR they have a $240k deposit for another rental. Assume $580k @ 5% gross again.
Total income: $208k ($150k + 2 x $29k). Total Loans = $640k on Home, $350k on each rental = $1.34m.
Uh oh, a DTI of 5 including the 2nd rental's income means they can only borrow $1.04m.
No mention of land value tax.
To me this makes me hopeful.
Makes me think if they're in negotiations with the Greens after the election to form a government, the Greens say wealth tax, Labour will say no, but we can do a land value tax, and the Greens will say OK, because it's 'close enough' to the silly thing they want, and will still play well to the base.
Land value taxes make good economic sense, unlike every other sort of tax, they don't result in less of the thing being taxed.
A wealth tax does not make good economic sense. It will lead to capital flight, lowering the capital-per-worker in this country which will further reduce real wages. A land value tax on the other hand, could see capital-per-worker increase (as $$ shift from land to industry) raising real incomes, while collecting tax revenue at the same time!
My chance of voting for Labour from this has gone from 5% -> 10%
I suppose we'll know soon enough as that will be the next question put to him.
Thing is, to my mind, the world is in such turmoil that no prospective government can promise anything for certain, when conditions are so ripe for changing suddenly, and dramatically.
Moral of the story, when you go over the cliff you deploy a parachute - no matter what your earlier prognostications were.
The No. 1 policy of import in this election for me is moving away from tax policy in favour of which PM is going to be better for the nation in managing an unforeseen international crisis. Our recent Labour-led governments are well known and trusted internationally - add in a coalition partner like Raf Manji with his London experience and background - and it makes for a better prospect.
Luxon and Seymour have zilch foreign affairs background and experience - aside from Luxon's dealings with the Royal Saudi Navy while CEO of ANZ.
Raf spent a few years after graduation as an investment banker in London.
Prior to AirNZ, Luxon spent a couple of decades in Unilever, a successful multinational serving a billion consumers a day with a century of experience working in the foreign affairs of 200 countries.
He started his career in Unilever NZ (I worked there as well at the same time) however left for overseas positions & ended as CEO of Unilever Canada.
https://en.m.wikipedia.org/wiki/Christopher_Luxon
Nice try ;)
Sure, locally there seems to be a Trumpian-type faction that thinks Jacinda made a mess of COVID - whereas internationally we are held of as a beacon of good management. I know - it's odd. Personally having had COVID (son came in with it once the restrictions were lifted and gave it to the family) - it's no picnic and I'm very thankful that few NZers had to experience it during the virus' most virulent stages. Even though we got a mild variant of it - the weakening effects can stay with you for quite some time.
For us living overseas who caught covid. We got sick but the majority are healthy actually nearly all have recovered well.
NZ wasn't managed well. It has no land borders and is so isolated. That's why there were less cases. It was an overreaction and tyrannical response.
I'd say that depends on where you were living overseas. For differing stats on deaths and cases per 1M population. See here;
https://www.worldometers.info/coronavirus/
This is a silly comparison. The incumbent Prime Minister always polls favourably compared to contenders. There is a good analysis here: https://www.kiwiblog.co.nz/2023/05/leaders_in_preferred_pm_ratings.html
re ... "A wealth tax does not make good economic sense. It will lead to capital flight ..."
Why does everyone assume any new tax will be punitive? (And assume it will increase the overall tax take?)
Just introduce it. Set the parameters high so very few pay it. And tweak over time.
Ditto ... Land Tax, CGT, Inheritance Taxes, top bracket Taxes, etc, etc.
Give governments the power "level" who pays tax. At present the tax burden falls on too few!
Half of NZs households pay no net income tax.
People seem to keep bringing this up without any critical thought or nuance.
Bringing up "50% of New Zealander's aren't net taxpayers" but forgetting that part of those 50% percent are people on superannuation. It's talked about as if 50 percent of workers are contributing nothing but considering there are 842,000 over 65's who will be the ones collecting the vast majority of those "transfers".
Then another big chunk would be WFF, and accommodation supplement which is basically a landlord subsidy, then the classic jobseeker which is $3b out of a $50b budget. There aren't as many working-age people just sitting around doing nothing as it seems to be framed from looking at the data.
The info for that is all in the below link showing what the transfers actually are and what groups are getting what. That data is also a bit out of date as it's from 2018.
https://taxworkinggroup.govt.nz/sites/default/files/2018-09/twg-bg-distributional-analysis.pdf
This is why - for the first time in my life - I won't be voting for a major left wing party.
The idea that they can use "re-distributions" to balance the differences between the (increasingly) wealthy and the (increasingly) dependent is just plain wrong. Not the least because it opens the door for right wing parties to seriously screw the poor as Richardson did under National if they get in. (Which they probably will.)
Having a browse through the comments, mostly I see self interest displayed.
Someone mentioned "how could they even consider this (tax reform), they've got absolutely no mandate".
Ahhhh last time I looked they won an absolute majority in the House last election. I reckon that's a pretty strong mandate to introduce policies for the long-term benefit of all New Zealand.
David Lange did that. Painful....but we were certainly going to hell in a hand basket under Rob Muldoon.
Radical reform of the taxation system is overdue, anything else is really cutting of your nose to spite your face.
Rogernomics neoliberal policy shift has been only partially successful, now is the time to redress those areas that it has failed the people of NZ. I reckon a big portion of the deficiencies in our health, education and infrastructure systems can be squarely laid at the feet of that market driven, neoliberal ideology.
The elephant in the room is that the decades of neglect has racked up an enormous bill in deferred maintenance. Don't need to be a brain box to recognise that continually deferring maintenance will lead to failure. Think about your car, house, bicycle, chainsaw, etc, etc.
"...they won an absolute majority in the House last election. I reckon that's a pretty strong mandate to introduce policies for the long-term benefit of all New Zealand."
Nope. Tax & other fundamental changes eg racist co governance need to be put to voters before the election to be able to claim a mandate.
They were just following through with National's support of Co-Governance after they supported the UN Rights Declaration, something Helen Clark opposed. Might not be legally binding, but it's 100% clear that National were in support of racist co-governance.
The statement in support of the declaration:
- acknowledges that Maori hold a special status as tangata whenua, the indigenous people of New Zealand and have an interest in all policy and legislative matters;
https://www.beehive.govt.nz/release/national-govt-support-un-rights-dec…
From your linked press release
"Will Māori get a veto right on government decisions?
The Treaty of Waitangi continues to be the basis for the Crown-Māori relationship. In some instances this does involve mutual agreement on proposals, notably Treaty claim settlements, but right of veto is not conferred."
Nationals co government trojan horse Chris Finlayson has a lot to answer for however Labour conferring Maori veto rights in 3 waters, local government, RMA replacement etc is not " just following through"
You seem quite clued up on the matter, maybe you could point me in the direction of where iwi could veto? I thought it was a 50/50 co-governance in voting for entity board appointments and any privatization proposals, where a 75% voting threshold needs to be met. As far as I have read it has nothing to do with decisions around operational or governance decisions made in those entities, but happy to be educated.
I don't necessarily agree with co-governance, but I don't see it as strictly something Labour is pandering to iwi on.
https://www.newshub.co.nz/home/politics/2021/10/are-councils-being-stri…
It was a simple request. If you can't provide some evidence to confirming Labour's proposed 3 waters co-governance had literal veto powers for iwi, then your assertion that I am "sealioning" is just a convenient exit strategy for lack of evidence.
Try back up your claims instead of fallacy hunting the comments of anyone who disagrees with you.
There is one key difference now - nobody needs to sit around NZ while they "break it to fix it". You can now just jump across the Tasman, pick up your automatic Aussie citizenship, get a 20-30% higher salary on which you pay less income tax, and get your tax deductibility, depreciation, negative gearing, and 6 year property CGT tax exemptions back. If by some miracle NZ starts to look more attractive than NZ, you can come back and retire. If it ends up being New Zeababwe you can stay put and enjoy your wealth in the beautiful weather.
re ... "Your average voter isn't ticking a box next to their name if it means 6 figures in extra taxes for them."
As I said above ....
Why does everyone assume any new tax will be punitive? (And assume it will increase the overall tax take?)
Just introduce it. Set the parameters high so very few pay it. And tweak over time.
Because we have a poor track record of doing that - we don't set things so high very few people pay it. Our tax brackets and lack of adjustment on them for over a decade is a prime example. Remember, this is a country that not too long ago, used to take 39 cents in ever dollar over the plutocratic threshold of.... $60K.
We take from the people who get up, go to work, slog away for 50 hours to give to people who don't or won't, instead of just people who can't. In order to make that work, you need to cast your net wide, and that means lumping as much of the middle class with stonkingly high tax burdens once other living costs (like mortgages at 40% of income, childcare at 350 per week) are taken into account.
We don't know how to do anything but punitive.
I do not think that they need a capital gains tax. The interest tax deductability provisions are far more effective, fair and easily implemented. If somebody pays for 100% of an asset then capital gains merely reflect the loss of the purchasing power of money over the period. Ie the investor has simply preserved the purchasing power of the investment. That is fair.
Their are a whole raft of ways that people are avoiding tax. Trusts, hidden foreign investments and incomes. People working and earning money overseas in low tax counties while parking their families in NZ and we provide all the benefits and provide all the services while they contribute nothing. ..... This list is long.
Lots to aim at while leaving hard working contributing Kiwis alone.
NZ is heading towards a basket case.
The tax take has never been higher but the infrastructure and services have never been worse.
30% of the population are on handouts. Why? They have no incentive to work. You have created an underclass who encourage each generation to do nothing because they do not want their kin to succeed. Only the very strongest can escape.
The key to assisting the 30% is education followed very closely by nutrition.
Any person with salaried income is happy to pay tax if it is applied to the greater good. In NZ so much is squandered on absolutely nothing of worth.
Identify priorities. Implement them for the national good then repeat. Surely the entire population could agree on 5 key priorities and add another for the ages as one is achieved.
the list of parties i cannot vote for is growing.
Labour - same rubbish as national, just red.
National, same rubbish as labour, just blue.
Te Pati Maori, I'm pakeha,
Greens, too left / socialist. Should have stuck to climate issues
Act - I'm not rich enough
Winston peters party- I'm not old enough
Maybe time to look at ,
https://en.wikipedia.org/wiki/Financial_transaction_tax#:~:text=the%20d….
Agreed. Very hard for a profit shifting multi-national corporate to avoid that.
$10b in combined revenue, $1.8m in tax. A 0.1% FTT alone would have recovered $10m.
https://www.nzherald.co.nz/business/top-multinationals-pay-almost-no-ta…
I reckon we need a two house system. One house determines how much tax is paid and how it is collected, the other determines how it is spent. I am sick of having one vote determining both factors, either choosing a low tax backwards hillbilly party like National / ACT or a progressive handout party like Labour / Greens.
A vote for National-Act is a clear indication that voters are sick of the singular focus on Maori eg co-governance, renaming of every Gov department, 2-tiered health system, specific scholarships for Maori and lowered entry levels for defined Universities, cultural reports as a factor in our judicial system, pandering to gangs (admittedly of mixed race), and continuing to support intergenerational welfare so more rats are bred.
I am a racist. I don't deny that. But what is factually incorrect in my post? Every point stands.
It is so easy to label someone a racist when they oppose a Maori perspective or initiative. As an aside I totally support the Strep throat campaign in Sth Auckland to help prevent rheumatic fever in Maori/PI peoples. I support a lower age of bowel screening recommendations for Maori.
I totally oppose the 2 tiers of healthcare now being offered.
Agreed however id like to see the breakdown of scholarships and where the finding comes from for those available to Maori attending university. Scholarships are often funded by donations of those who bequeath money in their will upon passing to give back to the community so it would be interesting to see what govt vs private funding.
Here is a political poll. My sister who is a Labour supporter, wont vote for them because they will not do a weath or capiltal gains tax. My Mother who is in a care facility cant vote for them and my Dad who liked Winston has given up to focus on Mum... so thats 3 votes right there.
With Grant R only a list MP I sense the writting is on the wall internaly as well - not sure who Hipkins has to campaign with him....
No you're not. Just a thinly veiled attempt to jeer at people who didn't vote for your team, hoping that they experience some pain and regret for not doing what you did at the election, maybe because you have underlying self-esteem issues to compensate for? That's the usual driver for this toxic political environment we have.
I know people who vote Labour, none of them have regret and will continue voting Labour because they just get on with life, are successful in what they do and aren't hanging out for the next minor inconvenience to flail and wail incessantly about.
1. Long term supporter AKA folks who have always backed the Warriors.
2. Blue collar workers who see Labour as the working man’s party.
3. Ardern’s myopic faithful believing the narrative of ‘be kind’ and ‘she saved us from vital annihilation.
4. Gangs
5. ‘But John Key sold all the state houses.’
i hate them all. Except for the 2nd group as some could be ex Pommie trade unionists who caused mayhem at Stamford Bridge. Chelsea!!!
national are in the same boat for the first time we could see ACT wagging that tail like mad , goodbye the lap dog.
if they are smart they would tell their epsom voters the cup of tea is dead and look to do another cup of tea deal with another party to give them options
There's not much use for a labour party which runs away from a tax on capital at the first sign of trouble.
How many farmers were going to vote for them anyway? What a selfish greedy bunch we have become. We sit almost alone in the developed world in having no comprehensive tax on the profits from capital. We huddle round our vastly overpriced and all too often poorly built properties and effectively give the finger to future generations-including our own grandchildren.
I am looking at a pie chart of the Summary of all tax collections Budget 2023/24. 30% comes from PAYE, 21% from GST, 16.70% company tax, 14.30% customs duties and so on down through student loan receipts 1.30%. Capital taxes, nowhere to be seen.
We would be horrified at the suggestion that company profits should be tax-free, so why not tax profits made from investments?
I don’t understand the fear about capital gains tax. Properly sold, I think the New Zealand public would accept it. The problem for Labour, is that Parker and Robertson have misread the room and much of the fear is now about a wealth tax. Many are fine with taxing realised gains, but unrealised gains are a can of worms.
The fear is based on the stupidity of the implementor, in this case, Labour or the Greens. To get people to accept it you would need to make it comparable with other countries, where the rate is set at 10-15%. At that level, it is still painful, but long term it is maybe acceptable. These idiots just think it is acceptable to apply it at whatever the tax rate on your earnings is, i.e. for a lot of people this would be 39%. They then wonder why it is unpopular when it would be one of the highest (if not the highest) rates of capital gains tax in the entire world.
Kiwibuild was a great success. Thousands of homes built....
1 Billion trees planted. Another thunderous success.
Child poverty up
Waitlist for super-cheap state housing has increased 300%. Another great success story.
Three-waters.... I missed the mandate on that.
The podium of truth ended up being a massive oxymoron, resulting in an own goal and a Jacindamania U-turn.
Forgive me if I don't believe anything from Labour for a good while.
Well done Chris
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.