Update: On Tuesday morning, Finance Minister Nicola Willis told reporters there would not be new taxes or fee increases in the budget. She said the tax plan would still be fiscally neutral but didn't reveal details.
Earlier on Monday, Prime Minister Christopher Luxon was unable to rule out introducing new taxes following reports the coalition may need to find billions of dollars to balance its budget.
A number of fiscal challenges have left the Coalition Government more than $5 billion short relative to the draft fiscal plan put forward by National in the election campaign.
The cost of restoring interest deductibility for landlords will be $800m more than expected, while the revenue from the online gambling tax will pull in $500m less than planned.
Indexing benefits to inflation was supposed to save $2 billion, but that estimate has been revised down to a measly $670m.
But the largest chunk of missing money comes from the plan to invite foreign buyers back into the top end of the housing market and tax them for the privilege.
National and its advisors at Castalia forecast it would bring in $3 billion—a number that was met with skepticism—but the policy never made it through coalition talks.
Since then, Finance Minister Nicola Willis has been warning updated Treasury forecasts show the economy has weakened, having a multi-billion impact on the Crown accounts.
Some shortfall in revenue could be absorbed by unallocated budget allowances, but that money would also be needed to fund coalition promises and cost pressures.
In light of these fiscal pressures, Interest.co.nz asked the Prime Minister if Cabinet was considering any revenue raising replacement for the scrapped foreign buyers tax.
Luxon said the details would be revealed in the May budget, which would contain a “fully funded” tax relief package, as promised.
“It'll be a combination of revenues. Those revenues may look slightly different than what it was before the election. They might look the same”.
When pushed to confirm there would be no new taxes on working people, the Prime Minister wouldn’t do so.
“Just wait for the budget, coming very shortly. But what we're dealing with is the dynamics of economic circumstances, and a massive determination to deliver tax relief to lower middle income New Zealanders”.
Elsewhere in the press conference he said the tax package would be funded partly through “revenue raising measures” and partly through “savings that have been identified”.
Carbon-based problems
To make matters worse, the Climate Change Commission has cast doubt on whether $2.3 billion of revenue from the Emissions Trading Scheme—earmarked for tax cuts—could be counted on.
It has recommended a drastic reduction in the number of available units from next year in an effort to soak up an oversupply in previous years.
Commissioner Catherine Leining was asked on Monday how that advice might impact the price of units and therefore revenues earned from the scheme.
She said the scheme was not designed to generate revenue, but the money it did bring in was a result of both the price and volume of units sold at auction.
Economic theory might suggest a lower supply of units would lead to a higher price, therefore offsetting the fiscal impact of offering less units. But Leining wasn’t so sure.
“What we consider is that we aren't actually reducing supply, we're actually correcting for an oversupply in the market and trying to keep supply parameters in line with emissions budgets”.
“So it is really hard to predict exactly what the impact will be on the auction revenues that come out,” she said.
There were also other costs to be considered, including the debt liability which appears on the Government’s books when a unit is issued and the cost of buying offshore carbon offsets to meet our international obligations — which are stricter than the domestic ones.
She also said one possible way to boost the unit price would be to reduce the free industrial allocations.
249 Comments
People where saying that exact thing in 2018 when it was looking like a CGT was coming. Supposedly all the gains had already happened so the tax take would have been minimal. Then we know what happened to prices a couple of years later.
CGT also covers stocks and other business sales like in all other OECD countries. It's worked in Australia for nearly 40 years and a lot of tax gets paid that way. We should just copy their system and be done with it.
Asset tax would be much harder to get across the line.
GST wont go up in a cost of living crises, you going to add to the everyday's people grocery bill, petrol...they not that dumb to put a tax on the end user..i.e the voter. (here is your $20 a week income tax saving but we add $30 to your grocery/petrol bill...political suicide)
That is short-term. Landlords are indeed rentiers, and are too proportionally abundant at present. But it's the System is in trouble; didn't matter which Party was in power; too many of us are rentiers on the energy/resource throughput.
This seems to escape most folk - indeed there are those who think (?) that the 'economy' stands separate from the macro-drivers (resource depletion/degradation, sink capacities, overpopulation/consumption.
This rabble took over as the boat has started to founder - no amount of fiddling with the controls on the Bridge, can fix that. The next valid leadership will be those who get their heads around lifeboat-life, and can inspire.
These are not they
This lot got in after the last rabble got pushed overboard when most of the boat was already under water. These guys have just underestimated the complete incompetence of the last rabble and the extent to which they would go to hide their failures. However, they will fix it, but the last governments incompetence will make said fixing more painful than anticipated for some.
There fixed it for you.
ah, no you didn't.
Short-termism is fatal, thinking-wise; this process started in about 1970; the halcyon years all preceded; say they spanned from 1945-70. The years of high EROEI energy; the years of high-quality resources there for the picking. From then on in, there has been a 'slowing'.
The Nats - ignorantly, not that they're alone in choosing ignorance - established a Productivity Commission (Sherwin was their pick - Nana merely their excuse to can it) to find out why that 'tailing off' was happening - it was merely the whole shebang running into the Second Law of Thermodynamics. Absolutely inevitable. Despite submissions, they chose to ignore, as do most.
We have yet to find a NZ journalist who is brave enough to do the research - so we continue to get ignorant posits as to what/who/how. Essentially, the failure is one of too-limited scoping.
Sad really.
Not a hope. To interpret a system you need to apply some critical thinking over the whole gambit. This in itself takes time - the planning period.
Tertiary educated persons are expected to show they can perform critical analysis in their chosen field and perhaps move that out to other related fields. Not everyone needs a a course in critical thinking theory but the basic concepts are part of the primary school curriculum.
Why do people think, act and feel the way they do.
Apply those very basic principles and we are on the way to positioning the ambulance at the top of the cliff.
They have a MoF who is incapable of understanding the numbers and National made election commitments they couldn't afford then and cannot afford now. Nothing has really changed wrt to the economy.
You can pretend National are the good guys if you want, but they didn't understand the numbers and what little putea there is has gone to landlords.
"Nothing has really changed wrt to the economy."
I agree ....... although not that we can measure any loss of enterprising ideas of value which perchance may have already left or is currently in the process of taking flight/leaving the country due to the Nats having kept up this charade.
Except yeah, they did.
They were warned that many of their costings were ridiculous, and that the policies to achieve them were unworkable or impractical.
They continued to promise tax cuts.
And now they've thrown out the unworkable policies, taken the L on the impractical ones (through delayed implementation or lessened takes), and thrown in a new revenue source or two (that even Nicola Witless must admit "quack like a tax"). And are still $5.6B in the hole.
They got it wrong. They continue to get it wrong. And unveiling tax cuts will cement their short-sighted, stupid, selfish legacy.
They had better not dare to do a 'John Key'. Most despicable, regressive, post-election "surprise"/behaviour I've ever seen.
And wasn't it also done without warning or consultation in order to pay for a promised tax cut (39% top bracket down, if I recall) as well?
Lowest of the low - and if I recall they called it a "tax switch" back then - an outright lie given it is fact that the lower income households use/spend all of their disposable income just to keep food on the table.
And from what I'm seeing in the regions, keeping food on the table is becoming even more extremely challenging. Another increase in 'working poor'.
Taking free school lunches away will really hurt a lot of families. In my local area, the food rescue already supplies a lot of the components of the school lunches, and then any uneaten school lunches get given back out to the community through the food rescue or composted.
No, they ruled out that GST wouldn't increase https://www.newshub.co.nz/home/politics/2023/11/election-2023-incoming-…
If they did, that would be a major blow to their credibility.
It's a bit of a disingenuous headline to only note the foreign buyers tax which is included in the deteriorated economic forecast in several key areas as covered in the body of the article.
We elect Govts to govern through dynamic environments.
"When the facts change, I change my mind - what do you do, sir?" JM Keynes (attr.)
Two things on that. Firstly, I asked PM directly about substituting the foreign buyers tax.
Secondly, I note in the story Willis has talked about deteriorating forecasts but we haven’t seen those forecasts yet. No evidence for that claim to date.
The $5b shortfall people are talking about is *not* counting any additional impact from these weaker forecasts she’s told us to expect.
So that's the equivalent of every day that has passed during their term, the revenue budget has been adjusted down by $40-50m. Some 100 day plan. Perhaps if there was less focus on repeal and lining pockets, and more focus on the country, this wouldn't have happened. Does it still count as "wasteful spending" if National are the ones blowing out the budget?
I mentioned last year some time in the interest comment section during the lead up to the election that National could not afford all of the promised tax cuts. Five months in and I am not surprised at all.
Selling state assets has thankfully fallen out of fashion of late. After four decades we've all had long enough to witness the real results I guess. But all this desperation... They're going to try it on, I'm almost sure of it. Any guesses as to what'll be first under the hammer?
True. It's all about selling contracts now that the public sector's ability to do anything but badly manage contracts has been hollowed out.
Still savings to be made in not maintaining stuff though.
On second thought, how about flogging off the South Island? Apparently nothing useful happens down there according to this lot (if you take the disregard for the rail link as any indication).
They haven't sold the interisland ferries yet. And I find it bizarre they don't see a problem with a state owned competitor to Bluebridge. And why does KiwiRail run the ferries if they're not going to be rail-enabled ever again? All sorts of questions.
Of course I don't want to sell the ferries, what little they're worth. I just wonder why the Nats' first instinct wasn't to get rid of them.
They sold rail ages ago. Had to buy it back after some bunch of Aussies shirked on the maintenance. I'm pretty sure this is why they're so disinterested in investing in the rail link / iRex. Run it into the ground, claim they can't afford or can't find suitable replacement ferries, then revert it to non-rail only. Much to the delight of their transport lobby backers.
And so begins the dismantling of our rail network...
"They sold rail ages ago. Had to buy it back after some bunch of Aussies shirked on the maintenance. "
Not only that I'm sure they overpaid for it as well. Probably one of the big three advised on the price to pay.
I wonder what influence Treasury had on the price to pay for it.
Not only that I'm sure they overpaid for it as well.
And when they did sell it, they sold it for less than the secondhand value of the rolling stock. The privatisation mantra was always an ideological one and had nothing to do with practicality. All about ensuring that all assets and resources are available for ownership and control by private interests, simple as that (the clue is in the name).
The tracks were bought back at $1.00;
https://www.nzherald.co.nz/nz/government-and-toll-seal-rail-buyback-dea…
And shareholders of Tranzrail that bought when people (who had no idea how to value the business) were saying "sell, sell, sell - its your last chance". 150% returns in a few months! (With quite a few sleepless nights for those heavily leveraged.)
That year was a good year for bottom-feeders & counter-cyclical share investors in NZ. (Almost as goods as the Air NZ year.) We should see a few the same this year and/or next year.
Don't think there was debt on the track, as they spent virtually nothing on it when they owned it.
But the govt then had to pay $600 million to buy the above track operation.
From memory, the $1 price tag had something to do with the need to spend millions on the Auckland commuter network.
I've mentioned if before. I heard that its was not originally privatised as it was held in case land swaps with Maori might be needed.
I'd prefer this to a sale. They could start by swapping the Maori owned parts of the Kaimanawas. Plenty of other land like about and the demand on the recreational wild estate is growing.
But I guess selling landcorp to foreigners would be our short term solution.
Agreed. It would be empowering for whānau, and reduce state reliance in many of the more remote communities.
I love the work being done at the moment in pilots to build papakāinga (housing) for whānau on iwi land, as one example. Iwi own the land so a considerable amount of the cost to build is reduced, plus the community then is able to house people who might struggle on the open rental market and have wraparound support where needed. Win/win/win.
I thought the reason National needed to be in power was because they're astute with fiscal policy and would get the books back in good shape. After all, we have an experienced businessman at the helm. Where's the spreadsheet Nicola?
Labour finance spokesperson Grant Robertson is slamming National's Christopher Luxon and Nicola Willis over what he says are "rubble" claims of a "rock solid" tax cuts plan.
"The $2 billion hole in National's costings is the equivalent of paying for about 3800 senior nurses, 4000 teachers or 2700 police every year."
https://www.newshub.co.nz/home/politics/2023/09/election-2023-grant-rob…
Luxon did a deal with the devils to take power...
... nzfirst coalition
... ignored reality in budgeting
... happily rolled back key policies for smoking climate change and school lunches in favor of cuts for the elite and donors.
Luxon has set the country back 10 years in several areas with no plans to improve them.
I suspect labour knew they would have to make sweeping cuts so they happily walked away knowing they can come back next time (in a period of green rootd)and blame the unavoidable downturn onthe nats coalition of disaster. Sounds a good strategy by smart peeps
I don't think there is a lot of intelligence there as well. I am pretty sure if Key was in charge he would have already watered down/postponed the restoration of landlord tax perks given the circumstances. It doesn't ream like this new lot are that adaptable. They can't read the room.
Haha oh yeah.
7 house luxon who blatantly has led a 100 day charge to increase revenues from his portfolio and to please the wealthy nat donors.... all at the expense of the poor who are already starting to suffer).
Be under no illusion the current NZ leaders are right wing, wealthy and in it for themselves.... if you are rich or a landlord all will be good.. otherwise it will be a very rough 4 to 8 years.
A cost of living crisis is code-word for high inflation.
Reducing disposable income during periods of high inflation is a pretty accepted way to bring inflation down.
I'm amazed they've been able to trumpet the line about solving 'cost of living' while promoting tax cuts, without getting called out on it. Increasing taxes does more to help the 'cost of living' crisis than cutting them.
Its the extra holiday home staying empty most of the year that really pings them, followed by increased costs for overseas travel for more holidays. Bless them perhaps they need the same budget advisors we force on people, (before they can access food support) who are on less than $20k who are unable to afford rent, power & basic medication costs.
Probably depends on where your mortgage is at. If you are on 250K your take home is going to be around 14500 per month, and if you have a 1m mortgage at current rates you are probably looking at repayments of 90-100K per year on that. So, half your income is going on the mortgage. Then you have another 12k possibly going on in insurance and rates related to the house, then medical and income protection, and then re-payments on whatever else you owe on cars and boats. If you have all this stuff going on, then 250K does not go far (It did during Covid when rates were 2%, but not now). However, if you are on 250K with a small mortgage and no other debts then you are sweet.
There's a clear human instinct to find a way to spend whatever money is left over via lifestyle inflation (and house inflation). A significant proportion will always feel hard up no matter what they earn - any temporary reprise from the pressure will result in a house or lifestyle upgrade.
250k is clearly plenty to raise a family, as many manage to do it on half as much or less.
All depends where you live and if you want to buy a home/havent bought one yet. If you have two or three kids and in Auckland then $250k household income isn't going far after buying and paying down the mortgage, rates, insurance, etc.
Compare that to say Christchurch then you're fine, all relative to your situation.
If you owe repayments on cars and boats then you are doing it wrong. The smart money does not take on massive debt on assets that depreciate faster then a cabbage and are not needed to perform essential functions of life. Sell them and be free of the foolishness that brought them in the first place. Even those who travel for work in more rural areas are smart enough to look to vehicles they can afford, can easily maintain (essential if breakdowns on site can be high risk) and get travel costs as part of payment for a job (the IRD and MBIE have initial rates available to read but many companies may go above this on the basis of more work reqs needed).
Buying a yacht or boat that is not part of work or essential for living is a luxury. They cost more in fees and maintenance then can ever be returned in value. I say this as I had family who would live on a boat for most months in a year and even they knew how to do most maintenance themselves, caught all food and traded for vegetables with local farms, and even then it was expensive, needlessly risky, living compared to most housing. The fees they paid were so eye watering that every drop of water was conserved, power was not available for water heating or cooking and returning to get fuel was an isolated experience. In the long run what is necessary for life and work is not the most costly vehicles that require debt at all. A vehicle costing 4k will get you to all places in the country. If you have to take on debt for that then you are unlikely to have an income greater then 40k.
Only those who need hydraulic hoists to enter vehicles, or have other severe disabilities, are forced & limited in their choice to just expensive private transport. For everyone else it is a choice that many obviously fail at.
If you have 12k costs on insurance you are doing it wrong and I can put you onto insurance specialists who manage the different insurance cover at multiple levels. Even then most jobs at 130k+ have a significant degree of insurance costs covered (even contractors). Ironically those who earn under 50k are more often excluded from such insurance schemes due to preexisting conditions. I know of many who cannot get life insurance for travel events like plane accidents because the insurers discriminate as if their medical condition would always be responsible for a pilot crashing a plane, or a volcano eruption etc. With house and car insurance unless you brought a stupidly designed asset with no due diligence the insurance costs are actually relatively low esp compared to others. You did buy a cheap to insure and repair vehicle right, (one you could take to any mechanic in the country and does not have expensive parts)? Even for houses with significant landscape retaining for risks, flood risk and asbestos have very cheap insurance, even with detailed engineering reviews of everything... so if yours is even close to 6k there is something amiss.
Have you shopped around your insurance providers. Because it seems very odd that you are paying far more insurance then most people and many are forced to live without insurance access and no government support and still make do.
An estimate of 12k on insurance costs must come from somewhere.
If you have anywhere close to that I would definitely recommend a review of the providers & the contract conditions. The only insurance that came close to being excessive I found was business insurance. Most others had competitive plans.
Although here is the thing while NZ insurance providers can discriminate against NZders with preexisting conditions (that have no relationship to the insurance offered) when they have agreements with American companies with offices in NZ they have to abide by non discrimination clauses. Which means that if you work for a foreign company with an office in NZ it can be more advantageous to get insurance through them (much cheaper, & can cover the whole family etc) instead of going it alone as a kiwi. Kiwi insurance providers will try to do all sorts of dodgy things to deny insurance access when they just have NZders to deal with, (and they will add many charges to those they do allow access to but then not pay out for them), but a US or global company they often need to abide by non discrimination. This is also the case for ACC and ACC has proven to be the least trustworthy insurance provider that repeatedly denies accident cover even though it is proven with specialist reports and they will purposely leak private details onto social media for fun when it suits them & to harass clients. Hence hunt around and be aware of the contract changes over time. Be prepared with extra savings to engage a lawyer when needed.
Most people do not have any need of boats (only those whose career is via boat need them and then the boat is normally a business asset). Boat or car debt is well known as the least useful debt to have. Bringing either boat or car debt up is a red flag with giant neon flashing lights and arrow signs; that if the person is not in the lower quartile of wages they need budget advice & financial courses fast. Their perceived lack of affording living costs is not because 250k is too low but because they gambled money away hand over fist. Hence those arguments would not be valid to suggest those on 250k are also in the hard luck camp. They have many options to live affordably and comfortably.
An estimate of 12k on on insurance costs is obvious. Just go to any web site. A decent house will cost you 5-6k to insure a year including contents, a car or two would be another 1k, add health insurance for a family, you add another 3k, and if you want income protection insurance then you would be paying at least 2-3k per year (this was published in the hopeless plan of the last government, being 1.5% of pre-tax income), if you add life insurance too then you would be over 12k. It all adds up, then you add rates on top, another 6k on a decent property.
Thats because of decades of debt driven madness whereby the masses can use their mortgages like a slush fund and live like rock stars. 'No questions asked' spending and a frenzy mentality has allowed living costs to explode as the peddlers of goods and services just continue to hike prices as they know people will just contunue to pay.
Two parents working full time with kids in daycare, even better as they can borrow more. Maybe a bach in Coromandel, a new Tesla or a $100,000 boat?
This all works very well......while money is cheap. The only down side is that those with no access to the 'slush fund' get left behind, so very far behind.
I never understood the mentality myself. Borrowing money makes myself poorer over the long run, perhaps unless I'm buying to buy productive assets or my own home. Why would I borrow to increase my lifestyle, when this inevitably means a lower quality lifestyle over the long run?
Comes from the generations that benefited most from asset price increase, borrow against your home to but another, then once paid down a bit borrow against that one and again and again to live on rent for the rest of your life and aren't you the smart cookie while your kids cant afford a home anymore.
She also said one possible way to boost the unit price would be to reduce the free industrial allocations.
Once again, finally we have officials starting to talk about the right things - first rental market regulation (which could lead to the cancellation of landlord subsidies); and now the cancellation of these freebies to big industry.
Still very disappointed however that the ETS fund/surplus is being spent on tax cuts. I think it was much more a sustainable benefit when used to assist the major polluters to reduce their emissions though capital investment and productivity improvements.
NZ Public: What's the problem with being transparent now rather than waiting for the budget release?
Luxon/Willis: We're still trying to get creative. We don't want a media/public backlash before then. Our pride is in the way and don't want to admit our election policies were fiscally incompetent. We're biding time for a miracle.
No it does not. All benefits are taxed that does not mean all are means tested as very clearly those earning over 150k income still get super and no your taxes do not come close to paying for it alongside most the other things taxes cover (like roads, education for your nursing staff, hospitals, business monitoring, police, government services etc etc).
I mean sure, high income earners pay more tax than low income earners. My household pays a lot of tax, but I don't begrudge those that earn less and I certainly don't think believe I am far more entitled to welfare based on some imaginary loyalty points scheme.
Looking forward to the day that this entitlement mentality goes to the grave with the boomers.
Anyone arguing against means/income testing super in NZ should just look over the ditch for inspiration. Australia has a gold plated Super scheme, we would have had a near 20 year head start if people didn't vote Muldoon (who campaigned heavily on this).
Yet somehow, despite Australia having a far better funded Super they still manage to income test and you don't even need to earn $100k as a couple to lose it entirely. Entitlement mentality in this country will send us bankrupt.
https://www.servicesaustralia.gov.au/income-test-for-age-pension?contex…
Nzdan we can't even means test main benefits correctly (as a hint look how bad the covid scheme run by msd was when analyzed).
Where is the new forensic accounting team going to spring up from to means test super?
All it would achieve is hammering ma and pa middle income lived in NZ forever unsophisticated financially persons who have been on paye and nothing is hidden.
If ma and pa are earning over 150k each on PAYE they do not need super benefits. Nor are they so hard done by that losing it would be a substantial loss. Oh dear they cannot take that European cruise. Poor babies bless them. They want to claim the winter energy benefits too because no way would 150k would be enough to pay a power bill. Yet those in real poverty with medical conditions preventing them working are expected to live on benefit incomes below 25k and still are expected to pay the power bill. Clearly the other 125k of those pensioners incomes are being squandered on meaningless luxuries they do not medically need. Either that or both the benefits for those unable to work need to be much higher and those above 65 years do not need a benefit to live on when they are in the upper quartile of incomes.
Just last week a family raising funeral costs via givealittle for the father with a terminal condition (brain tumor with unknown time of death) had their benefits cut. Because the wife had to give up work to take on full time nursing and there is no other medical nursing support available both had relied on benefits to live. Their children they had before the workplace injury (that resulted in discovering the brain tumor) are now facing homelessness because having enough raised for a funeral was seen as enough of a cut off point for much of the income support that paid for essentials.
Come back when those over 65 are facing that level of means testing because obviously we are doing it for the other benefits already. It would be a simplification to make means testing apply to ALL benefits not just some of them.
You confuse income testing with asset testing.
Easy to asset test joe average kiwi on modest or low income who only had paye income and lived here forever.
Try asset testing an 'new' kiwi who has wealth in another country. Try asset testing a wealthy NZ who has access to highly paid accountants and lawyers who specialise in hiding assets.
I do disagree with asset testing. A pensioner doesn't buy groceries with a portion of their $2m house, unless of course they borrow against it. Then it's debatable whether a loan is actually income. Otherwise why not tax people on their credit card purchases (aside from GST).
You wouldn't necessarily need a huge forensic accounting team. Just make it mandatory that every bank account is linked with an IRD number and have the banks report when a bank account linked to a Super recipient receives regular income that is in excess of the income test cap.
This could be automated. Hell, you could even have the banks reject the payment from IRD before it even enters their bank account.
It makes a huge difference. When you have $10+ million sloshing around I'd suggest you go see an accountant that specialized in tax minimization and estate planning.
Were you to have $100+ million then your eyes will be well and truly opened. "there are none so blind as those who will not see."
Tax the asset, not the person. Penalty for non-compliance or fraud is obvious - seizure of the asset.
Obscene wealth hidden away overseas I don't actually care about, it's not depriving other kiwis of opportunities in the way that holding limited physical resources like land and property is.
Means testing includes assets. If you are only focusing on income then the wealthy will not get captured - they are not on paye and often have little personal income.
Next question for you. What will be you definition of income? As per taxation, as per Working for Families, as per Main Benefit system, as per Community Services Card, as per student allowance, per State House qualification?
Will you income be as per the country of income origin or converted to NZ income rules (whatever you decide on)?
If you have a spare year sit down and read the Mater Tax guide. That just deals in taxable income. Will you rewrite it for means testing?
I'm not talking means testing, I'm talking income testing. Income can be defined as any money that is deposited into someone's bank account(s). Quite simple really. Sum of all deposits over 12 months originating from an external source (excluding declared joint account holder/spouse). If this exceeds say...$100k, then ineligible for super.
You wouldn't need to rewrite the Master Tax Guide unless there's a provision for superannuation, just amend the Super & Retirement Act to include this provision. Have the banks manage this and return funds to IRD when applicable.
I have to say I was surprised by this statistic.
https://www.stuff.co.nz/money/350177826/50000-people-earn-over-100k-get…
Almost 50,000 people claim NZ Super while also earning more than $100,000 a year, data from the Retirement Commission shows – and income-testing them could be one way to make the system more affordable.
It isn't quite as bad as it sounds. The pension is added to their income and they pay PAYE on the total. So that $100k you use in your example becomes $150k and they pay tax on that figure, and maybe at a higher PAYE rate.
But where it does become a rort is where the income is diluted through a separate legal entity (or multiple legal entities that may be overseas and impossible to investigate) that holds the income and disperses the income over time at lower rates - and/or - owns assets that the people enjoy either for free or at ridiculously low prices - and/or - use the income while they are on their "overseas trips".
As National & Labour, & their surrogates, spin & squabble about current fiscal choices for the new govt, it is worth remembering that these were the deficits Treasury projected in PREFU - and where Tsy itself was (diplomatically) sceptical about the promised spending restraint. Link
What would be so, so so cool ...
The rentier class are getting 100% interest deductibility back ...
So why not introduce a Capital Gains Tax?
No. Hear me out.
It would be widely supported by RBNZ, Treasury, OECD, IMF ... and the majority of Kiwis.
The NACTF get to write the rules so they can seriously water it down (and play silly buggers with the numbers because Kiwis won't read the detail).
They can claim it will raise revenue for 100s of years thereby allowing them to spend some of the future revenue now.
Sounds like great plan to me. I'd expect the left block to to support it initially until they get to see the fine print and then balk at the number of exceptions and loopholes.
Will it include an inheritance taxing aspect? I don't expect it to. Prince John will want little Max to get plenty so there's little chance of him working and making a hash of it.
But once on the statute books - expect a slow burn of changes as governments change.
Kiwis might finally wise up to just how much wealth NZ's wealthy have been hoarding while paying little to no tax on it while benefiting from all their workers who do pay tax.
Oh well. I live in hope.
Capital gains has always been taxable in this country. You should already know that. If you are in the business of capital gains (then the gain is your income and is therefore taxable), then you pay capital gains tax. Everyone who is flipping houses should be paying capital gains tax, ditto share traders. Capital gains (for housing in particular) happen predominately during times of Labour governments, as they generally run a very loose monetary policy. The taxes are there for the taking, but they never seem to be enforced. Enforcement is the first course of action and this hasn't happened. Conversely if you are not in the business of making capital gains then there should be no capital gains tax, and this goes for share holders that are long term holders for the purpose of collecting dividends and accumulating over time, i.e. most super policies, and also hardworking people that build their business from the ground up. People that have their own business often work with little to no salary and then get to the stage of sale (say ten years later) and you have the prospect of paying 40% of the sale price in taxes (forget about it). The problem with people that talk about capital gains tax here is they talk about it being on everything (which is dumb) and then they talk about it being at your marginal tax rate (dumber). No one is going to accept 40% on a capital gain when most countries do it at a much lower rate so to make it more digestible. The dumb and dumber approach that we have to it here will never work and that is why it will never happen. So to answer your question, taxing a capital gain when your objective was not to earn a capital gain could be considered theft by a lot of people.
Capital gains is not taxable in this country. Source: Business.govt.nz
New Zealand has no capital gains tax, so you won’t be taxed on profits you make selling a business. However, there are other taxes and obligations that may apply. Your options when selling can also differ depending on the business structure you have. It’s worth speaking to a professional advisor for specialist help.
https://www.business.govt.nz/how-to-grow/planning-to-exit/what-to-do-wh….
So you have not heard of the bright line test then.. or this.
New Zealand does not have a general capital gains tax. However, income tax legislation specifically includes various forms of gain that would otherwise be considered a capital gain within the definition of 'income'.
Which is exactly what I was talking about. If the purpose of what you do, is to earn capital gains as income, then it is taxable.
Your claim is that "capital gains has always been taxable in this country". The link I provided clearly states verbatim "New Zealand has no capital gains tax" and this is from the Government. Finding some PWC link on Google with slightly ambiguous wording to suit your narrative does not change this....
On a side note, can you please try use paragraphs on your bigger comments?
We don't have a capital gains tax, but some capital gains are classed as income and taxed accordingly (house flippers, share traders).
The line is very blurry. I can buy the same share on the same day as someone else, and sell it on the same day, and if we have different 'intentions' (and can convince the IRD of that), I might pay no tax on the gains while the other investor does.
Property investors will talk up the potential future rental income of their loss making investment and may not have to pay tax on the capital gain they 'happen' to make in chasing this rental yield.
So we are clear now. There is a capital gains tax here, and it is dependent on your intentions around how the capital gain arose, ie if your intention is to make money you are liable for the capital gains tax. That’s a relief because I got that answer right at law school, so I was really hoping the education system had not regressed that much that you all knew more than the university examiners.
Nah. You lot are screaming for handouts funded by capital gains tax. I’m telling you that ain’t gonna happen and there already is a capital gains tax and so you then argue there isn’t, when there clearly is, and now the argument is whether it is clear or not. It’s completely ridiculous, much like all the other arguments about taking other peoples money…just cos.
There is not a comprehensive CGT, that much is absolutely clear. I'm a share investor (not trader) so a proper CGT would catch me - I'd probably be worse off, depending on how it was balanced with lower income taxes. I don't get any handouts from the government.
Are you assuming the rest of us always argue from a point of self-interest?
By jeremy's logic, Paper Plus pays capital gains tax.
You see, I can sit on an expensive piece of art work for a few years and then sell it for a tax free gain. Yet, when Paper Plus sells posters/art work for a profit they're taxed on it. Therefore a capital gains tax does exist!!!
Okay, so where do I find the "Capital Gains" tax rate on the IRD website?
The scenario you're referring to "taxes on profits". If someone were to quick fire buy and sell shares, they're day traders and making a profit (not capital gains) from their activity therefore it's deemed as income tax.
https://www.moneyhub.co.nz/capital-gains-tax-new-zealand.html
You guys are so confused. How do you in your ignorance even justify muttering, You think you are elite because you convinced the bank to lend you money. I don't have any debt. What are you smoking out there ? If working really hard and earning stuff is what is really wrong with this country (I know some of you believe in not working and handouts are better), but if this is what you truly believe then we have a much bigger problem than I initially thought.
Yes you're absolutely right! Completely agree, we have a huge problem with far too many people thinking they are deserving of handouts and subsidies and benefits on behalf of the hard working earning and yearning folk. Obvious examples being the rentier class and superannuitants.
Many think the same, but there seems to be an increasing number that don't and would prefer to value themselves base don the level of stuff they have or debt they have while they await capital gains from a housing market that seemingly can't fail due to how deep it's tendrils has in the upper echelon of our economy and parliament. the needs of the few over the needs of the many.
Your line of thinking is precisely why the bulk share of the tax take needs to be refocused for hard working kiwis in PAYE and shifted towards other non-productive areas such as a land value tax and/or CGT. People won't change behaviours unless they have to, and when taking the incentive away from investment in unproductive assets, this directs investment towards other more productive avenues. If only the banks would do this to, but alas.
Meanwhile, property has received some of the biggest handouts while those who benefitted from the greater generations' generosity pretend to have done it all on their own two feet, and seek to take the taxes of the young out of envy to fund their universal welfare benefit too.
NZ's narcissistic property speculators truly are the most entitled.
In precisely the same way that income tax is an envy tax levied by those old enough to have received affordable housing but who lack the knowledge and skills for a knowledge economic, upon others who do have the skills to earn. One can only assume from your own assumption of drivers.
"Sell my house for $900k and go to buy new house. But I know only have $800k. I've been robbed by the State. No one would sell."
Rastus, In that hysterical statement you make a huge number of assumptions about how a well designed CGT would work.
Just about every country that has a CGT implements them differently.
NZ Inc hasn't got one yet and at last count four(?) different systems have been proposed.
For more info you could start here: https://en.wikipedia.org/wiki/Capital_gains_tax
Less hysteria and more study would benefit NZ Inc. immensely.
edited: If every country's CGT system is too much of an ask, what about just boning up on Australia's? Take careful note of the section titled "Exemptions".
https://en.wikipedia.org/wiki/Capital_gains_tax_in_Australia
The closer we get to budget 2024 the more complicated it all looks at to which sector of the economy can afford to pay for any shortfalls in running the country. When I look across our communities the people falling into the bottom 85% of earners should be exempt. Which leaves the asset rich top 15% to target. With the greatest emphasis on the very top earners whose wealth increases as asset values increase. But of course that will never happen due to the lobbying power of that top group and the ideological fervour with which many in our community defend the right of the rich to hang on to those assets and not pay an equal share of their income/wealth to the rest of the citizens. Watching this all unfold from the sidelines is very disheartening.
I am not anti-rich per se. We need them as much as they need us. I just want them to pay a proportionate share towards running the country.
Generally they do pay, and much more than their fair share. Like it or not the very people you speak of are very mobile, and any suggestion whatsoever of asset theft via wealth taxes or extra taxes for the super wealthy would simply see them move their assets off shore, which means zero taxation, and if you annoy them even more, their companies will move off shore as well, leaving you with less tax revenue and more unemployed people to support with less money. This is why this never happens in reality. Idiots like the Greens would have a go at it, but that is only because they are so thick they fail to see this reality. It's been tried in other countries, and it didn't work. So you might as well forget about it.
there are plenty of jurisdictions "offshore" who already offer lower taxes - why haven't they left already? And no, there was a report out just recently that said the exact opposite of your reckons on paying their fair share. There is no tax on capital hoarding or asset flipping, and where there is, the loopholes can be driven through in a truck - so please spare us the crocodile tears.
They are probably here because they have not been annoyed enough to leave yet.....and paying a fair share is a matter of opinion. Take a very simple example, lets say I earn 350K per year and I pay 150K in taxes, We both have two kids, and you earn 90K. You pay no net tax because of all the handouts. So, who is it that is paying their fair share. You that pay nothing or me that pays 150K. Can you answer me that. Id say the 90K guy is a freeloader. Taking it a bit further, if I was earning 10m bucks, all things being equal I would be expected to pay about 4m in tax. Is that still not enough and would I be paying my fair share yet ?
What ever happened to being grateful to be blessed with skills/opportunity in this country that presents you with a $350k p.a. income? Many would crawl over broken glass to earn $350k for their skills if it meant paying $200k in tax, let alone $150k. Here's the thing, if (in your hypothetical scenario) paying $150k in tax is that abhorrent, then take a pay cut.....
What if you "earned" $10m because your company kept the wage bill down considerably, resulting in the tax payer picking up the tab for your employees true living costs? Just remember who these subsidies actually truly benefit.
I don't think you get the point. It is a hypothetical scenario, demonstrating that for many, it does not matter how much other people pay for their own problems, it is never enough, even though they are most probably contributing nothing themselves, and then still claiming it is unfair.
Wages are low because we have a productivity and skills problem here which is directly related to education. We then have people that did listen at school leave the country and earn loads of money overseas where there are jobs for their skills. The rest live here and bet on the housing market to offset the effect of low wages as a result low productivity, and then compete with rich New Zealanders returning from overseas. We then have immigrants that actually want to work that come here with nothing and work like dogs with one or more jobs, and eventually gain home ownership and all the benefits and New Zealanders keep getting pushed to the bottom. Is that about it ? So, we have really high asset prices (housing) which are effectively the result of gambling, and low wages that are linked to low productivity. It's only going to get worse too. We have gone backwards in education in the last 6 years to the point that we have the worst outcomes in education since records began (this is not in dispute) and a government that focused on solving poverty and made it was than it has ever been (who could have predicted this). The worst education outcomes in a generation does not equal higher wages. It just means more marginalized people. Thanks Labour. Good effort.
I asked Chat CPT to make it more concise.
Low wages stem from a productivity and skills gap linked to education. Skilled individuals leave for better-paying jobs abroad, while those left behind rely on the housing market for income. Meanwhile, returning wealthy New Zealanders and hardworking immigrants further strain the job market. High housing prices result from speculative investment, exacerbating the wage issue. Education standards have declined over six years, leading to the worst outcomes on record, while government efforts to address poverty have backfired. This cycle only deepens marginalization without boosting wages.
Perhaps our low wage economy doesn't incentivise NZ employers to improve productivity given too opportunity exists to offshore some of our jobs to even lower wage economies should employers see fit. Educational achievement in this country was declining long before the last coalition's 6 year term and I wouldn't be surprised if New Zealand as a country is Not alone in the world in achieving it's worst educational outcomes because of the global pandemic ....... whether left or right/colour of the Govt. in power at the time, it may not have made any difference.
There are already offshore tax jurisdictions that are considerably less taxing on companies. Ireland has a 12.5% company tax rate. They could shift to Bahrain where there's no company tax, and pocket an extra 28%?
Why do these "wealthy" people have their assets/companies here to begin with?
Most will have a plan. But we don’t need to worry for the next 9-12 years because there will be no Labour government in power to even try and progress it so it’s a moot point really. If worst comes to worst and you really wanted to stay here is would be entirely possible to have all assets overseas and just make a loss here and then pay nothing.
The public sector employed around 462,300 people in 2023, 18.8% of New Zealand’s total workforce (2,464,300), as measured by Stats NZ’s Business Demography data.
Over the last 5 years, the overall public sector workforce increased by 15% (with central government up 15.3% and local government up 13%). This compares with an 9% growth in the private sector over the same period.
Sack the 15% that was hired under Labour and thats an immediate saving of approx $7B a year.
I heard a figure of one manager to per doctor there is that much bloat in the health system. All those managers (well most of them) need to go. You don't cut the doctors. Doctors and nurses are already leaving because of this hopeless bloat. All needs to go. Managers sufficient to do the actual jobs required of course need to stay, but only the competent ones. Everyone else needs to go. All the cultural crap also needs to go, anything in HR related to diversity. All gone. Serves no purpose whatsoever. If they did this, it would be a good start. Then you get into getting into all the the backroom services, IT etc. Consolidate systems (would cost money obviously in the short term), you move from multiple vendors to 1 or 2, scrap all the teams supporting multiple services. There is no need for all this stuff in NZ. The health system needs to focus on health, not employing people they don't need. Same for all the other ministries.
There are 18,000 doctors in the country. So your figure would suggest there are 18,000 managers in the health system? At $150k salary each, we spend $2.7b on managers salaries in the health system?
The Ministry of Health has 750 employees. Where are the rest of these managers hiding? Even if we said there were 10 managers for every hospital in this country, there'd be another 2200 managers.
Too many useless bureaucrats in Wellington, with tens of thousands hired by the last Government - they just need to sack them all, and by doing so billions can be saved with no noticeable impact on frontline services. Also, ditch the landlord tax cut and introduce tool roads and congestion charging. Finally, postpone the proposed tax cut to more favourable economic circumstances.
Nationals plans at election time were widely criticized for being very optimistic. They disagreed that was the case and said their numbers are rock solid. Now after the election they have lost 5.6 billion dollars from their original rock solid plan. If now isn't a good time to ask them what they are going to do to get their plan back on track, I am not sure when is.
The answer is pretty simple..
The government enacts a fund..lets call it the"Covid Fund "..
use this to provide for any govt dept short of cash(police/nurses etc)
tax bracket adjustment as planned.
This procedure worked well for the last clowns why not reuse it?
(my understanding the lunch's in schools was funded this way..for a limited time of course as most on here knew and predicted as they read the PREFU properly?
Te reason school lunches are funded year by year is because the requirement changes year by year. If you allow for growth and that growth doesnt occur , the money tends to be absorbed anyway . if there is a increase in eligible kids , the funding is going to be short . I was surprised when our kids started going to school , how often some kids change schools.
Labour always intended to refund the school lunches , for national to say it is unfunded is close to dishonest . again.
On Tuesday morning, Finance Minister Nicola Willis told reporters there would not be new taxes or fee increases in the budget. She said the tax plan would still be fiscally neutral but didn't reveal details.
Great, they got scared off. Or is that simply a carefully crafted statement - and there will be tax increases elsewhere to "existing" taxes?
Hilarious. Even less for Willis to play with ... Plugin Hybrid charges drop from $53 / 1000km to $38.
https://www.nzherald.co.nz/nz/government-agrees-to-slash-road-user-char…
Maybe not. Apparently sales of plug in hybrids crashed once everyone figured out owners would be paying twice. If nobody buys them then nobody pays the RUC. If the drop in RUC means people buy plug in hybrids and pay the tax, then more tax will be collected than if the change hadnt been made.
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