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Key rules out land tax, CGT, RFRM, but still considering income tax cut and GST hike (Update 5)

Posted in News

By Bernard Hickey

Prime Minister John Key has announced in his opening speech to Parliament that a land tax, a Capital Gains Tax and a tax on equity in residential property investments would not be considered in the May 2010 budget and had been ruled out by the Government.

It was however looking at unspecified measures suggested by the Tax Working Group to tax property more to help pay for an unspecified reduction in the top personal tax rate.

(Updates with My view that Key exposed himself today as a timid follower, not a leader. Update 3 includes reaction link. Update 4 includes link to video of Key's tax comments. Update 5 includes link to full speech)

Read the full speech here. Watch on YouTube here.

"Some of the options discussed by the Tax Working Group are not favoured by the Government, for a variety of reasons, and will not be progressed," Key said in speech notes prepared for the address and obtained under embargo by Interest.co.nz in Wellington.

"In particular, we will not be developing any proposals for a land tax, a comprehensive capital gains tax, or a risk-free return method (RFRM) for taxing residential investment properties," Key said.

However, Key said there was a hole in the tax system around investment in residential property that the government wanted to address and it would consider other options suggested by the Tax Working Group, although he did not identify specific preferred policies.

"The government does believe there is a gap in the current tax system around property investments where income is being derived but, in aggregate, no tax is being paid - in fact the government is actually losing revenue in this sector," he said.

"We will therefore be making changes to the way property is taxed, which will result in increased Government revenue and more fairness for the taxpayers. These changes will be announced in the budget."

Also, Key said the government was still considering an increase in the GST rate to no more than 15% with compensation.

"No decisions have yet been made about raising GST and Government has asked for more work to be done on this," Key said.

Justifications put forward

Key said a land tax appealed to economists as an efficient way to raise revenue. "However, a land tax is effectively a lump-sum tax on people who own land at the time the tax is introduced, would only fall on people who hold their wealth in one particular form, and would create cashflow problems for many landowners, especially those with lower incomes," Key said.

"An RFRM is another tax that, while having some conceptual appeal, would also create cashflow problems for taxpayers. A property owner could have a very sizeable tax bill each year under an RFRM, but little or no ability to pay it, except by putting up rents," he said.

"A comprehensive capital gains tax extends the tax net and is highly progressive. However in the government's view it would make the tax system more complex to administer and comply with, and may encourage taxpayers to hold on to assets simply to avoid tax."

"These new taxes are therefore off the table," he said.

Need for tax reform

Key however introduced his comments on ruling out changes by arguing there was a strong need for tax reform.

"The Government agrees with the Tax Working Group that New Zealand relies heavily on the taxes most harmful to growth, particularly corporate and personal income taxes; that there is a hole in the tax base around the taxation of property; that the tax system lacks integrity and fairness because of differences in the treatment of entities; and that there are significant risks to the sustainability of the tax base," Key said.

"We have a tax system that taxes Labour and investment income at relatively high rates, taxes consumption at a relatively low rate and generally gives money back to people when they invest in residential property," he said.

"Is it any wonder that our economy is tilted towards consumption and property investment, that we have a shortage of savings, and that a high proportion of graduates live overseas?," he said.

"Tinkering over recent years has made the tax system more complicated, led to poor incentives in the economy and created a raft of different ways for people to minimise their tax payments."

My view

John Key has just sent Generations X and Y a clear message. Leave the country now.

He may as well have directed those younger taxpayers who are stupid/poor/unlucky enough not to own property to the websites for AirNZ, PacificBlue and Jetstar and suggested they buy one way tickets to Australia.

He had a chance to follow up all the talk of real reform to create a 'step change'.

He had all the experts under the sun from inside and outside of government telling him he needed to do something. He commissioned reports. He talked a good game. Today he did nothing. He did worse than nothing. He shut down the debate.

He decided not to challenge a generation of voters who are now rich because of the property boom and don't want to give it up.

He is cementing in place the biggest transfer of wealth between generations in New Zealand's history.

He is saying to a generation unlucky enough not to own property in 2002 that they can give up on the dream of family home ownership in the main cities unless they can pry the money out of their parents. He is saying to all those too poor to own a home now will never be able to own their own home. He is accepting the poverty and the hopelessness that often is attached to the working poor in rental accommodation. He is saying tough. My backers own property.

We won. You lost. Eat that.

He is saying I don't like the activity of investing in property to avoid paying taxes, but I'm not brave enough to challenge them or convince them what is in their best long term interests. He has finally shown his colours.

He is a mediocre leader without the vision or the ability to change New Zealand. He is a seat warmer who is too scared to scare the masses. He is saying he wants to get re-elected. How uninspiring. How pedestrian. He is saying he is a not a real leader. He is saying he will follow his followers.

What happens when the baby-boomers who voted him in start complaining about how they can't watch their grand kids grow up in New Zealand?

Who will deliver the tough message? Not John Key.

For further reaction to John Key's tax comments see here.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

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.

344 Comments

If only we had a

If only we had a system which taxes Labour , Bernard ........or holds them accountable . Sadly it taxes labour , instead . There , there ( not " their " ) !

what a anti climax.. just

what a anti climax.. just like the ending of a B rated movie

I thought you said GST

I thought you said GST was off the cards BH??

Sounds reasonable so far. Although

Sounds reasonable so far. Although he didn't rule out ring-fencing, which is a concern.

I suspect, they will be removing depreciation. The use of the word "comprehensive" with regard to CGT sounds like they might draw a "line-of-death" in the sand for when tax is payable on sale of a property, which would make a huge difference.

I interpreted it the same

I interpreted it the same - ruling out a "comprehensive" CGT implies some other sort of CGT may be there (probably no more than rigorous enforcement/interpretation of the current rules), and depreciation is the obvious other change.

I also had the impression that ring-fencing losses had potentially come onto the table.

Boy, that was sad. I

Boy, that was sad. I thought Labour was sad, but this vision and ambitionless spending dump and we're looking at tax increases is even more disappointed then I thought.

Phil, for once you're right.

So what happens to LAQC's?

So what happens to LAQC's?

Just shows that Key is

Just shows that Key is no different from the last PM, he reads the polls carefully, stays in the middle ground and does nothing.
As for fixing the housing property market it is clear the property barons have had his ear for the past few weeks. Hopefully they have plugged the gap in the National Party's finances as well.
John Key has just lost his opportunity to fix our tax system......he is no longer a leader just a poll follower.

OK - no land tax,

OK - no land tax, no CGT, no RFRM (thank god). But Key seem explicit that the landlords are going to get whacked so whats left?

Well, I think we can take it residential building depreciation is goneburger. The TWG didn't really talk much about ring fencing for residential landlords or abolishing LAQC's (not that this will help much...) or Stamp duty. Are these back on the table?

Or are we left with a "radical new tax plan" that consists solely of rejigging the depreciation loading on a few selected assets?

I think i need to sit down now - I'm blown away with the bold free-thinking on display.

@ gdjcpico - Nothing. LAQC's

@ gdjcpico
- Nothing. LAQC's were never an issue.

@ ChrisB
- IMHO, removing depreciation will be more than enough to remove the marginal property investors from the equation. Stamping on PI too hard would just create more problems.

Johnky is going to change

Johnky is going to change the country for the better by...well doing as little as possible and hoping for the best.

Looks like agree on what

Looks like agree on what the problem is:

"We have a tax system that taxes Labour and investment income at relatively high rates, taxes consumption at a relatively low rate and generally gives money back to people when they invest in residential property," said Key

How is doing bugger all a solution to low productivity, low investment in productive activity, loss of skills and talent, low export returns and low growth?

Wally was right, don't expect much.

ABSOLUTELY PATHETIC. whats the point

ABSOLUTELY PATHETIC.
whats the point in increasing GST then increasing hand outs like WFF to offset that?
And Key has pandered to the interests of his property investment backers
This shows no sign of he vision and leadship this country needs
I have lost all hope for this country!

Ring fencing losses on rental

Ring fencing losses on rental property was all that was needed to put property investment on the same footing as other investments. Looks like JK will do the sensible, logical thing after all.

Now, how to get banks to lend to businesses (other than those involved with property)....

Ideas?

Man, Phil Gap doesnt get

Man, Phil Gap doesnt get tax huh. What a rant.

Interesting about the petroleum industry. Would like to see more details. I certainly hope they dont screw that up (read like UK) !

"We will therefore be making

"We will therefore be making changes to the way property is taxed, which will result in increased Government revenue and more fairness for taxpayers. These changes will be announced in the Budget."
This quote and the part about reforming the tax system followed by how they won't do it.
Making changes, BUT none of the ones that have been discussed or proposed - Err, he doesn't know how he can do it yet?

As others have said, dissapointing...

As others have said, dissapointing...

The politicians seem to be determined to let NZ sleep walk into being nothing more than a retirement village, full of old bitter forgotten individuals wondering where their children have gone.

As someone in their 30s, who is paying the top level of tax and not getting WFF, all I can say is "I don't think so, John".

I simply have had enough of paying out all this tax while I watch all around me people rorting the system.

Funny, I think he is

Funny, I think he is just giving little hints, warnings, kinda of preparing you all...By the time the Budget comes you will all be precooked...

Increase both GST and WFF

Increase both GST and WFF hand-outs....

Great! Middle-class workers with no kid / no rental property will pay for this tax cut...

JC - "Ring fencing losses

JC - "Ring fencing losses on rental property was all that was needed to put property investment on the same footing as other investments"

Hilarious. Ring fencing would be the one thing that would put property on a different footing to other investments. What I'm waiting for are the incentives to invest in productive export industry. Trying to think of the catalysts they have been putting up over the last year......still trying......brain..hurts.

@ JC "Ring fencing losses

@ JC
"Ring fencing losses on rental property was all that was needed to put property investment on the same footing as other investments."
- Ring fencing would actually be one step further than other businesses as someone running a business automatically offsets expenses versus income.

Disappointing. They really needed to

Disappointing. They really needed to stamp down on property, however because they and their mates have property, they have a conflict of interest, so they dopn't want to do something that could end up costing them a lot of money. Things are no just going to plod on, getting slightly worse and worse, as we borrow more and more until it will be too late. There is really nothiong to address the huge amount we are borrowing each month. GST was one idea of the tax working group, but a minor one. Fairfax seems to think it was a central one based on http://www.stuff.co.nz/national/politics/3307911/Key-confirms-GST-increa... . Tax on property was however far more recommended than a GST rise,
They think a raise in GST will bring in more money, but instead it may mean that people won't spend as much, which may offset much of the gain. That will also cause businesses pain, as some will not be able to pass on the increase very easily, and some may have to absorb it. They may risk losing customers, if it is passed on.

People, send an email to

People, send an email to Johnkey, tell him how you feel. If you have a National MP, send them one too.

They are ruled by the polls and public opinion.

No point being pissed off about something and keeping it all to yourself.

B-rated movie. G-man, you're too

B-rated movie. G-man, you're too kind.

No real changes then, possible

No real changes then, possible small adjustment to property investment and a refunded gst increase.

Top tax rate reduction? Does anyone know how the $ of new Zealand that pay the top rate of tax atm?

Bernard - just read your

Bernard - just read your Update 2, "my View", you know, I think you may well be right. Really Sad.

Cheers, Les.

I am coming to the

I am coming to the conclusion that when a big issue comes up on the horizon, stick ones head in the sand and then wait until all goes quiet and then pull your head out and all will be well.
Worked for GFC and now TWG.
No wonder we are apathetic, nothing changes.

So, all those who are

So, all those who are "disappointed" by JK's "pathetic" suggestions, have "lost hope", etc.: what would you like him to do? He is not intending to introduce CGT, or charge a land tax, or RFRM - is this bad? Or would you prefer the state to take more money off you?
If he cuts taxes (personal and business) significantly, it'll be great! And if he did not intend to increase GST and to eliminate property depreciation claims, it would be even better!

So the real losers are

So the real losers are childless, renting, middle class. -the most mobile section of the community?

Bernard - Am I right

Bernard - Am I right in thinking the media got a full 9000 word version of Key's speech earlier today? Any chance you could post a link to the entire thing now the embargo has been lifted?

Can I use the cycle

Can I use the cycle way yet?

wake me up when something happens.

CJW Nail on the head. And the more money they earn, the more skilled they are, the easier it is to leave...

@BH Just your update, and

@BH Just your update, and you pretty much hit the nail on the head.

As a Gen X, I am just not seeing any future for my wife and I in this country we love.

We will not leave tomorrow, as we have responsibilities we must follow through on, but once they are past..

Goodbye NZ, hello Australia (at least it will be close enough for our parents (who did not participate in this property orgy) to visit).

So is now a good

So is now a good time to become a real estate agent ?

The property "sky" isnt falling and Im still going to make plenty of money and get my new tax cut

JK Gets my vote

What do people expect from

What do people expect from politicians "“ a system rotten to the core.
Sauvignon Blanc and apples are cheaper in the UK then here in NZ. Let us keep the wonderful standard of living - import the world and export the brainy and skilful. Well done Key - gggrrrrrrr !! We need revolutionary events !
1 Step "“ Soften up & education for politicians - how to make us wealthier as a nation !

Walter

Please read and understand this in context to many other of my articles.

Wally thought Lockwood's slow march

Wally thought Lockwood's slow march across the floor was more interesting...any slower and we'd all have time to make a cuppa....he's not crook is he!
Sorry I got it mostly right...more tinker and fiddle wrapped in spin and dressed up in BS.
The landlord bash will be sold as being bold. The stonecutters are happy the immigration gates are wide open..and the residential property ponzi bubble is alive and well in Noddyland. Not once did Key mention property being seriously unaffordable you will note...all in all a win for the stonecutters I would say. Anyone see if Bolly has dived out his office window yet?
So it's over to you Mr Market to come and do your thing.

@Trev, get real mate, they

@Trev, get real mate, they don't care, no more than gutless Labour did. It'll be interesting to see how Goffy plays the reply and the game from here on out. Probably not much better I shouldn't wonder. Same trough, just different breed.

So dissapointing, I really thought

So dissapointing, I really thought Key was going to man up and sort this gigantic mess of a property market out, but no teeth no guts typical choke under pressure.

It's hard to start writing

It's hard to start writing because I cannot find a starting point in my disappoint of John Key and Bill English. They talked such a good talk in the run up to the election then have gone on to do nothing.

Oh well it wont take long in the grand scheme of things to get them out of power.

@Dave smyth Hi Dave, I

@Dave smyth

Hi Dave, I should have qualified my statement - I meant business which were not sole traders /farms/LAQCs etc i.e. where losses can't normally be passed on to share holders.

The real losers are over-paid,

The real losers are over-paid, over-qualified employees who have never taken a business or investment risk in their lives.

You didn't think a corporate or a a rich person with a team of accountants would pay for it did you/ really? Who else is there who has any money to spend?

Unfortunately our Prime Minister has

Unfortunately our Prime Minister has failed to really reform the tax system and we have minor tinkering around the edges. Surely the simplest and easiest way to tax the residential property sector is to have GST on rents and stamp duty on sales. Whilst the likes of REINZ likes to pretend increased costs will go straight onto rents, the reality is rents are a function of supply and demand not a function of the landlords costs. If the return to landlords is lower then long-term the value of the property has to decline to a point where the yield becomes acceptable to investors. It may take a little pain as rents go up, demand falls, rents fall, demand stabilises, house prices fall, but ultimately we will have a much more balanced and fairer tax system which actually treats providing accomodation as a service and taxes it accordingly whilst also making it easier for first-time home buyers such as myself.

John Key is just like

John Key is just like Obama....all talk and do nothing....whoever said "never let a good crisis go to waste"...should be crying right now with both of them.

Cheers NZ, it's the slow boat to hell....but you will arrive there sooner or later.

This was a totally underwhelming

This was a totally underwhelming speech but I'm not surprised that they won't introduce any new property tax. It looks like the only adjustments made will be to the whole depreciation thing.

Well I am childless, middleclass and renting. I am going to see what exactly comes out in the budget, and how higher interest rates affect the property market and if its no good in a few months time, I am off to aussie. I won't be buying a property in their overpriced market either but I will earn a bunch more and then in a few years come back and buy here... maybe...

I think that it is

I think that it is too late for all the CGT and other suggestions now. I think there will be a slump in the amount people will be prepared to pay for our substandard NZ housing stock.

As someone pointed out, the next generation are 'going global' and are smarter than any generation before them. They will know that they hold the power when it comes to negotiating for real estate. They are simply not going to pay 'through the nose' prices so the previous owners can retire with a golden handshake.

Nature will take it's course and we all have to tighten our belts - show a bit of austerity.

Maybe John sees investors losing a substantial 'ponzi' capital loss, and afraid to articulate that to the public.

You guys are funny. What

You guys are funny. What a bunch of melodramatic whiners!

What did you expect? Changes to deductibility will be plenty to stop property investment by the delusional investors who do it for "tax breaks" - otherwise known as spending $3 to save $1.

Perhaps the other options were ruled out because they were put forward by a bunch of people who don't understand property, were all theory and no practice and were actually crap?

As usual, lots more emotive, soap-opera stuff from Bernard without knowing what the actual changes will be.

@ JC
"I meant business which were not sole traders /farms/LAQCs etc i.e. where losses can't normally be passed on to share holders."
- Unless you're talking publicly listed companies, even with sizeable, privately owned businesses, the expenses directly offset any income the shareholders receive.

So, all those who are

So, all those who are "disappointed" by JK's "pathetic" suggestions, have "lost hope", etc.: what would you like him to do? He is not intending to introduce CGT, or charge a land tax, or RFRM "“ is this bad? Or would you prefer the state to take more money off you?
If he cuts taxes (personal and business) significantly, it'll be great! And if he did not intend to increase GST and to eliminate property depreciation claims, it would be even better!

Anyone seen my copy of

Anyone seen my copy of the Property Press? Which one of you guys took it?

What are your thoughts around

What are your thoughts around the drop on the personal income tax rate? It does not look too promising for a decrease.

I think a lot of

I think a lot of people were hoping for a major reform on property, so that more empahise and investment can go into productive business, so NZ can generate wealth, and we can raise our wages to prevent kiwis moving to higher wage countries.John Key wanted to change things to bring kiwis living offshore, to come back home. This isn't going to chnage things. The result is, that proabably more people will now leave. I for one was holding out for a major change. I am mobile and have no baggage in NZ, so can move offshore at any time, and I am are there are a lot of others too. NZ however is a good country to retire in.

Beehive website not working too

Beehive website not working too well, but Key's speech can be found here:

http://www.johnkey.co.nz/archives/886-Statement-to-Parliament.html

Just about to put up tax comments in a video

Alex

Bernard, I think its a

Bernard,

I think its a bit rash to say all is lost.

"We will therefore be making changes to the way property is taxed, which will result in increased Government revenue and more fairness for the taxpayers. These changes will be announced in the budget.""

All he seems to be saying is particular changes mooted are off the table, but that additional ppty taxes WILL be introduced From what I can see this still leaves removal of -ve gearing credits and depreciation. There could even be stamp duty - thats easy to enforce as well and coudl be directed at investors only.

That said, I dont think Key has a clue what he is going to do so has left it open. What is disappointing is that he has not signalled any clear substantive changes which would assist in pricking the bubble. He can either do something decent or trivial come budget. I am guessing it will be trivial. we all need to remember, John Key was NEVER a businessman. He was a currency trader, an occupation that adds NIL productivity to the economy. Maybe he is just being true to his parasitic tendencies.

Can't we just transfer whatever

Can't we just transfer whatever Norway has been doing for 50 years and go 'search replace" with New Zealand?

It probably is as simply as that. Thats the sad thing.

Bernard has nailed it -

Bernard has nailed it - existing wealth transfers are to be extended for as long as they can be sustained. The end game will not be pretty.

what a bunch of whingers.

what a bunch of whingers. go to aust.
he said he will smash the property investers rorting the system and your all saying 'why doesnt he smash the property investors rorting the system'. you all expect him to transfer the wealth from the property crowd to you who missed out of the 01 to 07 credit boom. well thats just too easy for procrastinators who sit on the sidelines without the gumption to act.
get out there after may 20 and find yourself a positive cashflow residential property investment that you will pick up off a lender to the LAQC pack. or if your a first home buyer, buy a property without having to bid against someone with a tax break advantage. sure he should have done more but at least hes evened up the playing field a little.
or sit back and whinge about how unfair life is for me. boo hoo.

<i>- Unless you’re talking publicly

- Unless you're talking publicly listed companies, even with sizeable, privately owned businesses, the expenses directly offset any income the shareholders receive.

They usually (hopefully) pay tax, not receive it.

I mean, would it be so unfair to ring-fence tax losses, for use once the property reached profitability? Depreciation could stay.

A typical whiney BH response.

A typical whiney BH response. He doesn't understand the property market, doesn't understand the tax implications, he just blows hot air about his OPINIONS without any facts to back it up.

BH should own an investment property (oh no, that would make him a --- LANDLORD!!) to see the s*** that we have to put up with, with bad destructive, non-paying tenants who are ably assisted by the Government, to continue to rip off the system. THEN on top of that, he'll find out how difficult it is running a business (YES, BUSINESS) when your business is continually villified, over-taxed and over-regulated.

Get a grip, BH. You know nothing.

KPMG: <i> "With the GST

KPMG: "With the GST rate in Australia at just 10 per cent, an increase to our rate would have a negative impact on New Zealand's competitiveness.."

I think that is a little overstated, I don't think 2.5% is going to make any difference whatsoever when you compare it to the impact exchange rate fluctuations. For example today NZD$ is around $0.68 when only 2 weeks ago was $0.74.

good Reply property valuer ,

good Reply property valuer , to many whingers on this site . Your all going to get a tax cuts !! . dont spend it on luxery items you dont really need instead make the extra $$ work for you

People should think long and hard before popping out children they cant afford , and focus on upskilling to work there way to a more prosperous future rather then happily putting there hands out for WFF to make ends meet . Show some gall and ambition folks

@ IanC "I mean, would

@ IanC
"I mean, would it be so unfair to ring-fence tax losses, for use once the property reached profitability? Depreciation could stay."

- I guess either way around would be viable. Ring-fencing everything and removing depreciation would be chaos and I think cause too many problems. If the changes just cut a swathe through the marginal investors, then the changes would be effective and not cause too much damage.

Smile and wave, tinker and

Smile and wave, tinker and fiddle - what a team.

It's clear now that Mr

It's clear now that Mr Key knows that the housing market is naturally in the crapper so doesn't wan't to do anything too rash to avoid getting blamed for the impending doom.

How about this from Colin

How about this from Colin Espinar

http://www.stuff.co.nz/national/blogs/on-the-house/3307861/A-pass-for-Ke...

"Indeed, the only thing Key is promising in this area is to close the loopholes that allow mum and dad property investors to declare big losses on their rental property as a way of cutting their taxable income and clawing some tax back from the IRD. That had been well signalled, and even Labour doesn't oppose it.
"

is he referring only to depreciation here, or ALL losses. I did not think Key was promising this??? But it would be great news if he was, in fact i woudl see ring fencing losses as having hte biggets impact.

ANYONE???

"Whump"...sound of Mrs Ts handbag

"Whump"...sound of Mrs Ts handbag hitting BHs lughole.

@ jimmy (the other one)

@ jimmy (the other one)
"is he referring only to depreciation here, or ALL losses."
- I think depreciation as it's not an actual cash expense and is the primary motivator for people with a tax-loss focus. Despite what Colin Espinar says, it's not a loophole or even a dodge, it's common tax law.

One word - DIASGRACEFUL

One word - DIASGRACEFUL

It seems to me that

It seems to me that no one is still really sure what concrete changes will happen to property in the May budget. Should I buy now, or sell? There's a window of finally opportunity for both sides of the equation to decide which way to go over the next 3 months. Everyone make up your own mind according to your position, because whatever actually happens, you won't be able to say 'Why wasn't I told"

Thank goodness for practical common

Thank goodness for practical common sense. The situation is fairly delicate and if the government had have implemented the very things they rejected, it may well have put us into such a tailspin, that it would get rather ugly. And it wouldn't just be property investors but everyone who owned a house who would get burnt, including those of us who use collateral on our house to finance our business.
Ideologues have a nasty habit of being so convinced about the correctness of their thinking they don't forsee that things don't usually work out as they expected.
George Bush's war on terrorism etc a case in point.

I agree - instead of

I agree - instead of whinging, those who are "disappointed" that the Government decided to take less money off people, should get up and, for a change, try to DO something: invest (in property or shares), start their own business or simply work harder! Failing that, they shouild feel free to go to Australiia (I am sure they'll continue whinging there...).

Maybe what JK has decided

Maybe what JK has decided is that all the suggestions are tinker and fiddle.

There is a big world out there and many industries and opportunities. If you tinker with one without a huge oversight as to what is happening in the rest of the economy, then it is just tinker and fiddle.

Better to do nothing than do something and get it WRONG AGAIN.

Something to understand here. Income

Something to understand here. Income Tax cuts will be applied to incomes that are, for many Kiwis, effectively fixed - or more correctly are falling in real 'purchasing power' terms. Conversely, GST will be increased on goods and services - whose prices can rise to effective infinity as was demonstrated in the Weimar Republic and, more latterly, Zimbabwe. If, as one suspects, debt monetization lays ahead then the proposals of the government are not 'neutral' but actually signal a dramatic increase in taxation for the average New Zealander. When the basic necessities of life consume 100% of net available income government 'tribute' at 15% is going to see the aggregate burden of tax effectively go through the roof.

As for property taxation adjustments remember, if the property sector falls over then down goes NZ. Ultimately, the only 'option' is to monetize in order to keep the ponzi scheme going and - if it can be done - raising GST will then see truckloads of nominal fiat dollars entering the treasury as good old NZ has virtually no exemptions for this regressive tax.

So now it is time

So now it is time to go to Australia to buy their property.
The median price for Australia capital cities are:

Sydney A$615,500
Canberra A$478,000
Perth A$491,500
Melbourne A$518,500

It is cheaper then Auckland NZ$470,00 when you considering the size of city.

Visa points calculators: UK -

Visa points calculators:

UK - http://www.ukba.homeoffice.gov.uk/pointscalculator
Canada - https://services3.cic.gc.ca/rescalc/resCalcStartNew.do?&lang=en
United States (diversity immigrant programme) - http://bit.ly/1Lbphk

And of course, we all know about Australia's special category visa

@Dave Smyth Share holders can't

@Dave Smyth

Share holders can't offset company losses against their PAYE

But you're right about everything else...

People who have never invested in property seem to live in a fantasy world where calculators, spreadsheets and basic math are rare.

Ring-fencing will remove the speculators and improve the tax take... NZ will still have too much invested in low-return property.. but it is has proven to be an inflation-proof asset (albeit with risk).... and the only investment the average person can borrow for/leverage.

When Bollard doesn't sack Key

When Bollard doesn't sack Key - Harawira should all three.

Mrs T. <b>is not my

Mrs T. is not my Mum [ praise the Lord for that mercy ] .

Read you update BH , and you nailed it . No guts , no glory . Key & Co. plodding toward a 2011 election .

Les Rudd has your cousin Kevin , over in Oz , got any tips for you , on how to lead your own party ? 'Cos between Labour & National in NZ , we are rooted !

JC, Share holders can offset

JC, Share holders can offset company losses against their PAYE and anyone can including stock trading, etc...

I agree. John Key sees

I agree. John Key sees NZ property reverting to the mean. Prices will drop. That is what is happening around the world. It will happen here.

Why bring in new taxes on a sector that will soon implode.

Dave Smyth Says: "You guys

Dave Smyth Says:
"You guys are funny. What a bunch of melodramatic whiners! "

yeah I have to agree
On the other hand the speech was waste of time. hasnt told us anything we didnt already know...
We know Key has decided on quite a few actions on quite a few area, like mining, deprecation on property and the like....
SO WHY THE HELL DOESNT HE GET ON with some of it NOW!!!!
Why wait till May Budget?

He hinted at conservation....and development of new industries etc
So when can we breed Weka and export meat for premium prices?....and several of our other (endangered) species....they are endangered because they are not commercially viable...Wood pigeon for next Christmas dinner?
Here are new industries, damn near sitting there ready to go, tomorrow, just need to employ a few people....DoC could get a royality...there is a huge cut in taxes to fund DoC......And it has a overwelming support by the NZ public according to surveys

Jim Anderton: Mr speaker, Monday

Jim Anderton: Mr speaker, Monday October the 20th 2008, National leader John Key told a press conference this morning that if National is elected and does a "half decent job" at running the economy, then increasing GST will not be necessary...

IMHO he will ensure LAQC's

IMHO he will ensure LAQC's have equal losses between the directors to carry forward rather than being split by the accountant into more shares for the main bacon earner ( to offset the highest income earner / potential tax payer)

so LAQC's will continue, but there ought to be a jolly good reason for anything other than an equal share for equal investment/equity

and they will nab those that have evaded tax - as opposed to avoided it, through such schemes, as long as it has nothing to do with owning an electoral office and renting it back to your own political party...

@ JC "Share holders can’t

@ JC
"Share holders can't offset company losses against their PAYE"
uhuh... and PAYE is tax paid from income paid with money left over after... expenses?

@ Steptoe (Steps)
- At least we know what isn't happening!

Sounds like Phil Goff is

Sounds like Phil Goff is doing most of the posting on here today...

This is a fantastic result

This is a fantastic result and what inspirational leadership from John Key. To encourage the important foreign investment we need a Government that will protect property (residential and commercial) ownership from the evils of taxation. My asian colleagues back at home in China are very happy the Government is ruling out the findings of the non-property Tax Working Group. This will have a positive influx of capital into New Zealand, to further help New Zealand's economy.

As a service country to Asia, New Zealand is starting to shape up well. Keep up the great work National & Act. Try not to trim depreciation too much when you get to the budget. Friends owning leaking buildings certainly face depreciation. Carpets, kitchen cabinetry, light fittings all need replacing as they wear - why rule out something that actually happens.

What is done in overseas countries is slashing benefits and Government spending, then reducing taxes. That now needs to be implemented strongly and quickly, to ensure NZ's doesn't have a big public debt, that will encourage any socialist leaning government of the future to over tax their nation's good people.

@ President of Property "LAQC’s

@ President of Property
"LAQC's have equal losses between the directors to carry forward "
- perhaps... not entirely fair considering that the higher income earner will be the one propping up the rental.

"The situation is fairly delicate

"The situation is fairly delicate and if the government had have implemented the very things they rejected, it may well have put us into such a tailspin, that it would get rather ugly. And it wouldn't just be property investors but everyone who owned a house who would get burnt, including those of us who use collateral on our house to finance our business."

You took the words out of my mouth Muzza.

@ JC “Share holders can’t

@ JC
"Share holders can't offset company losses against their PAYE"

The first statement is correct.

Roger - depressing, eh? I

Roger - depressing, eh? I was expecting more and thought some of the stuff he's rejected might have been actioned, but phased in slowly, so as not to bring the house of cards down. Something which I think, is a real issue and he's treading very carefully around it. So we watch and wait, and who knows we might be amazed. Dreaming a bit now, but maybe come budget time there'll be other stuff they can do, maybe on the monetary side that would have more +ve effect that any tax/fiscal change on the fortunes of the productive sector. Nah, dreaming, forget it, these guys won't challenge the status quo in any signifcant way, IMO. As for Uncle Kev, nah, don't really speak much, he's not a CASPer and so don't have that much in common.

As for another political party, hmmm, maybe another country would be easier. Just take Bernard's advice, so much easier.

Cheers, Les.

@Dave Smyth Please tell those

@Dave Smyth
Please tell those of us who have shares in companies which have made loses how these can reduce our PAYE tax...

Very disappointing. In what essentially

Very disappointing. In what essentially has been a mass landgrab, privilege will remain in privileged hands. There will be enough migrants here to work menial tasks, and others come in a mger level. I'm not sure who the rest will be, kids of people like Key? At least they'll have a rent free roof over their heads. Ho. Hum.

@ Selwyn "The first statement

@ Selwyn
"The first statement is correct."
- I didn't say shareholders could offset company losses against PAYE. I was merely explaining that a salary can only be paid from money it actually has... unless of course they're borrowing to pay salary, or just not paying their bills.

@ JC
"Please tell those of us who have shares in companies which have made loses how these can reduce our PAYE tax"¦"
- As I already said... "Unless you're talking publicly listed companies, even with sizeable, ***privately owned businesses***, the expenses directly offset any income the shareholders receive."
- This of course assumes the company is being run responsibly and incomes are not continuing to be paid in the face of mounting losses.

Walter's link to the Muppets'

Walter's link to the Muppets' Swedish chef gives me an idea . Can we get him to run for parliament ? ( the CHEF , not W.Kunz , there are limits you know ! ) .............But would we know the difference , our politicians already are a bunch of incomprehensible muppets . .............. . Yup , the big guy (BH) is right , time to dust off the trans-Tasman canoe .

"Over-taxed" Mrs T? Let me

"Over-taxed" Mrs T?

Let me tell you about the term 'over-taxed'. You're quite happy to take tax-payers money but hate paying any back?.........oh, I see.

The taxes taken from folk like me that are paid back to those beneficiaries thru WFF are so they can afford the rents you charge on your over-valued property.... (but if they're so bad why don't you just evict them??)

And here I was thinking that if only house prices were lower I afford a house for myself, partner & daughter so I wouldn't have to deal with awesome landlords like you anymore...

Of course, why would property prices drop when there's tax-free gains to be made?

Watch out , Ray ,

Watch out , Ray , she wields a hefty handbag . BH got whumped on the lughole !

Love to see what Gareth

Love to see what Gareth Morgan says about this. He even said the working Tax groups suggestions were nowhere near enough.

@ Ray "The taxes taken

@ Ray
"The taxes taken from folk like me..."
- Ray, I'm pretty sure that any tax refund I get is a tax refund from the tax I already paid. If you think that Inland Revenue might have mixed up our IRD numbers, maybe we should catch up and petition them to sort out this heinous administrative error.

No CGT - great! No

No CGT - great!
No land tax - great!
No RFRM - great!
Tax cuts - great!

GST increase - bad.
Property tax - bad.

Best tax system: ZERO tax!

Reaction: KPMG Senior tax partner

Reaction:

KPMG Senior tax partner Paul Dunne said Key's silence on depreciation indicated this was very much the focus for the government in its tax reforms:

http://www.interest.co.nz/ratesblog/index.php/2010/02/09/reaction-to-joh...

No worries RT....I had fast

No worries RT....I had fast bowlers coming at me with bouncers on saturday.....my bob-and-weave is in good nick.

And Rob.....I'd say GM's classic 'tache will be on high-twitch mode till the Budget is announced...

It's after 5pm so soon

It's after 5pm so soon the people who actually have jobs and pay the tax will finish work and be able to comment.

So who do we turn

So who do we turn to Phil and Anette OMG.

bob : 9 - 5

bob : 9 - 5 is not the sole shift available . Are you implying that we're all bludgers ? I actually have a job , believe it or not . .... And it starts after 5 p.m. .

Bernard - You are very

Bernard - You are very harsh. Taking depreciation away is significant to property owners as well as making a lot of sense as property clearly appreciates. The other suggested property tax reforms are inconsistent with other sectors and I am pleased to see they are off the table.

In short, are LAQC's now

In short, are LAQC's now a waste of time?

John Key on ZB has

John Key on ZB has just confirmed that houses and commercial buildings will no longer get depreciation benefits ?it is still to be officially in the budget, go figure.

From NZMEA, 9 February 2010

From NZMEA, 9 February 2010

'Still no real change'

In his opening speech to Parliament today Prime Minister John Key has accurately characterised the problems with a tax system that is in dire need a radical overhaul, but has responded with a determination to do no more than tinker say the New Zealand Manufacturers and Exporters Association (NZMEA). We had hoped for more political courage and leadership towards a step change that is needed to address the widely accepted problems in our economy.

John Key acknowledged that the tax system is broken saying, "The Government agrees with the Tax Working Group that New Zealand relies heavily on the taxes most harmful to growth, particularly corporate and personal income taxes; that there is a hole in the tax base around the taxation of property." However, he then went on to say, "In particular, we will not be developing any proposals for a land tax, a comprehensive capital gains tax, or a risk-free return method (RFRM) for taxing residential investment properties."

NZMEA Chief Executive John Walley says, "How the Prime Minister expects a broken tax system to be fixed without any changes is beyond me. We hoped for more, sadly it seems we can only anticipate more of the same."

"The desire to drop the income and corporate tax rates is commendable but jobs follow investment as night follows day, and without balance in fiscal and monetary policy the real economy will be robbed of returns and starved of investment."

"There seems to be a consensus that broad based, low taxes are fundamental for jobs and growth; what is lacking is the political will to deal with vested interests and make it happen."

This is an MMP Government,

This is an MMP Government, you are all expecting crisper decision making that you get in a FPP Govt. Key is our truly first MMP leader,he a consensus leader.

@ GDJCPiCO "In short, are

@ GDJCPiCO
"In short, are LAQC's now a waste of time?"
- If you're asking about tax deductibility, we won't know until the May budget.
- You never needed an LAQC to claim expenses against your personal income.

@ Les Rudd
- IMHO, CGT and land taxes were going to have less impact than removing depreciation or ring fencing losses. The RFRM would have been a nightmare all round.

Yesterday Key said it would

Yesterday Key said it would it would be quite clear what was going to be implemented but today we get nothing confirmed.
The country still waits for some leadership!
How can we have any confidence to grow with all this uncertainty..... All plans on hold untill the budget.

I TOLD YOU ALL JK

I TOLD YOU ALL JK was gutless!. Just Pathetic, this guy is like talking to a corporate brick wall. Protects his mates and fellow MP's all the way and screw the little guy at the bottom with more GST to pay on their rates, their ACC, their car reg and WOF, their food, thier clothing costs, their heating costs EVERYTHING.

Your a gutless idiot John!

Ah the joy of being

Ah the joy of being self righteous Bob, Os and Mrs T. We all like to feel smug while we're doing well don't we. We feel a sense of relative superiority and condescention toward our fellow man who aren't as "hard working" or "smart". Look at me they cry, I did it. Everybody else sink or swim on their own. Nothing to do with bubbles, timing or luck. Whats the saying - Pride comes before the fall?

'Tax system broken' was the

'Tax system broken' was the headline, well, I guess JK is happy to keep it that way for the sake of POWER.

@AndrewJ, It’s not MMP or

@AndrewJ,
It's not MMP or FPP, but rather a good working team with intelligent leaders, which makes crisp decisions.

@ stevek " Nothing to

@ stevek
" Nothing to do with bubbles, timing or luck."

"The harder I work, the luckier I get!"
- Sam Goldwyn (American Film Producer)

@ Justice
""˜Tax system broken' was the headline, well, I guess JK is happy to keep it that way for the sake of POWER."
- So bitter! The changes that we're likely to see should have the effect desired without badly affecting too many people.

Dave - an intelligent and

Dave - an intelligent and phased implementation of the TWG ideas rejected could see us with a flat tax around 25%. Certain groups, vested interests will be quite content with the timidity shown, but NZ as whole is likely to be worse off in the long run. Nothwithstanding what else we might be able to drill up, dig up, grow up - they are unlikely to make up for what we can't make up, in terms of sustained wealth generation afforded by transforming materials and information to make up value - a concept clearly not well understood, as seen from John Key's speech.

Enjoy your subsidies.

Cheers, Les.

@ W. Kunz 4 political

@ W. Kunz
4 political parties are supporting KEY.

Stevek theres also another saying..."the

Stevek theres also another saying..."the harder I work the luckier I get".

"New Zealand, we are in

"New Zealand, we are in crisis. As a nation we are rumbling down the path of economic doom. We are spending and planning to spend so much of your money on sustaining our 2nd world status that to do nothing would be immoral.

A land of such potential.
Forget Australia - we could be the Switzerland of the Pacific.

New Zealand, further to our election promises, today I am lowering your tax rates dramatically, and comprehensively.

How do we do this?

We are cutting huge swathes into the lumbering unproductive behemoth that are New Zealand state services.
We are offering you the option of deciding which state services you wish to pay for - and - receive. Subsequently, they will right-size, offering real competition and choice.

We believe you are best placed to make decisions on how to spend your money.

After all - it is your money."

John Key

Luck and fortunate timing are

Luck and fortunate timing are factors in all businesses and investments. You can be right in the long term but wiped out in the short term in anything if your leveraged. Often the guys who make the real money out of new ideas are not the inventors but the imitators a year or two later. Hard work gives you a better chance though.

Oh Dave, this was just

Oh Dave, this was just sad! I knew he was a wet blanket but how wet? soaking wet... I'm not bitter, I 'm f..ing angry that this guy (one guy) thinks he knows better than all those experts that told him the facts.
I'm a CEO and I think he just told the young NZders out there to "get stuffed"

@ Les Rudd CGT is

@ Les Rudd

CGT is effectively already there in the form of income tax on property trading. It just needs to be enforced properly.
Land Tax, we already pay (rates!), would be easy to implement but there would be exceptions, particularly with Maori land.
RFRM - ack! Expensive to implement (annual valuations?) and a red tape nightmare.

If this is really about removing the perception of tax advantages, then the likely changes will be enough to do it. Taxes don't prevent booms as has been proven overseas.

Even if investors left in droves, where do you think they would invest?

@ Justice As I just

@ Justice

As I just said to Les, taxes don't prevent booms. So if the goal is to remove the tax-focussed investors and get back to sensible property investment, I think the changes we're looking at will do it. Regarding property, isn't that enough?

“No decisions have yet been

"No decisions have yet been made about raising GST and Government has asked for more work to be done on this," Key said."

So if he fails to go ahead with changes to GST (highly unlikely) then he would of effectively done jack boo!

People really what did you

People really what did you expect?. A class called "politics 101"

Rule 1. First get power
Rule 2. Keep power
Rule 3. when in doubt refer to rule 2

On a general note

People who come here generally bring capital with them, together with skills and a willingness to work hard. If more arrive in NZ than leave what is the problem?

I just saw on the

I just saw on the news that John Key clarified that depreciation for rental property is likely to go. This will be a serious blow to some struggling investors. Might be a good time to start looking for that first home!

I'm genuinely surprised by some of the reactions on here about changes to property taxation. They are significant to investors.

@Justice He wouldn't have said

@Justice

He wouldn't have said it, if they didn't intend to introduce it. They have told people about it now, so it isn't a shock in the budget. I would say it is a 99% chance it will go ahead.

Dave, GST will hurt the

Dave,

GST will hurt the poor!. Increasing benefits as compensation does absolutely NOTHING to encourage business initiative or self worth.
If they wanted to REALLY encourage 'saving' then remove the withholding tax on savings accounts below 50 thou say! Money that stays here is invested back into the community so why do we penalise everyone for it?

# Rob Says: February 9th,

# Rob Says:
February 9th, 2010 at 6:08 pm

@Justice

He wouldn't have said it, if they didn't intend to introduce it. They have told people about it now, so it isn't a shock in the budget. I would say it is a 99% chance it will go ahead.

agreed, hence my 'highly unlikely' comment

# Dave Smyth Says: February

# Dave Smyth Says:
February 9th, 2010 at 6:08 pm

I just saw on the news that John Key clarified that depreciation for rental property is likely to go. This will be a serious blow to some struggling investors. Might be a good time to start looking for that first home!

yes, that's fine and a good move IF he follows through with it. Problem though is the banks and the likelyhood of vastly increased interests rates this year

@ Justice "GST will hurt

@ Justice
"GST will hurt the poor!."
- depends on how they structure the tax cuts.

"Problem though is the banks and the likelyhood of vastly increased interests rates this year"
- try paying them with multiple properties! :)

Reading the lame article on

Reading the lame article on Stuff as well as the comments just says it all about the average NZer............emphisis on the word average.

There's so many retards out there, pulling the wool over the sheeples' eyes is done with ease from both sides of the political spectrum. Just wave something shiney with one hand and pick the marks pocket with the other.

The smiling assasin strikes again..............

@Dave Smyth As per Bernards

@Dave Smyth

As per Bernards article, it may be a good time to start looking for a new country. Forget about houses in NZ. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10625085

Don't get me wrong Dave,

Don't get me wrong Dave, the property changes will have an effect if implemented. BUT we need more than that if we are to save this country and our way of life. We need BOLD NEW initiatives and ideas. Just shuffling GST and benefits is not going to do it. Keep in mind, i speak as a business owner, not a property investor, only property I own is a market garden business with a house. My company however NEEDS a happy qualified YOUTHFUL workforce that want to live here (not aussie) and have real dreams that they can achieve, including home ownership

Well...there you have it folks...National

Well...there you have it folks...National coalition govt bedecked in Helen's skirts...what a sad sight..funny as hell but gosh how sad...the chance to make a radical change in direction tossed away with the trousers.

Dave - "Taxes don’t prevent

Dave - "Taxes don't prevent booms as has been proven overseas." - agree, but the severity could be reduced, especially when considering a sparsely dimensioned economy like ours. Which brings us to,

"Even if investors left in droves, where do you think they would invest?" - again, as I've said before, I sympathise with that view, but not making the changes required will not help improve this problem.

"Regarding property, isn't that enough?" - I reckon ring fence, so that the avoidance factor is dealt to more positively.

That said, we could really make the kind of difference we are looking for with monetary system and policy reform.

Cheers, Les.

<b>Wally</b> : Not so fast

Wally : Not so fast , wee kilt wearing loon . Bonny Jonkey was on Radio National , and is still promising changes to property right-offs / GST / and PAYE & company tax rates . Still a ficker of hope , laddie ! Cannie ye wait til the May budget for the full details to be fleshed out ............. Meanwhilst , might I suggest ye steer clear of Manchester St. , 'cos ye looks purtier than a haggis in the kilt !

I nearly broke my TV..but

I nearly broke my TV..but that would have been a bad thing as it would probably cost extra GST to get another one. For some sad reason I thought John Key might have the testicular fortitude to signal the real moves that all the experts contracted, not to mention his own right leaning media commentators were urging him to signal....But...he didn't. So where does that leave us?. Leaves us with the sinking feeling that the party presently in power is in power to cynically do whatever they need to..to keep their backers backing them..regardless of the effect on the country as a whole. Do they really honestly believe that some cuts in taxes will compensate for additional GST. You bet your boots it will for those at the upper end of the pay scale....but what about the rest..? And can someone please explain how anything signaled today helps us close the uncloseable gap with Australia...or was that just some sort of sick sideshow..?

I'm not sure I want

I'm not sure I want to see Key "fleshed out" in a kilt or Helen's skirt.

Come on guys. How about

Come on guys.

How about commenting on the rest of his speech. Plenty of other stuff being signaled.

@ Rob "As per Bernards

@ Rob
"As per Bernards article, it may be a good time to start looking for a new country. "
- Bernard is just hyping it up. Sensational sells.

@ Justice
"We need BOLD NEW initiatives and ideas."
- Can't disagree with you about that. The loss of apprecticeships was a bad idea. I would also like to see more proactive policy rather than just shuffling the deck.

@ Les
"I reckon ring fence, so that the avoidance factor is dealt to more positively."
- I think 100% ringfencing would be too great a blow to existing investors.
- Reducing the upper tax rate and removing depreciation removes two factors that some people focus on tax reduction with property investment.

Does key like borrowing all

Does key like borrowing all this money to keep NZ afloat? I thought he would have tried a capital gains tax.....(this is not a land tax John) it's a tax on wealth creation through doing nothing.....I'd be happy to make money doing nothing and accept a tax charge for that.....??? Property housing and farmland overvalued......needs to be taxed and that value returned to government.......Introduce it....we should've done this in the early 90's when banks opened their borrowing.....we're a bit late!

Labour did nothing for 9

Labour did nothing for 9 years while the large bubble was getting inflated, and didn't address the issue at all but added to it, where were all the people complaining then?

At least Key has said he will address it to some extent, there are some things he hasn't ruled out that would still have quite a large effect.

John Key: "I'm a bit

John Key: "I'm a bit like Obama"

Spidy Sense: "Ohhhhhh so that's what he meant" [slaps forehead]

Will NZ be better off

Will NZ be better off ??? These insignificant changes will not achieve diddly squat. One of Keys platforms is to close the gap between Australia and NZ. Can't see that happening any time soon; as long as Australia has the ability to sign up 60 billion dollar mineral deals with China (that will contribute 50,000+ jobs to Queensland) Bollard is right on this one. Where are the 50,000 coming from ?? K1W1's skipping NZ for the glow of black gold in Oz. If I was a newby just left school with some qualifications I would be on the next plane to Queensland. Get some engineering skills for maintenance of plant and equipment or IT skills in planning the maintenance and 100k per year can be yours. So sad very sad, been building for years since Rob Muldoon was the bogey man so in 30 years nothing much has changed.

<blockquote> At least Key has

At least Key has said he will address it to some extent, there are some things he hasn't ruled out that would still have quite a large effect.

Well as he only referenced the word debt twice in his speech, I somehow doubt John Key understands the root cause of how the bubble got inflated. So I'm bemused as to how he will be able to address something he doesn't recognize.

Sorry Make my Day but

Sorry Make my Day but it seems the Queensland coal story was aussie bullshit. The Chinese have denied the deal happened.

@phil - wake up you

@phil - wake up you jonkey lover and get over your political bullshit bias - jonkey has done nothing and will do nothing - the man is a populist twat and is only looking to secure his return in the next election. deflation and debt for everyone for ever and ever and ever - until the banks foreclose on us. Chance to make a difference going, going ......

@ Chris What were you

@ Chris
What were you hoping for specifically?

Phil Goff looked like he

Phil Goff looked like he had all the answers today didnt he Chris......not.

Im not sure what part of raising GST is populist ?

Don't worry, IMF will make

Don't worry, IMF will make all the tax changes for us 10-15yrs down the track.

I think digging stuff out

I think digging stuff out of the ground to get burned is a bit sad for whichever country that does it...but I suppose it does bring in the bucks while at the same time polluting the air and making cheap things for us all to buy...(plus 15% GST) Pretty soon we will have dug up the whole planet and be down to the core..but then 'hey' we will be able to use the core for more energy...!! Maybe the Chinese should just drill down to the core like the Star Trek movie villain...and be done with it...as long as they don't initiate a black hole in the process like in the movie.
Interesting if that coal contract story was a scam. What does that say about the state of the media..??

Actually, Bernard, you're quite wrong,

Actually, Bernard, you're quite wrong, or in denial.

Wealth is only backed by extraction of real resources (I do harp on) so the next generations were always going to be bereft. The cupboard is being bared. By you and me.

There are too many of us, consuming too much. They'll actually be better off here than in Oz, more resources and a better food-place - because that is what it will come down to.

Actually, raising GST is the correct move, as it slows down consumption and therefore extraction. Key is therefore a good little greenie.

Bernard, I'm amazed. You've read my comments here. Have you done any homework? Or are you just like the others - is it a case of: tee hee that can't be right, it would be soooooo inconvenient, so I won't contemplate it?

.

I'm afraid there are too

I'm afraid there are too many Roger Douglas posters here (I was a huge fan also). However, Roger never got the job done, and neither did Ruth - they moved NZ forward but never survived to finish the job, and as a result of their policical demise, we never got the chance for 16 years to see a similar courageous politican to carry on what is required.

Whilst I am disappointed today as well, I'm giving Keys the benefit of the doubt in that to make a sustainable difference he has to bring NZ with him, and that will take time - at least two terms, possibly three. He will have made little difference if thrown out after one term, so perhaps there is a master plan there, God I hope so. If nothing else I don't doubt that Keys is both very smart and pragmatic.

While bitterly complaining about what

While bitterly complaining about what he hasn't signalled perhaps we should consider what he has signalled.

More of the same actually, so who benefits? If I could figure that out I'd be pleased. All I can see is some who benefit over the next electoral cycle and then every one, including those that benefitted start to lose as the real game starts to hit.

Maybe it is just too far away. Perhaps we just have to wait for real signals of wealth depletion to hit more people. Patience, that's the thing. I think my grandchildren will put it right. I hope so.

What a joke, they need

What a joke, they need to deal to the negative gearers, how will raising gst do that.
Why dont they come up with a solution to stop people avoiding tax in this way so that they contribute relative to ther income, instead of letting them have all these tax breaks that they currently enjoy, stop those breaks and problem fixed, they would then get the 200 mil they reckon they are missing out on, I suspect there is more to this Tax reform than meets the eye as it seems they are wanting more money now than the 200 mil. What happened to the tax cuts this Governut promised pre -election they just as bad as the last lot of jocks.
I'd like to go to aussie to live only i've been there and done that before and there were too many Aussies, but i dont see this as a problem any more as one must learn to cope no matter what to have a good life, who voted these idiots in.

Who did you want Rod,

Who did you want Rod, more of the last lot who dumped us in the hole in the first place ?

Re: Jack. Actually Roger Douglas

Re: Jack.
Actually Roger Douglas and his followers love to bask in the idea that everything he started was his idea, when the reality is he had no choice. If he hadn't done what he did the IMF would have donwe something worse.

None of them act unless there is no alternative - just like the Easter Islanders - humans today can no more shift past the status quo than they did, even if ruin is going to be the obvious outcome.

Patience is the thing! Something will crop up eventually that forces one of them to act. Let's hope it isn't as violent as a communist or fascist uprising, but if it takes too long it will look like one of those. There's nothing much we can do. It's a human condition thing.

No Jack some-one to hit

No Jack some-one to hit the problem in the face, Stop negative geared Tax Breaks

"Actually, raising GST is the

"Actually, raising GST is the correct move, as it slows down consumption and therefore extraction. Key is therefore a good little greenie."

That all depends on what people ARE consuming powerdownkiwi. AND what about the things people must consume (rates, ACC, car reg,WOF, insurance) that will have GST increased on? How does that help my businesses which relies on people spending their wages? including the selling of my fruit and veg! I employ 12 people! Well, not for long.

@ Rod - Sounds like

@ Rod
- Sounds like they're removing depreciation.

I'm with Matt in Auck,

I'm with Matt in Auck, ABSOLUTELY PATHETIC.

I thought the whole point was to rebalance and broaden the tax base?

Far as I can see he's upping consumtion tax and lowering income tax - no rebalancing, no broadening and an expansion of benefits to compensate the increase in consumption taxes to those dependent on the State (which I assume will also include all our pensioners).

I am now a confirmed conspiracist - Key is trying to bankrupt us in order to feed us to the vultures he used to work for.

yep suck it up economy,

yep suck it up economy, the National party is just fine!!!

wally--coal deals still on --a

wally--coal deals still on --a bit of confusion over company name,s
http://uk.reuters.com/article/idUKSGE61806O20100209

I dont see any betrayal,except

I dont see any betrayal,except maybe the mining of national parks but isnt that what pike river coal is doing,anybody here been shafted by them?maybe some rental property investors will be unhappy bur when IRD claws back depreciation the tax rates will be lower in the year of sale.change is opportunity and stop whining.

"Far as I can see

"Far as I can see he's upping consumtion tax and lowering income tax "“ no rebalancing, no broadening and an expansion of benefits to compensate the increase in consumption taxes to those dependent on the State"

thats the idea .. give you the choice with what you do with you income . Spend it or save it .

Sure low income earners and benificaries wont be any better off now , and appart from doing the jobs that the rest of wont they are no real use to the economy , all they do is buy the basics to survive , its putting more money in the hands of the higher earning middle class and top earners who spend more on the decretionary items , the new clothes , fancy electrical items , renovations to there houses , eating out at all the overpriced bars and resturaunts . They are the group that keep the economy moving forward with creating a demand for the retail , tradesman and hospitality business's and jobs , and using there hard earn wealth to create opportunities for others

much more usefull then propping up the poor . if you want to move to Aust good on you and take your social problems with you .

Basically nothing changes for the

Basically nothing changes for the middle classes with no WFF or other benefits who 'will get compensated' (great incentive that one, let's encourage continued sucking off the GOVT). Instead the middle earning productive classes are set for a bigtime shafting.

A 2.5 percent rise in GST + the cost of living going up further soon with the ETS (anyone know how much by?) + low wages and a really,really tight job market at the moment = a probable move overseas for many of us. We're being backed into a corner and will simply have to make the move. Then what happens when the baby boomers start retiring in increasingly accelerated numbers over the next few years? When's the tipping point in this country going to arrive?

KFC - point is as

KFC - point is as Key suggested all the beneficiaries (and the biggest chunk of them are non-means tested pensioners) are going to need an increase in benefits to compensate for the increase in GST... and without braodening the tax base in order to pay for this increased cost of welfare - it's just more government borrowing ahead.

Governments have to take in more taxes AND reduce their expenditure in order to reduce the amount they borrow.

If they don't - they are bankrupted - the IMF moves in and does exactly that for them.

The way I see it - that is Key's plan.

If you still believe the

If you still believe the politicians are there to do good for "the ordinary people" then you need to wake up.
Nothing will get changed at the end of the day, the result will be the same.

The government is now trying to make the rents go up through manipulating the tax system, sadly many can't see the other side of this tax reform.

The wages will always be the last thing to catch up....just before the next boom wipes out all your pay increases.

Change or no change, neither will do any good to the ordinary people.

No one can beat the system. get to decide what you need to do to protect yourself.

I think todays speech is

I think todays speech is the product of MMP. The MMP system was promoted as a fairer system where parties would need to work together when actually it creates governments that will not rock the boat but instead tinker here and there for fear of losing support and power at the next election. At least under FPP either Labour or National for better or worse would make bold decisions for the betterment (or not) of the country.

The way I see it bold decisions and major changes under MMP risk alienating the swing vote next thing you know Labour are in at next election by forming a minority government with support of the smaller parties with conditions they remove the polices implemented by National.

Well i aint leaving NZ,

Well i aint leaving NZ, great place, Aussie has no water

Gingerbreadman I have your property press mate

Kate , appologies as my

Kate , appologies as my rant wasnt directed at you

Im all for supporting the pensioners , they have worked their whole life for this country and it is their efforts which has given us what we have ( and sometimes take for granted ) today .

Everyone needs to pay there fair share of taxes but the government needs to aim their reforms to get the most bang for there buck . And they arnt going to achieve that by focusing on helping those on lower incomes . Im all for raising GST and cutting the tax rates to compensate and have no problems with the higher earners benifiting the most as this is where the money will do the most good - economically speaking .

All through the media and blogs like this , people are focusing on the fact that those on lower and medium incomes are going to be worst off while the rich get richer . unfortunately that is a sad reality of life these days and its up to each indervidual to take steps and make sacrifices to improve there lot in life -

" Im struggling so do I really need 3 kids ??? , but I want a large familly so what the hey ... WFF or the DPB will top me up " . Are those people really any different then the hated property investor avoiding a bit of tax ??

"thats the idea .. give

"thats the idea .. give you the choice with what you do with you income . Spend it or save it . '

KFC, what incentive is their for people to save when they EVEN get taxed on that? 'Withholding Tax' This MUST GO! It was criminal to even introduce it to people with savings less than 100 thou. Keeping your money in a NZ(most important) bank is a community service as it lowers the country's borrowing from those evil Aussie banks to fund mortgages

” Im struggling so do

" Im struggling so do I really need 3 kids ??? , but I want a large familly so what the hey "¦ WFF or the DPB will top me up " . Are those people really any different then the hated property investor avoiding a bit of tax ??

KFC, that IS a valid point which is why such benefits should be removed and the minimum wage raised to say $20 an hour AND GST on 'luxury' items only be increased (boats, new cars, plasma TV's etc) not food and other necessary commodities

A BLUDGE-T pre-announcement ....to the

A BLUDGE-T pre-announcement ....to the WISE........and a minor rant.

Alex, it is not just the BEE_HIVE web site not working properly.

It is 120 of our finest worker....killer bees...(not WORKER BEES).....leading us up, up, up the garden path along with 1.7 million of their cohorts.

Drones every one...not producing HONE-Y, consuming as fast as they can SLURP.

Whilst they continue to cream the said ..HONE-y at our expense.......never theirs.

The queen fled the hive and we all now we all have HIVES...or is that a HIC-KEY.....but I digress...

And another clown clone Queen of the same....ILK....and the same damn.......work-shirkers.

Why would you vote for ANY of these idiots.... beggars belief....and a certain portion of the pop-u-lace.

All change...no Change......NATIONAL/LABOUR.....ACT AND will you take GREENS with that......BENEFIT a MAORI with $200,000 gift, but not for the WORKER BEES.

There must have been something to this TREATY of WAIT-ANGI....waka way to go.

Cuddling up to the lowest common denominator, does not a NATION grow.

Now there is another SCAM....

Please Mr IMMIGRANT, grant me a wish.....please come and save us ......with your savings, so we can rort....SOME MORE gullible people to re-inflate our property scams.

By the way...you will be a second class citizen...to the SOVEREIGN MAORI, cos no-one deserves it more in this WELFARE state, we created just for THEM.....and 1.6 million others..

So may I suggest you buy a FIRST CLASS ROUND TRIP...you might find it a WISE investment.

Or a round the WORLD trip ticket ...would be better....

Cos you can place an odds on favourite, you will regret coming to NZ...it does not favour the WORKERS...but the SHIRKERS and we have 1.7 million and counting...ably led to the TROUGH by the ONLY colour favoured here.......

I will give you a clue.....they used to eat people, but now they just sit and con-template.

Wakey Wakey NZ and the world.

PS...

If an intended migrant....or Gimmi-GRANT as well like to call em.........Bring a telly with you.....and your own food.....and by the way we have a tax rort here called WORKING For FAMILIES......it means taking from the GULLIBLE.......(Is that you.)......and giving to the many, many, many, WELFARE bludgers as an incentive to do nowt.

FAREWELL...to the business & WORKERS.......not WELL-FARE for the the SHIRKERS....

Seems he KEY did take a NOTE of how many SICKNESS BENEFICIARIES we currently have....(Must all be sick of WORK....me-THINKS)......

PITY...the NOTE was another $100 dollar bill off the workers to encourage em to move out of NZ to OZ.

(KEY said we could all catch up......by moving there....Contra-dick-ting BOLLARDS at any cost....somehow.).

They should try WORKING together....(HA HA...I am prone to JEST).

Pity here in NZ Work is a dirty word. It used to be called LABOUR.....but that didn't WORK either....so we OUT- SOURCE all the WORK to our e-CON-o-mic enemies

We need an incentive to do more..here....not less WORK for the uber-classes.

It is fast becoming a show-place as to how NOT to stage a recovery.

(Except for the PROPERTY scams, finance rorts and the odd THEFT as a SERVANT and an even odder GIFT of our NATION to WAITANGI....you can FLAG that as right.....YEAH RIGHT).

Welcome to the LAND of OPPORTUNITY you potential migrants.

But I give you FAIR warning...not a FAIR GO....(you will soon see what that means).

Please, PLEASE, PLEASE... bring plenty of cash and a blood donor card..... we will want BOTH as part of OUR ongoing scam OPERATIONs.

That is before you find salvation in the PROMISED LAND...of .....OZ.....

WIZZARD....of ....just follow the YELLOW BRICK ROAD....all roads lead to OZ.........BERNARD said so....and personally I believe him........NOW.

Weight...there is more....TARRY-ANNA & TITTY-WAI must have had a lot on JOHN......(her sun must shine out of his HINE)..........but her SON must THINK we are all STUPID here in SUNNY NZ.

But it just SEEMS like it....... FORE--SHORE

FAREWELL....

A lot of poor me

A lot of poor me posts here.

If you haven't jumperd on the property investment juggernaught in the last 5 years then you are probably smarter than you give your self credit for.

Property prices vs rental returns havnt stacked up for a number of years and the only reason that property prices have continually gone are that:

1. A heap of lemmings believed property goes up in price 10% year on year.

2. Lemming Investors have been allowed to offset losses against personal income.

The only people making money in the past 5years were lemmings selling to other lemmings. Anyone in it for the long haul would have realised that things didn't stack up!

The property bubble is bursting as we speak, Its just not going off with any sort of bang. The Realestste Agents and Banks don't want you to know as they both have vested interest in keeping prices up.

Removal of Depreciation claims is all that will be needed to expedite this process.

Yes you get withholding tax

Yes you get withholding tax but you also get a interest so the incentive is there to keep money in the bank and you do come out ahead albeit slightly . Its called savings . The idea is to build up enough over time that get you a worthwhile amount to put to use in a productive way - bonds , shares , term deposits - making you money work for you . If nothing else have something aside for tougher times . Its the " I WANT IT NOW " credit driven society which has led to these proplems . People have forgeton how to work hard and save for what you want . Its too easy to slap it on a credit card and worry about it later and then whinge about how tough things are when the interest payments suck away all your disposable income but at least you have a nice TV huh

SORE-LOSER Says: February 9th, 2010

SORE-LOSER Says:
February 9th, 2010 at 8:58 pm

some real truth to alot of that!

KFC Says: February 9th, 2010

KFC Says:
February 9th, 2010 at 9:03 pm

Yes you get withholding tax but you also get a interest so the incentive is there to keep money in the bank and you do come out ahead albeit slightly . Its called savings

That's fine KFC IF, IF that interest beats normal inflationary pressures. Please don't lecture me on finance, I know it well

Fisho Says: February 9th, 2010

Fisho Says:
February 9th, 2010 at 9:02 pm

Well lets hope that is true because it needed nipping in the butt years ago that's for sure.

pwilkie...cheers mate. Not sure whether

pwilkie...cheers mate. Not sure whether that's good or bad!
Lots of anger on the site tonight

Don't move to Aussie any

Don't move to Aussie any of you. They don't want a bunch of pitiful whingers over there. All I read here is the bitter comments of people hoping to get rich out of a sharemarket boom who now feel betrayed by National, the usual bile of the lefties about 'rich getting richer and poor getting poorer', and the rest of the posts are a mixture of paranoia, cynicism, cliches, inane ramblings....everything you'd expect.

Aaron Says: February 9th, 2010

Aaron Says:
February 9th, 2010 at 9:12 pm

Well, you heard it people from 'god' himself!

KFC - what few folks

KFC - what few folks think about with pensioners - is that many, many, many (likely the majority) which we support via NZ super - are the most asset rich members of middle class NZ. I don't think we (current generations) have a debt to pensioners. In the main they worked at a time when job stability was pretty much a given - most of today's pensioners had full time employment (not contract, not casual) all of their working lives - many only changing jobs one or two times in their lifetime.

The same cannot be said for those in the 30s and 40s now, and that most certainly cannot be said for the future employment prospects of today's youth.

If you're 60 or 70 now - you had the opportunity of free, really free, education up to whatever level of academic achievement of your choice. And if you chose not to study into your early 20s - you entered an appreticeship and your employer paid you to learn on the job. You also benefitted from a time when unions were strong, particularly for unskilled labourers, and the 37 hour work week was introduced. If you worked overtime, you got paid penalty rates. If you were a shop worker, most stores were closed on the weekends - and if you were a shift worker - you got paid penalty rates.

Land was cheap and plentiful, houses were a affordable multiple to wages - and if you were in a State house you were given the opportunity to purchase it over time. Ask John Key's Mum - the welfare state was in full swing - her son was housed and educated by the state. She only needed to work part time to make ends meet.

Today's pensioners had it pretty good in the main.

No Aaron let them go...they'll

No Aaron let them go...they'll soon work out NZ for all of its faults is not the worst place on the planet to live.

Its simply a matter of playing the cards you are dealt, and getting over this culture of envy.

I'm 32 and don't own

I'm 32 and don't own a house, I better get used to gum trees and dust I guess, bye.

Much time has been wasted

Much time has been wasted discussing matters on this site that a national government would never ever consider doing. Good to hear Key finally put an end to the speculation.

Changes related to depreciation will have little/no impact on property. Increased GST will make a house cost more to build, council fees will be higher, sections will cost more etc, etc. If new homes cost more then existing house prices will rise.

The rich will get richer and they already have assets purchased at the lower rate of GST and the poor will get poorer.

"... generation unlucky enough not

"... generation unlucky enough not to own property in 2002 that they can give up on the dream of family home ownership..."
Are you playing Excitable Commentator again?

Yes...at 17%-35%.... Kate... But we

Yes...at 17%-35%.... Kate...

But we had no huge WELFARE STATE that is crushing the life out of GODS-ZONE...., nor huge debts.

Nor TAX and Finance theft RORTS to favour a few.

SCAMS and PONZI schemes are not what we desire.....but it is what we GOT.

I suppose that is progress.

'nipping in the butt'....for gawds

'nipping in the butt'....for gawds sake. I'd be funny if it wasn't so sadly typical. Whatever Muldoon said about kiwi's moving to aussie and i.q's et al certainly isn't true today. There's also more paranoia here than at a conspiracy theorists convention....must be all the dope and P you're all smoking. "no one can beat the system!"....live in the real world...politics hasn't changed for thousands of years - why the constant shock?

So we should all invest

So we should all invest in the sharemarket? It's just a question. Tell me: is it my imagination or do these companies we are supposed to invest in seem to have a convenient habit of squandering their shareholders funds, destroying the SP, and then diluting and destroying the value of there shareholders 'share holding' while at the same time extracting further funds from these hard pressed 'investors' by going back to the well with another big 'capital raising', and then at the same time being stingy with the dividends, if they even pay one at all? I mean, unless you can afford the blue-chip and extremely pricey shares you seem to have to back one of the endless 'dog stocks' that fit the above description & which seem to litter the NZSX. Is this a sad trait just of the NZSX or is this happening everywhere?

I'm with Aaron &amp; Andrew.

I'm with Aaron & Andrew. I wish Bernard would bugger off to Australia and stop whinging about NZ. He'll like it more there, there's even more to whinge about.
Houses are more expensive, there's a lot more taxes (CGT & stamp duties etc), CentreLink payments that make WFF look wimpy, dire water shortages, bush fires, mammoth cockroaches, snakes, mosquitos & ticks carrying all sorts of diseases, redback spiders on your clothesline and cane toads in your swimming pool to name but a few.....

Having been in the rural

Having been in the rural real estate industry for over 20 yrs, I have never had
such a quiet start to a year. There are purchasers that are sitting there cashed up but not prepared to
make offers, it seems that the market is frozen, buyers expectation is that values will fall further, the correction is well underway. The banks
with their tight lending policy are now in control of this market and with interest rates now on the increase,
causing purchasers to back the truck up. R/E land values have to adjust down to line up with bank policy,
regards return on investment. The days of farming for capital gain are out the back door for now and
sooner the vendors accept this the better. the result being from a vendors perspective, unless the bank is
putting the boot in, forcing a sale, they (vendors) will sit and wait for the next cycle, but could be 5-7 years
away if the traditional cycle is followed, but hay, keep your pecker up.

Well if BH's advice is

Well if BH's advice is heeded and Gen X/Y all scurry across the Tasman, I would think that there's more opportunity for returnees. However, with the demographics, what kind of business opportunities will there be? Diapers for the aged? Store brands of blue rinse? Selling reverse mortgages?

At the end of the day, all Key has ruled out is more taxes (kind of), so there is some light at the end of the tunnel. Mind you, as all we Kiwis know about tax, one hand giveth and the other taketh away,

http://www.stuff.co.nz/national/politics/3307798 Good stuff John

http://www.stuff.co.nz/national/politics/3307798

Good stuff John Key finally doing something about the bludgers! Back to work lofers

Bernard Hickey: are you moving

Bernard Hickey: are you moving to Australia, or are you just encouraging everyone else to? Bernard - if it's so bad here why don't you man up and get on the plane yourself. You've told others to abandon their lives and families and up sticks, so why don't you do the decent thing and set an example. Maybe you could make even more money in Australia Bernard!! Cos that's what life's about, isn't it Bernard....making money!!! You probably won't do it...there's more money to be made here writing investment prattle & dashing off sensationalist columns like a child having a tantrum. You're not a traitor for telling our young people to ditch their life here and quit NZ - you just want them to follow the money-trail wherever it may lead, just as you've probably always done.

Bank Manager's link to Bruce

Bank Manager's link to Bruce Shepherd's commentary sums it up for me, but our esteemed Bank Manager probably needs to realize the message wholly: the property market is largely debt driven and that era is now history. It's a pity that NZers generally miss the big picture and focus on the tinkering instead.

Agree with you realtor mj,

Agree with you realtor mj, with the exception that recient investors may not be in the position to wait 7 years, when faced with propertys that will require cash inputs of $5K and up per year

Remember when Bernard said the

Remember when Bernard said the property market was going to collapse? He didn't need John Keys help back then...it was just going to up and die on it's own. But it didn't, and Bernard looked stupid. So he frantically searched around for someone or something to do the dirty work for him...and he found John Key!!! And John Key IS going to make some changes, which is more than what was going to happen back when Bernard was making silly predictions which made him look ridiculous. BUT...it's not enough for Bernard. "Everyone must go to Australia" says Bernard, rationally & reasonably. "John Key let me down". Poor silly Bernard, looking stoopid yet again.

Bernard, easy on the vitriol

Bernard, easy on the vitriol old man.

You haven't got stuck in the ductwork have you? (I did like this morning's Dilbert).

As I've said before, you couldn't seriously believe that any of poorly targeted Land Tax, RFRM or CGT proposals each of which would unjustly distribute the tax burden in a way that would encourage respective tax avoidance, would be adopted by any rational thinking person (let alone politician).

Some solutions to cut property speculation and reduce tax incentives for negtive gearing involve:
1. Clarifying trading rules. This would reduce trading velocity and limit the speed of price growth.
2. Move the top rate of tax to a much higher level so that middle/upper income earners would have less incentive to make losses. A 30c rate for $50,000 to $150,000 could achieve this.
3. If people are exploiting working for families by reducing their incomes with property losses - simple: don't allow rental property deductions in the WFF calculation.
4. How about a new tax law to clawback losses? If you sell a property and it's made cumulative tax losses then you can either pay back the total tax loss at the time of sale or pay CGT on the sale price and retain the tax losses. A simple rule such as this would seriously limit the tax incentives to negatively gear property and be relatively easy to administer since each property investor either files an IR3R for each property every year or does a full set of accounts - so the taxman has a good record of what these losses are.
This would sort out serious investors from the cowboy speculators.

Meddling with depreciation will do nothing. Chattels do depreciate very quickly, if you can't claim depreciation for this then it will all go through as maintenance which is essentially 100% depreciation in year one. Building do depreciate too, roofs, windows, weatherboards, kitchen cabinets, wall linings, wiring, plumbing etc all need repaired or replaced over reasonably short periods (especially in student properties!). The net result of cutting depreciation might be not much of an increase in tax revenue at all.

Build your own list and

Build your own list and make thousands.
http://twurl.nl/hdol4f

This is not the BUDGET!

This is not the BUDGET! This speech is the opening of parliment and to set the scene for the coming year. You can sit in judgement of Key after the actual May budget when I suspect he will give us a few surprises and some shocks. He would have been very ill advised to make financial changes today and cause panic selling.

Bruce Shepherd has apparently never

Bruce Shepherd has apparently never heard of inflation - house price growth had a couple of genuine booms in the periods he mentioned, before returning to (inflation adjusted) earth. The only time they haven't is the last boom.

Equally, house prices to household income remained fairly consistently through all those inflationary periods - again, only the last boom is a serious departure.

It's not that he's wrong (debt is the problem this time), its just kind of sloppy not to acknowledge real vs nominal price growth.

Chris J. All quite sensible

Chris J. All quite sensible suggestions but im afraid not sensationalist enough

Raving about intergenerational theft and demonising property investors attracts far more hits to the site..........

I highly recomended Bernard to

I highly recomended Bernard to set up an example to GX and Gy to move out of the country first.

Good thought on (4) ChrisJ

Good thought on (4) ChrisJ ---> its basically ring-fencing in reverse. Its better for reducing speculation but would still have people making tax driven decisions.

I assume that most landlords are already expensing anything they can get away with - not sure they'll find a catalyst to change from capex to maintenence expense because they're losing a 3% depreciation charge. As I've said in a comment in another post, my impression is that this (expensed) maintenance goes a long way to ensuring that residential buildings do not, on a nominal basis, end up depreciating.

Now, I just have to

Now, I just have to ask has anyone out there seen the lovely do up bungalow on Mt St John in Epsom for sale?

It could be great for landlords, maybe ones who like letting to bikey gangs or tenants with large dogs.

The property has a commanding position above its distinguished neighbours, one of which is reportedly a mildly prominent website editor (his name might be mentioned somewhere on this page?).

Any other of Bernard's arch-enemy landlords like to pass round the hat and and put in a bid? It could be a great negative gearing opportunity for the "get up Bernard's nose brigade".

Ahh, the pleasure that could be obtained in annoying "our dear leader" and getting tax deductions at the same time!

WFF is a strange one....

WFF is a strange one....

I'm going to ignore SL's comments about people with brown skin being first at the 'trough' as it's a pathetic statement.

Don't get me wrong- I think WFF is a walking zombie nightmare for NZ.... it makes me sick when I deal with beneficiaries who are 'earning' more than I do working full-time at a big bank ...... BUT.....if you were on a low income with a couple of kids and one day a govt official says "Hey, you look like you could use some cash.... here's $650 a week..."...well.... I bet you'd say "?!......OK!!"

And then people like Loser turn around and say "Maori scum like you thieve money from the nation....you're a pig, etc., etc., etc."

I mean, come on! Get real!

Blame the system, for sure....it's rotten to the core and sending the nation broke quickly... but it's all LEGAL.....in fact ENCOURAGED by WINZ officials! It's their job to ensure that everyone who enters their doors gets the full benefits they're entitled to.

Why the hell blame the Maori and many, many Pakeha who walk thru WINZ doors??

Chris J - what a

Chris J - what a stupid comment.

<i>Now, I just have to

Now, I just have to ask has anyone out there seen the lovely do up bungalow on Mt St John in Epsom for sale?

It'd be a very committed desire to irritate BH - I'd guestimate you'd get a whole 3% yield on that one.

Yup CJ, that was probably

Yup CJ, that was probably one of the stupidest comments on interest.co.nz to date, but a good example of good old Kiwi pettiness towards others who go against the grain.

Chris J, some intelligent suggestions

Chris J, some intelligent suggestions there (@10.02pm!), unlike most put forward by Bernard or the TWG.

I agree with your comments on depreciation, I said the same thing in another thread.

For example, at the moment if I re-roof a property (i.e. improve it rather than repair it), I have to add the expense to the building value and claim it back painfully slowly over many years. Then if I ever sell the property, I have to declare the expense back as income (reclaimed depreciation).
Remove depreciation on buildings, and I'll be able to claim the cost up front (100% in year one, as you say!) and better still, if I ever sell it won't have to be declared as reclaimed depreciation! Brilliant.

Mr. Tucket Says: February 9th,

Mr. Tucket Says:
February 9th, 2010 at 3:49 pm
One word "“ DIASGRACEFUL

One word - DICTIONARY

Aaron said: "Bernard Hickey: are

Aaron said:

"Bernard Hickey: are you moving to Australia, or are you just encouraging everyone else to? Bernard "“ if it's so bad here why don't you man up and get on the plane yourself. You've told others to abandon their lives and families and up sticks, so why don't you do the decent thing and set an example. .......
..................there's more money to be made here writing investment prattle & dashing off sensationalist columns like a child having a tantrum. You're not a traitor for telling our young people to ditch their life here and quit NZ "“ you just want them to follow the money-trail wherever it may lead, just as you've probably always done."

come on, all this negative talk on this website is how he profits and this is his business.
All this does not have to be his real idea.

@bob 5:09pm nice- lol -

@bob 5:09pm nice- lol - comment of the day I reckon
@Murray - Your misunderstanding of the tax law regarding depreciation recovery on disposal is scary - suggest you get an accountant....

Moving to other country won't

Moving to other country won't change anything.
Its how you adapt the system in where you are.
If you know how to work well with the system you can do well anywhere.
Spend all your life looking for greener grass or bigger pay cheque you gonna end up with nothing but coming home to mum & dad.

Does John Key really want

Does John Key really want his tombstone to read

"Here lies the Manager of the Worlds Largest Retirement Village 2008-14" ?

18% of 18 to 25

18% of 18 to 25 year olds are unemployed so encouraging them to move to Oz is actually a damn good idea as then we do not have to pay them a benefit!

I've just had my WFF

I've just had my WFF calculated. ( ouch - some of those bullets came real close )
but I can assure you, tax losses from property are EXCLUDED in the WFF calculations

also, there is already a clawback when a rental is sold.Its called depreciation recovered.

the one thing that would make me take my savings out of rental and put it in kiwibank for sure....lose the withholding tax.Why are they are ignoring this option, media and pollies alike.

Stevek, my point is: the

Stevek, my point is: the less tax we (all) pay the better. I get very little value for the considerable amount of money I pay in tax (unless you count the entertainment value of watching the sad comedy / tragedy on Parliament TV). So, zero tax would be ideal.

I imagine most property investors

I imagine most property investors will be pleased with the restrained approach to 'property tax avoidance' that John Key has telegraphed will be taken in the up-coming budget. Clearly, Mr Key has his eye on a second term in office & understands the political influence that the PI sector holds in Aotearoa. His approach is to signal an end to the property investment rorts that exist in New Zealand and indicate a willingness to do something about it in the distant future. Sending smoke signals now will allow all his property invested mates an orderly retreat from the market, no harm done you understand. Clap Clap Mr Key. I'm sure your watered down interpretation of the tax working groups recommendations will serve you well.
As for myself, this will hardly lead to the property values correction I was hoping for. I will therefore consider my situation carefully. I will weigh up the pro's & con's of staying in a country where the landed wealthy lord it over the working poor, all subsidised by the working middle class. Actually, my stomach turns at the thought of another cent of my earnings going into the jollybag that is the NZ treasury. Australia, here I come.

So you're a pakeha pensioner,

So you're a pakeha pensioner, SL?

My, how memory becomes so selective with age!

No, there was no big 'Welfare State' because in the days of your prime (1950-1970s) - there was no serious unemployment because the state pretty much employed everyone that the private sector didn't. Railways, Ministry of Works, Broadcasting Corporation, the New Zealand Post Office, NAC, DFC, BNZ, State Insurance Corporation and so on. And how many of today's retired farmers got their farm through a government ballot?

If you squandered these golden years when the state would employ you if no one else did and somehow failed to accumulate significant assets to look after you in your retirement - well, frankly, I don't pity you.

Why do you think so many pensioners got burned in the recent finance fiascos - because they had more money than sense.

No, SL, we did not have as you say a big welfare state then - because the state employed a huge, huge, huge chunk of the working population - and he words "efficiency and effectiveness" weren't even a part of the vocabulary.

I loved the second season

I loved the second season of Monty Python way back when, but this has been so much better. Thanks to everyone!
ROFPML

To all you idiots giving

To all you idiots giving Bernard a hard time please remember

1) He OWNS a house, but is a nice enough geezer to actually give a toss about what a housing bubble does to younger NZ households
2) you obviously enjoy the website he created
3) he speaks the truth. 25% of NZ grads overseas (% must be higher for those younger). The easist way to attract them is NOT to increase incomes, it to lower taxes and allow them access to affordable housing - no brainer really. (we cant do much about the weather unfortunately)
4) we are eheading for another crash anyway, disallowing depreciation will have some additional downward effect, although its unfortunate we coudl not have intro'd tougher measures but at least the political climate is changing in this regard - 10% drop this year, stagnation for another 2-3 years, then the speculators will tire and big falls will ensue.

Aarron and J.C, I think

Aarron and J.C, I think you need a sense of humour!

Old Bernie is quite aware what I think of him and his demonisation of landlords. Actually the property next door to his is a real tip and ideal for a landlord to go and hold as a negative geared landbank. A 5% return could possibly (with work) be achievable IanC (interested?).

Obviously having had a couple of hundred neighbours to deal with over the years I know full well the range of problems neighbours tend to create. I've had everything from neighbours cutting down trees on my properties, using my land for parking, scaffolding or just a general dumping ground, using my land for access to run a bulldozer across or as a permanent road-way, blocking drives, sending bills for unauthorised works, trying to extort inordinate sums to get a resource consent application signed or just generally being grumpy.

So, if someones rude or unpleasant to me I feel perfectly entitled to be a grump in return. (that's a warning to neighbours to be nice).

I must admit that I would take great pleasure in being Bernie's annoying neighbour. Why?
This post is the perfect example, his whole focus seems to be the targeting of property (and their owners) as the sole evil force in the universe.

The reality is that the 2002-2007 boom was more a consequence of the devaluation of real property values due to a net migration loss during the preceding 25 years and the consequential oversupply of housing stock that endured in many areas until about 2001 than any unsustainable growth due to an asset price bubble.

In general NZ house prices currently lie below replacement cost. Which is a real problem when we are constructing 12,000 houses a year in an environment that requires 30,000 annually. An increase in GST will compound the dilemma with new homes costing yet another 2.2% (with 15% GST).

This is a serious problem not being addressed by the likes of Bernard Hickey who instead is focused on lambasting landlords as the devil incarnate (and throws hissy fits at prime ministers who do not agree with his world view - see above). Landlords provide a valuable service to the community providing accommodation without the need for state to outlay capital. Vilifying landlords as the harbinger of higher house prices is easy but in fact it is owner occupiers that drive the majority of NZ housing markets.

So I don't mind being a grump right back at BH and if any investor out there is looking for a possibly good rental in a reasonable central Auckland suburb, try the do-up bungalow in Epsom that I mentioned earlier, annoying a neighbour might never be so much fun!

Genuinely think a bit of

Genuinely think a bit of judicious editing should be applied to an idea expressed on this site recently.... could prevent unnecessary regret later.

Dumb.

Anyone that is moving to

Anyone that is moving to Aussie so they can buy a house there, is deluding themselves anyway, affordability is even worse there.

Bernard, What did you expect?

Bernard,

What did you expect? He is an ex-speculator himself !?!

Wow.. Lots of negative back

Wow.. Lots of negative back lash at Bernard from the crowd that have already had their pie and now don't want their kids to have any.

From someone who falls in to the generation X demographic that got slugged with student loans at full interest and then missed the massive low tax, easy money, speculative mania, gravy train that has been the NZ residential property market since 2001 I just wanted to say a big thank you to Bernard. Thank you for having the courage and moral back bone that our politicians don't seem to have and for speaking the honest truth as you see it, articulating what I am feeling and for thinking of people other than yourself. New Zealand needs as many people like you as it can get.

To all those that have benefitted from an unfair tax system and now don't want to pay their fair share on their easy winnings I suggest you leave the country as you are the problem. Those who have done very well out of property over the last decade who now want the rorts to continue should fit in very well to the Australian under arm bowling club. To me something is seriously wrong when a young, hard working family who can't afford their own home pay their fair share of tax while a property speculator with multiple homes can grow their wealth buy hundreds of thousands over a few years while avoiding paying their fair share. That's just not cricket. If you fall in to the later camp I'd suggest you find a young family from the first group and buy them dinner and a nice bottle of wine to say thanks to them for picking up the share of tax you know you morally should have paid instead.

The only way for most young New Zealander's to achieve middle class now is to leave the country they love, live abroad for years and maybe coming back once they have accumulated a big bag of foreign loot if they can. It's a very sad situation for many young New Zealanders like myself who actually like the country they were born in and would like to live and raise kids there but can't afford to stay, due mainly to the insane cost of housing.

It kind of reminds me of the Dr Seuss book 'The Lorax'. In the story the greedy Once-ler chops down all the trees for profit that once were the homes of the Brown Bar-ba-loot bears. The once happy bears then have nowhere to live so they all sadly leave. The Once-ler then realises in the end, as he sit's lonely in his old age, the mess he has created and the harm he has done, but by that stage it's too late and all he has left is his guilt.

I don't know why people

I don't know why people are so against renting. There comes a point where the price to rent is a no-brainer versus the cost to purchase given the size of mortgage repayment, not to mention rates, water, maintenance etc

This Peter Schiff video from about 10 minutes on makes the point well.
http://www.youtube.com/watch?v=EgMclXX5msc

Everybody thinks that houses will appreciate (in excess of incomes) forever. Take a look at the private debt levels.
Two points:
a) Trees don't grow to the sky.
b) Mean reversion.

Now it may take some time to play out, but the last person you want to be is the last guy levering it up big time.

Thank you for the informative

Thank you for the informative post.
this is very useful to me.

Chch Press ( 10/02/10 )

Chch Press ( 10/02/10 ) p A5 : Govt should ' get rid of Working for Families ' : Geordie Hooft ( tax specialist at Grant Thornton ) : Working for Families had turned many families into beneficiaries .........If the objective of changes to tax rates was to make the country more productive and work hard then canning Working for Families and dropping the tax rate would achieve that ....... " If you know the means of particular people it will be quite surprising to learn they qualify for Working for Families. "

Roger, now that's a headline

Roger, now that's a headline I like

To the Gen X's/Gen Y's-don't leave NZ, keep saving hard, keep to your budget and goals, aim for a modest first house in the suburbs, work and save harder, pay it off and move up the ladder.

To the Gen X's/30 year olds moaning about house prices-where is your house deposit after 10-15 years in the work force????I bet some of you enjoyed the long weekend down at the Wellington 7's keeping up with the Joneses!

It is so easy to moan and whinge and beg for change. The game can't change you have to. Where there is a will there is a way.

To Murray and Chris_J, I have an interest rate question . If you were buying a rental right now what rate would you take? Floating for rest of year or fix for 18-24 months?

28_yr_old (now 29) Too true.

28_yr_old (now 29)

Too true.

Interesting headlines in the Herald this morning..it would seem the Govt are doing quite a bit to start the rebalancing process...to the extent the even the TWG have welcomed the changes.

@ Phil: couldn't agree more.

@ Phil: couldn't agree more. House prices in Aus are way more than here - even with the higher wages there. Brisbane is now roughly the same as Auckland price and their typical professional salary is about 20% lower than NZ.

Lastly, BH: when is your Departing to Australia party?

@ Squid (February 9th, 2010

@ Squid (February 9th, 2010 at 11:06 pm) - care to elaborate?

Any depreciation claimed on building value is generally recoverable upon sale and is added back in as income. I have a very good accountant, thank-you. You may need a new one....

28_yr_old (now 29) - I would probably fix for 2 years, and I'd want to be getting at least an 8% yield unless the property is extremely undervalued (mortgagee etc)....

@ Chris_J - Great post!

@ Chris_J
- Great post! (February 10th, 2010 at 12:06 am) Sadly, Bernard's followers are posting mostly emotional rhetoric rather than sticking to facts and debating the issue. If they're unwilling to understand the other side's perspective it's much easier to remain angry! The thing I struggle to understand is why anyone would think tax changes are going to make property values find some new lower level when you can't build a new home for what they're selling for now!

Chris J I would welcome

Chris J

I would welcome you as my next door neighbour.
Come on over for a beer.
I'm hoping someone buys the house and does it up. It is a tip right now. I'd prefer an owner occupier rather than a slum lord.
There's a good story behind the house. It has been empty for 2 years while Auckland City Council bureaucrats sat on their hands working out what to do.
Please to all you property investors. Bid up the price as high as you can.
It will help lift values in the surrounding neighbourhood....
Make sure you take on lots of debt...

cheers
Bernard
PS. Chris J - Bring a plate and I'll resist the temptation to smash it on your head. Just kidding...;)

Jimbo -re: "From someone who

Jimbo -re: "From someone who falls in to the generation X demographic that got slugged with student loans at full interest"

When I was a student I worked in the holidays and had a part time job while at Uni - that's how you avoid student loans - its called "hard work" mate - something Gen X tossers do not understand!

All walking wollocks again, especially

All walking wollocks again, especially Mr Key. Mr Winglish's turn next - oh what fun horsie!

Maybe wandlords are not demons, but do wemons not intimidate? Why be that angry, "remain angry" so? Mr Smyth maybe you can help Mr Chris?

If that extra 18,000 homes were built per year, where would that put prices? (Yay!!)

Wexellent bloggling from the wandlords - you must be so welieved now the sqwirming is over.

I hate hearing all these

I hate hearing all these manipulative comments from landlords suggesting that any tax on them will be passed on to tenants, even going so far as to say that the personal tax cuts to the top earners will end up being funded by tenants.

Thats like suggesting the tail wags the dog, it's what the rental market is prepared to pay that dictates if a rental investment shows a positive return or not. It is not the amount a landlord needs to balance his books that determins what rent he can charge.

The argument that rental supply will dry up and force up rents is also rubbish, who is buying the rental when it is sold? It will either be a first time buyer who now doesn't need to rent or another landlord or someone moving up the property ladder. In all cases the rental supply/demand is not changed, only housing stock levels and immigration changes that.

Key is still a bit

Key is still a bit vague on the GST issue and compensation for lower incomes...
We have MMP the Maori party was mooting no GST on basic food items a while back...
I would not be surprised to see an increase to 15% and no GST on things like fresh veggies, fruit, milk, butter ,cheese, bread....
Making fresh food more competitive than junk food would also have long term effects on the health bill.
Something I have mentioned before..
Also
Useless post secondary pre training coarses that dont train and dont give trainees the skills for a job with large drop out rates....
Also to Uni students, where often it is common in the 1st yr classes can drop from 140 to 80 and down to 49 in the 2nd yr of a degree...
Such dropout rates waste huge amounts of Uni resources and add to the student loan bill

Again mentioned several times here.

So much discussion here is about core financial issues, and very little in regards to identifying huge waste of money and resources in other key areas of the economy that have a dramatic effect on Government spending.

Another area is DoC....
The budget for species recovery, wood pigeon, morepok, kakariki, skinks, and many other species, if put into the hands of experienced private, hobbyist breeders (who usually are far more experienced than DoC) could damn near be elinimated...
Then there is the commercial aspect, breeding Weka for release and for high end exotic meats for export... And yes there are several enterprises basically set up ready to go.
And the pet market (CITES prevents live export) where children can have a native kakariki parrot, skinks etc instead of a budgie as is the case from Iceland , Europe, Russia Aussie thru to Peru and all places in between.
A species that is commercialised has never become endangered or extinct.
Already is an informal structure ready to kick off to administer permits on a similar basis to the Fisheries Volunteer Inspectors....again freeing up budgets.
And I note this worked very well for many decades..till DoC took over with its dictatorial , empire building attitudes.

There iare far wider issues, maybe not quite as big as property, but still have a huge effect on the economy and Government spending that should also be discussed here.

So a typical rental property

So a typical rental property owner has say 2 properties and he might be earning say $120,000 per year - drop the top personal tax rate by 9% and he pockets an extra $6,000 so he is not really gonna give a toss if he cannot claim depreciation.

In fact Key said landlords should be able to claim costs of improvements in the year they are done rather than depreciating - ie put a new roof on and claim it back in the year you do it - now that is actually better for the landlord than depreciating it over years! But worse for the government.

Bernard : What do you

Bernard : What do you recommend , that I put a bid in now , or wait for the house to be 30 % off ? ...... ........ Do you like gummy bears ?

Most people here are so

Most people here are so short-sighted! They are concerned about how much they can get from the government (WFF) and how much tax they pay. They never weigh how much contribution they make to the society. Earning a good salary does NOT mean you contribute more - cleaners may work harder and longer hours than CEOs. Simply leaving the country is not only short-sighted but also selfish and irresponsible.

Tax system to me is a system of re-allocating wealth. It's like a pie, and everyone in the country gets a slice of it, large or small. But it we had a larger pie, our slices would be larger as well. So what we really need to focus on as a nation is increasing the size of the "pie" rather than reallocation of the pie. JK or the government should provide us with more incentives to generate more real revenue!

P.S. I came to NZ 10 years ago as a uni student, graduated, found a job, and obtained my professional qualification. I see NZ as home and would like to stay permanently.

@The Bank Manager: agree, I

@The Bank Manager: agree, I had 4 part time jobs in 1990s while at Victoria Uni - one of which was cleaning bathrooms/toilets for a 5 star hotel in Wellington. Remember then the unemployment was about 10%. So c'mon if you are determined enough to work you'll find a job just don't get too fussy of what you have to do.

@ Julz "I hate hearing

@ Julz
"I hate hearing all these manipulative comments from landlords suggesting that any tax on them will be passed on to tenants..."
- Do you really think increasing costs for landlords will have no effect at all on the rents tenants pay?

"The argument that rental supply will dry up and force up rents is also rubbish, who is buying the rental when it is sold?"
- As population pressure increases, the demand for rentals will increase too... but if there's less rental properties, rents will rise.
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=1062...

"When I was a student

"When I was a student I worked in the holidays and had a part time job while at Uni "“ that's how you avoid student loans "“ its called "hard work" mate"

Yep, and we did not have ipods, stereos and cars. Or have overseas holidays.

I spent a summer shovelling gravel and mixing concrete by hand on a steep building site - boy I went back to Uni with motivation after that.

I don't really care about

I don't really care about house prices. Debt is a different matter,the problem in housing is the amount of debt,this I do care about and I don't see Key addressing the problem.
Our debt levels will either keep us enslaved or we will default.

Dave - re. your second

Dave - re. your second point to Julz, c'mon, you can stop flogging now, especially as you are fudging two seperate issues together:

http://www.interest.co.nz/ratesblog/index.php/2010/02/08/housing-report-...

There are simple answers to both, zero-sum is one, deconstrain RMA/land supply and bulid more is the other = no problems. As I said, it'd be good for the construction sector, and even good for SPIs - cheaper rentals, why wouldn't you want that?

Cheers, Les.

@ Dave Smyth "- Do

@ Dave Smyth
"- Do you really think increasing costs for landlords will have no effect at all on the rents tenants pay?"

Very little, any adjustment in the market will be via house prices not rents, if costs go up for landlords rental properties drop in value to a level where it again becomes viable to own a rental property and now you have to compete with the new boys like any other business

"- As population pressure increases, the demand for rentals will increase too"¦ but if there's less rental properties, rents will rise."

True housing stock levels, immigration and natural population growth are what determines rent levels