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Opinion: Govt must look at unpopular measures to increase savings because Kiwis have no idea
By Infometrics economist John Carran
Credit rating agency Fitch's announcement last week that it was placing a negative outlook on New Zealand's AA+ sovereign rating because of its large current account deficit and need to raise savings brings into stark relief a dilemma facing New Zealand's economic policy makers.
On the one hand there is a political imperative to stoke spending and prevent soaring unemployment. On the other hand New Zealanders are perceived as irresponsible spendthrifts living beyond their means. This conundrum has been publicly epitomised by Reserve Bank Governor Dr Alan Bollard's seemingly contradictory comments exhorting banks to lower interest rates for borrowers and castigating New Zealand households for not saving enough.
Of Dr Bollard's objectives it's his desire to see an increase in savings that is the most problematic. Leaving aside the contentious debate about whether New Zealanders are saving enough, there is scant chance that New Zealanders will lift their rates of saving in the near future, despite the urgings of Dr Bollard and others. After almost two decades of economic expansion New Zealanders have ingrained borrowing and spending habits.
Many believe that job security and reasonable economic times will continue to be the natural course over their lifetimes, despite the current downturn. Why save for a rainy day when the sun shone for so long and the forecast is for fine days ahead? Government policy, as opposed to its words, facilitates these habits and beliefs.
The Reserve Bank and the government are taking the edges of the worst effects of the downturn through low interest rates and fiscal stimulus. This is partially mitigating the adjustments that would otherwise need to be made by businesses and individuals in response to the imprudence of the past 15 years. The argument is made that many people affected by the downturn are victims of the errors and greed of a relative few, so it is fair to support them.
Of course some individuals also chose to take maximum advantage of cheap and easy credit to buy that late model car or put in the Italian marble bathroom. Because of the central bank and government interventions it is likely that the current downturn won't be sufficiently cathartic for New Zealanders to radically change their long-term saving and spending habits. I doubt that a year or two of 10% unemployment and moderately falling house prices will do the trick. Two of the developed world's best savers, Japan and Germany, endured hyperinflation, humbling war defeats, and catastrophic destruction of national wealth before saving habits were engrained.
Another reason why thrift won't suddenly become trendy in New Zealand is because we retain a generous universal state pension scheme relative to our incomes. There are some merits to our system, such as its simplicity and moderate effects on older peoples' decisions to stay in the workforce.
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However, for a significant proportion of people in the bottom half of the income spectrum New Zealand Superannuation at current rates provides a disincentive to save more. Kiwisaver has been designed to help New Zealanders save for their retirement. Time will tell whether it has this effect. It may not improve saving to a great degree as many people that can't afford to save won't enroll in Kiwisaver, while others may only switch their existing saving to Kiwisaver to take advantage of government subsidies.
Another way to increase saving is to take the China approach "“ generate income faster than the population can possibly spend. This is certainly more desirable than a traumatising disaster or cuts in public entitlements being the catalyst for more saving. New Zealand doesn't have a vast pool of unutilised land and people to stoke economic growth like China. It will need to substantially raise its productivity to grow at a significantly faster pace.
As New Zealand's experience shows, productivity is an elusive and slow evolving phenomenon that is not amenable to quick-fix policy solutions. We shouldn't rely on improvements in this area to boost our savings any time in the foreseeable future.
If New Zealanders are to save more it will take more than telling offs and gentle persuasion. The government must look at what might be the underlying causes of the perceived lack of saving and take meaningful actions. This is likely to include politically unpopular measures that reduce the advantages of conspicuous consumption or investing in housing, and improve the payoff from saving.
Possible options to raise the benefits of saving include increasing taxes on consumption relative to those on income and saving, imposing a capital gains tax on housing investment, or reducing New Zealand Superannuation entitlements through greater targeting or raising the age eligibility.
The government can of course choose not to take consequential actions that will improve saving because they conflict with its other objectives, such as income redistribution or favouring particular groups in the economy. But if this is the path that continues to be followed, Dr Bollard and other supporters of higher saving should direct their comments toward government policy. Lecturing New Zealanders about their lax saving habits won't make much difference.
2 Comments
"Lecturing New Zealanders about their
"Lecturing New Zealanders about their lax saving habits won't make much difference."
Sorry John, but your article does exactly that. Hence a waste of your time writing it.
As I have suggested before,
As I have suggested before, a capital gains tax is essentially a fraud because it arbitrarily confiscates actual (albeit depreciating real incomes/savings) against what is normally a money supply driven (thus largely illusory) increase in wealth on some asset like a holiday home or investment property etc. It is thus the next stage of a confiscatory tax regime. A capital gains tax is likely to appear when political expediency requires assuagement of the 'mob' in the form of a defacto regime of financial punishment for asset owners - the sensible of whom never asked for their home/bach/rental to be inflated to absurd and destructive multiples of income in the first place.
The price we pay - and are going to pay - for the abandonment of sound money!
Well said Malcolm. And you
Well said Malcolm.
And you know what, bring in a capital gains tax, then you're just one step away from bringing back estate duties, and then it's an all out Government attack on wealth.
And we're all back to the stone age, or at least, as replicated by the USSR.
But nine out of ten posters to this blog, and this site, want the further theft that is a CGT, and I suspect we're going to get one, thus blinding our society perhaps fatally longer, to the the fact that the only answer is to reduce drastically the size of the State, and with it, all existing taxes.
Pretty sure the tax would
Pretty sure the tax would only apply on gains in value once the house is sold, so its not illusory. The 'actual' amount taxed comes from the same money supply driven increase in asset value in the first place so what you said malcolm (dispite the big words) makes no sense.
Mark Estate duties never went,
Mark
Estate duties never went, just the current rate is 0%, As for CGT it already exists, just that most people don't understant the tax law pertaining to it, If your business gains its revenue from capital gain (ie trading properties or shares) then than profit is taxable. Those who 'invest' in rental properties at nil or near nil operational return are inviting scrutiny
Neven
Mark - I fear you
Mark - I fear you are right. Yet one thing has not been understood by the chorus line of taxers. Have you ever noticed how the tendency is, particularly amongst the liberal elite, that the tax regime should always be structured to take from those who are perceived as having greater 'wealth' than themselves. This, of course, is how such vicious death duties gained acceptance in Britain - the tyranny of the mob who could take without cost to themselves (so much for the parable of the good Samaritan!). What so many liberals seem oblivious to is that, on a global basis, they are vastly wealthier than most of the world's population. This would also be the case with New Zealand's welfare recipients. So, as global governance emerges, are they going to be happy to have done to them what was so ruthlessly done (in particular) to the aristocracy in Russia (and, of course Britain)?
Neven, yes, agreed on all
Neven, yes, agreed on all points.
Actually, part of my beef, and I have many, with our taxing legislation, is the current land taxing provisions are vague in application (to say the very least), and a minefield - a taxpayer often, before these provisions, cannot define exactly where they do stand (vis a vis, selling the odd rental property, and share trading issues are a cot case in this respect). Some might say a CGT is a way around this, however, I would say, we've just got to stop taxing 'stuff', including most certainly income, and reduce the size of the State. It's out of control, as is the complexity of all our taxing legislation.
Sam the Man - your
Sam the Man - your comment is a splendid reminder of why governments are able to get away with robbing their citizens through taxation!
The fact that property prices
The fact that property prices do increase to 'absurd' multiples of income highlights that money supply is not all to blame for house prices, as money supply should have similar effects on both income and asset price. The irrational gain in house prices has been because NZ unlike most other countries is pretty relaxed on capital gains tax so is an attractive investment, along with prescriptive land reg's, causing a demand spike as everyone wants some of the action at the same time.
CGT won't hurt the family home which is not going to be sold anytime soon anyway, just acts to make property speculating less attractive relative to more productive forms of investment that will actually help the country instead of hamper it like property investing does.
Mark and Malcolm, CGT is
Mark and Malcolm,
CGT is no more theft than taxing someone's savings in a Cash account. The point is that tax should be EVEN across the board, thus not providing favours to one asset class over another. The easiset way to achieve this is one flat tax (maybe 20%) across everything including salaries AND more consumption tax - maybe an exception could be made for the family home but I am in 2 minds about this. Why should one family who invests in a house get off scott free and not a family who buys shares?
Jimmy, why should savings of
Jimmy, why should savings of 'any type' be taxed when we all admit a big part of our 'Western' troubles have been we are not saving enough???
Again, government is the problem, and this is a structural problem. You do not fix the distortions of taxing one area too much - whatever that means - by then trying to tax everything other damned thing.
What needs to happen is the size of the State needs to be slashed, and people be left with their own money.
Well, Sam has touched on
Well, Sam has touched on the importance of planning regulations. Hopefully Bernard is getting an interview with the Minister of Housing this week where he will question him on what the government is going to do to reduce the restrictions on the supply of housing, which would reduce SOME of the speculative element of housing investment, and better balance the economy.
How is the interview looking Bernard?
A bit of a ramble
A bit of a ramble here.
House prices are increasing because of inflation - more money available to purchase properties due to artificially low interest rates and a Govt policy of papering over the cracks. As an example of this fact, overlay the NZ M3 graph with the housing price graph. There is a direct correlation between the two.
We have not seen real growth in this country for decades - the growth we have seen is an illusion brought about by too much money printing. Real growth comes from producing more than you consume. I was also shocked to hear how the 35% of Govt expenditure was considered part of the GDP. In reality it is a 35% surcharge on the productive economy, as the government has no income that is not taken by force from those who produce.
Finally I am particularily concerned that we will be forced to contribute to the scam that is Kiwi Saver, pouring money into funds that provide no safety and no escape in times of market weakness. I agree that we have to save, but saving will not be viable until the rate of return from saving is not harmed by discounted interest rates.
Sam the man - but
Sam the man - but there's the problem. Money supply driven growth inflates asset prices but not incomes (to the same degree). For example, when measured against gold the real income of my Pommy countrymen has been static since the 1970s. For the American the situation is worse - his income has fallen by about 50%. Now, in gold ounce terms average British house prices at April 09 stood at some 300 ounces - the same as in 1970. Thus, measured against real money - as opposed to that rather tired piece of nominal paper called Pound Sterling - there has been no capital gain. Yet wait, house 'prices' are dramatically higher in Britain than they were in the 1970s. Result - we should surely be taxing these 'capital gains'. Trouble is, as I have argued before, they are just an illusion. Do you seriously think, that during the Weimar disaster in post Great War Germany, incomes kept up with the exploding money supply. Likewise, more latterly in Zimbabwe - where Robert Mugabe has created a nation of billionaires - huge swathes go hungry! Businesses and employers need income to raise wages - houses need only a tidal wave of newly created fiat money to raise prices.
Sam : The fact that
Sam :
The fact that property prices do increase to "˜absurd' multiples of income highlights that money supply is not all to blame for house prices.
Money supply is ALL to blame for house prices. The money has to go somewhere - And for the last 38 years money has been detatched from reality - it has had no backing apart from our willingness to believe in the illusion of value.
As the money supply increases, it finds outlets in goods. The problem lies with the fact that money has no value, it is debt. It is loaned into existance and more money has to be created to pay back the interest on the loans. So the cycle continues.
It will continue until it collapses under its own weight. Eventually the debts reach a level where there is not enough earning capacity to repay the money. Then the system implodes. It is well underway in America - it is only a matter of time before it happens here.
Malcolm, I agree with your
Malcolm, I agree with your analysis. Inflation is a Govt sponsored event, designed to steal wealth from the unwashed masses.
If restrictions on the supply
If restrictions on the supply of housing are relaxed then supply is better able to respond to demand. This helps to prevent housing bubbles and helps to prevent excessive investment in housing.
Matt, yes, Big Government, and
Matt, yes, Big Government, and a hideous piece of legislation called the RMA and under it, Five Year Plans, no, sorry, District Plans, distorting the market again, helping to create the asset bubble.
Got to cast our Nanny State.
yes Mark, and in centres
yes Mark, and in centres like Auckland where supply might be getting tight relative to demand in a year or so, something needs to be done URGENTLY with planning regulation or else we will see another bubble develop
What about a popular measure
What about a popular measure to increase savings?
No tax on interest earned for (say) 3 years?
Disclaimer: I have not thought this though at all, but it's bound to be fairly popular ....
Mark, "Jimmy, why should savings
Mark,
"Jimmy, why should savings of "˜any type' be taxed when we all admit a big part of our "˜Western' troubles have been we are not saving enough???"
A good point. Ideally no savings would be taxed. But then it might start to get difficult when we look at taxation on salary/wages. If these are subject to tax and not savings I am sure we will see new ways to avoid the wage taxes by putting it down as savings etc. Even rates across the board is the way to go - keeps accoutant bills down as well. If no tax on savings, then I would prefer no tax on anything.
It is funny though how people become used to certain types of taxes and consider others an imposition. eg most are happy to get taxed on wages, but would cry foul on estate taxes on inheritances. In theory you should be more peeved about having to pay tax on somehting you work hard at rather than something you get for nothing. At the end of the day, no tax is fair but if we have to have it (and in all seriousness this will never change), then make it even across the board.
Alex, Sounds a good idea
Alex,
Sounds a good idea to me as a short term measure to redress an imbalance. Then revisit in a few years.
Alex - What interest??? 4%
Alex - What interest??? 4% a year a saving of 1.3%
Another issue is what % of the population have $ left over to save with?
Rod Oram this morning on
Rod Oram this morning on Radio NZ had a lash at the Gumnut for not introducing more tax friendly rules on annuities. Rod argued that many could provide for their own retirement by purchasing annuities. And the point is loud and clear, as ever, that the Gumnut exhort us to be prudent and save, yet they continue to run with tax policies that crucify savers.
If only i could get
If only i could get pregnant
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10587053
Inheratance tax was intended to
Inheratance tax was intended to stop people rising above their station. Prevent the transfer of wealth across generations.
It is another form of income tax, as it affects thos who earn their money in jobs more than those who own a business.
ha! good one Andrew I
ha! good one Andrew
I like this Bennett lady
Andrewj : it is your
Andrewj : it is your right as a man to have babies . I'm thinking of a little scene from Monty Python's " Life of Brian ". Firstly, you'll need a shoe box for the foetus to gestate in. Then charge on down to WINZ and get signed up for all the goodies on offer !
And here's where I start
And here's where I start wondering - annuities? Quite outside the taxation situation - in the light of recent history, it seems that you can't trust a financial institution to pay what it promises for even a couple of years without freezing payouts/going bust/spiriting away the cash. What's the chance of an annuity provider paying out as promised for 20 years or so?
$715 per week net! My
$715 per week net! My God! That's more than I get for working, hard for 40 hours per week, and looking after my M,D+2K family.
I am outraged at the
I am outraged at the amount people get paid for having babies. Infact im sickened. I know girls that have babies so they can get the money also. It really happens, and is why a lot of lower social-ecomonic background girls have babies young. Fundamental problems in government spending (i.e our f'n TAX dollars) need to be taken to in times like these with an arnold schwarzenegger sized knife!!!!!!!!!!!!!!!!!!!!!!!!!
Help solo mums by giving
Help solo mums by giving them cards that give large discounts on napies, baby food, etc.
Benefits should be in voucher form. You only have to go into the TAB during the working day to see where most this money (our TAX!!!!!!!!!) is going.
Sorry for off-topic...
\rant end.
Andrewj: Clark and Cullen must
Andrewj: Clark and Cullen must be glowing with joy for being responsible for creating that sort of rubbish. I see Clark is right in her element still in the business of redistributing wealth from the "Haves" to the" Havenots" Wonder how much of her huge salary she gives to the stuffed dictator run, corrupt, bribe infested hell holes that she expects us to contribute to? Anyone miss her stupid false laughter and her love of Rugby test matches and her love of the average Kiwi. Sick!!!
Gail M : Maybe someone
Gail M : Maybe someone in the know can shed light onto annuities. I thought that there was some insurance component to mitigate against failure of the provider. It is a little known investment choice in this country, more popular in Australia. Similarly with reverse mortgages, which retirees use successfully, in Europe and in the USA.
Back when dinosaurs roamed Australia,
Back when dinosaurs roamed Australia, I got my first housing loan, and one of the conditions was that I had to have Life Insurance policy ( in case I got killed; that way my wife and chidren didn't get turfed out - less wives worked then). That insurance policy also had an annuity attached to it that matured after 25 years, paid tax free to the benificiary. ( same as purchase price of the house, actually!)
Maybe any new mortgages could encompass a similar concept. It would further limit the size of the principal of the loan, as more 'repayment' went into tax free savings.
How can you be opposed
How can you be opposed to a CGT?
Why would you put cash into savings to be taxed when you can get into housing debt/asset building tax-free?
The investing playing field has to be equalised.
Agree with death and taxes.
Agree with death and taxes. Equalise all playing feilds, then look at more macro solutions suggested by Malcolm etc to reduce taxes across the board and reduce size of the state.
As far as taxing dispite no real capital gains after inflation, the same arguement could be used against taxing interest in the bank, its taxed on nominal value not inflation adjusted increase in savings. Same tax across all investements, help re-balance the lop-sided country we live in before S&P deide to rebalance us themselves
Btw, in my line of
Btw, in my line of work I see how much is paid out to beneficiaries each and every day.... on 27/07/09 as a nation we spent $366, 061 on benefits. That's $15, 252 an hour... and that will be spent today.... and tomorrow, and the next day.....
I fail to comprehend how collectively we can afford Working for Families.
You're wasting your 'ink' Josh.
You're wasting your 'ink' Josh. Key and English are playing possum until after 2011.
All we can expect until then will be spin and several repeats of the 'strategy' speech.
Are you sure that's all,
Are you sure that's all, Death and Taxes. That's ONLY $33 each per year, 9 cents per day?
Yea just a shame bribes
Yea just a shame bribes to the public are still important in winning votes.
Reminded me of that street on the news where John key was meant to change it for the better. And the unemployed man living there recently was mad at the Government for not changing his personal circumstances.
He must have expected to be put in a flasher house, have his dole increased, or something. I dont know.
Media loves to show how government spending cuts hurt the poor solo mums who miss out on there $700 pay checks, neglecting that that money was taken from hard working individuals who are providing productive labour to the country increasing our GDP.
You get what you reward. Reward the lazy and you'l get more, and with it large government debt, credit downratings, and poor standard of living for all.
Yep George, I'm sure. Not
Yep George, I'm sure.
Not so sure about your math though...we work it out at $2004.18 for each kiwi per year.
$32.067 billion is the budget for general benefits (excl. Super) over the next 4 years.
Unbelievable that you can get
Unbelievable that you can get over $ 700 / week after tax siting on your bum and then bitch about an extra $ 28 / week.
We have families in Fiji who can't afford 0.30 cents per week to send their kids to school.
We are a totally welfare dependent society and while we have these attitudes why would you save. Why would you go to work ? This is way more than the median wage.
It will all end in sadness - the only question is when.
Why do we think we alone can afford to pay people for not working.
Today's trade figures make a credit downgrade a certainty.
Eventually the price mechanism will do it's magic and the exchange rate will fall out of bed.
Then we will have a wake up call that no government can ignore as foreign lenders pull down the shutters.
It's just time now - but be prepared.
'..government is the problem.' EXACTLY
'..government is the problem.'
EXACTLY
No worries you lot, Bill's
No worries you lot, Bill's unearthed an old gestetner and they say he's churning out ten dollar notes by the truckload in the Beehive basement.
The problem with the beneficiary
The problem with the beneficiary system is it makes the assumption that only those that need money apply for benefits - it effectively it relies on people having good moral values. That was fine 15 years ago.
However NZ has evolved (I use that term loosely), we now have people claiming benefits simply because they can (they don't care if they could help themselves instead). Anyone can claim a benefit (or at the very least alter their circumstances so that they can).
Perhaps they problem is not so much with the beneficiaries, sure many have low moral values and are willing to take money from those that genuinely need it. Instead I believe the system should be fixed so that handouts are only for those that require it (and can only be spent on things they need).
Unfortunately a pretty low expectation has been set over the last 9 years "“ i.e. "If you come to our office, we will give you a handout". This expectation needs to be addressed ASAP.
Where am I going wrong,
Where am I going wrong, Death and Taxes? There's about 4 mio of us right? and $366,061 per day is a lesser number than the 4 mio of us, so that's less than a dollar a day each - so about 9 cents per day?
Sam, but why do you
Sam, but why do you think morality has crumbled, and immorality abounds?
It's because OF the welfare state. Keep telling people they can have other peoples efforts for nothing, and guess what ...
Working back from your numbers,
Working back from your numbers, Death and Taxes, and assuming 4mio population, then:
$32.067bn over 4 years = $8.01675 bn per annum ( That's your $2004.18 per person per year)= $21,963,699 per day. That seems a more accurate ( and alarming!) number to me, than your $366,061.
Sam You are right that
Sam
You are right that a "welfare system" depends on middle class values and once you remove these then it simply becomes socialism, instead of a social democracy, and guess what! we have had governments applying concerted pressure to achieve this (the slow turning of the screw)
Conversely, right wingers seem unable to accept some basic laws of biology, standard deviations, which means there is a portion of society that will always require support and as one blessed with ability we have an obligation to do so
The issue is of course balance
Neven
George- I take it back.
George- I take it back.
Alarmingly indeed, $21,963,699 per day is the correct figure.
Got it, Death and Taxes!
Got it, Death and Taxes!
Do you mean $15,252 per minute?
ie: $15,252 x 60 x 24 x 365 = $8.016bn per year = 32.065 bn over the 4 years.
See! I can do maths....
But Neven, social democracy is
But Neven, social democracy is socialism.
I think there are few things more evil than the social democrats credo, founded on its belief all societies are built on needs.
http://www.policy.net.nz/blog/2008/09/12/the-vision-thing/
Dreadful.
In fact to quote it:
Individuals and groups who by superior strength or simple good fortune are endowed with wealth and influence, enjoy their advantages on the sufferance of that vast majority whose daily labours make possible a functioning society. Only so long as, in the judgment of the many, the possession by a fortunate few of social, political and economic privileges serves the community as a whole, will those privileges endure.
Dripping evil. Note how this rotten creed takes no congnisance at all of plain hard work, and that statement above is the announcement of a war, the total initiation of force, on the productive, and thus workers. In a social democracy, my hard work will be appropriated.
Socialism pure and simple, a complete tyranny of the majority, its every action is set out to enslave.
Um, probably should have toned
Um, probably should have toned that down a bit ;)
Mark : Yes, perhaps you
Mark : Yes, perhaps you are being a tadge harsh on comrade Trotter. The last paragraph of his blog, which you omitted to quote, puts his views in a more balanced perspective.
At $22mio per day for
At $22mio per day for the benefit, you can get a little heated, Mark!
No Roger, I meant a
No Roger, I meant a bit hard to Neven, not Trotter. Look through all his posts on that blog, he has no desire to take on board any sort of balance, [and neither do I].
In fact, that last paragraph of his is tribalistic nonsense, as I stated on the comments further down that thread.
Mark : Gotcha ! Correct
Mark : Gotcha ! Correct me on this, Trotter says " As a social-democrat I cannot countenance the arbitrary dispersal of the people's resources, nor the slow fragmentation and dilution of their rights. " Yet that is exactly what Clark & Cullen did, 1999-2008. So which side was our dear comrade on ?
for those looking for an
for those looking for an example of centrel bank ineptitude have a read of this article:
http://business.theage.com.au/business/rba-warns-of-housing-price-bubble...
According to the RBA there is a "risk" of a house price bubble forming. Wow, what an understatement. Maybe if they had said this 15 years ago. Australia has the BIGGEST HOUSING BUBBLE on earth. Its twice as bad as the US and has been for some time. Are these guys deliberately dumb because they feel they have to pander to an ignorant populace?????
Neven, I think you'd find
Neven,
I think you'd find that 'right wingers' do understand as you put it "basic laws of biology and standard deviation", it's the 'libertarians' who don't accept this.
<i>Australia has the BIGGEST HOUSING
Australia has the BIGGEST HOUSING BUBBLE on earth.
Surely not! How can that be, they have a capital gains tax. You know, that tax 90% of this room wants to stop housing bubbles ...
Mark, Aus CGT was halved
Mark,
Aus CGT was halved under Howard which gives property an advantage relative to savings. Many commentator see this as contributer to the bubble. They also have tax deductabilty on loss making properties. Where they differ from us is they have a boof head PM who thinks that tripliing grants to first home owners is a great way to increase affordability.
Jimmy: Does property have that
Jimmy: Does property have that advantage there? That 50% discount was only to certain limited taxpayers wasn't it? Plus their CGT as far as I remember is levied without any adjustment to the cost base for inflation, which makes it a particularly vicious tax.
Ye gads, we're not going
Ye gads, we're not going over this CGT thing again, surely not. Cullen did enough to warp and convolute our tax system over the nine years, 9 agonisingly long painful years of his reign. We sure as hell-fire don't need a CGT. More grist for the accountants and trust consultants, as they seek loop-holes around this idiocy.
Maggi Thacther once said the
Maggi Thacther once said the reason socialism doesent work is that you will run out of other peoples money . thats whats happening in NZ why work the goverment steals off hard working kiwis and gives it away . The Goverment doesent have the money so they take it off others to give to away its pure theft social welfare will wreak this country.
Baz
Im probably going to get
Im probably going to get shot for saying this- it seems to me that the government won't make the required changes to the tax and benifits systems because to lower benifits would be to lose votes, I dont know the stats but I am sure that a large number of voters are also on the benifit and with how much they are able to claim why would they want to better themselves?. why dont the govt change the rules around voting to exclude all of those who do not contribute to the economy e.g. if you farm babies and have not had a job in x amount of time then you don't get a say in how taxpayers money is spent, I know there are alot of people who are genuinely in need of the benifit but it sickens me the amount of people who just milk it, I have heard comments from friends that they will earn less working a reasonable job compared with what they can get on the benifit, where is the incentive to work?. mark and malcom I totally agree that we need to reduce the size of the state and lower taxes, Imagine how productive we could be with lower taxes and more people deciding to work I pay enough tax to support a few people on the benifit, if I were able to keep some of that money in my business I would be able to create other jobs or increase the wages of my exiting staff
Mark, My understanding is the
Mark,
My understanding is the CGT is halved as long as you hold the asset for > 1 year.
Yeah, something like that, but
Yeah, something like that, but the fact they then don't allow an inflationary adjustment, in an enviroment where central bank policy fosters inflation, still makes it a vicious tax.
Mark, You are right, the
Mark,
You are right, the removal of the inflation adjustment can make it a vicious tax depending on whether you beat inflation or not. But I honestly dont think most property investors consider that.
I couldn't agree with you
I couldn't agree with you more John, but I also see a government that is running on borrowed money in anticipation that it will be able to pay its way with money its planning on earning in the future. They know Kiwis have to save as their promises of looking after people in their retirement is unsustainable.
There won't be a CGT,
There won't be a CGT, not now and not in the near or distant future. Way, way too many lost votes (babyboomers who hold all the rental stock) at stake folks.
As my dad has been saying for several years, if they were even remotely serious about increasing saving rates they would do something about reducing significantly the taxes you pay in putting your money in a bank in a term deposit or your super scheme, for eg. That's one reason why its been a no-brainer to buy up houses instead isn't it?
On the topic of the DPB: as a former painter (who worked with and around blue collar types, and in often working class areas) I know personally of or have met several 'couples' who claim to live apart to collect their plethora of benefits and the girl/female doesn't name the father on the birth certificate. That we allow that is severely wrong I believe.
Mark You make my point
Mark
You make my point on right wingers exactly, to call the redistribution of wealth 'evil' shows exactly who is paddling in the shallow end of the ethics pool.
Similarly simply because a Trot like Trotter calls himself a social democrat does not mean its true (unless it reinforces your position is shallow end of said pool)
Democracy is in itself social, remember 1 person 1 vote? I'm not saying the system is perfect, nor am I a socialist, I describe myself as Utilitarian but am increasingly coming to the conclusion that the concept of the "greater good" is beyond most people
Neven
The government should introduce Individual
The government should introduce Individual Savings Accounts (ISAs) like we have here in the UK. Everyone can invest up to £3,600 p.a. in a cash ISA or up to £7,200 p.a. into an equity ISA (or a combination of the two). Any interest or gains are tax free. This has to be one reason the UK personal savings rate is much higher than NZ.
Quote from above article ...."The
Quote from above article ...."The government must look at what might be the underlying causes of the perceived lack of saving and take meaningful actions"..
Thats easy...... 40 yrs of People seeing the purchasing power of money diminish...
Just like a car.... MONEY IS A DEPRECIATING ASSET..... Its "intrinsic value" diminishes over time... (very quickly ...when money supply is running at 10-15% growth).... Most people realize this.
Even Bollard acknowledged that there should be a "depreciation allowance" for money earning interest....
At current interest rates.... savers are lucky to break even ( in fact some are losing money )...when tax and inflation are taken into account.
One could say that there is actually a Government caused DISINCENTIVE to save our money as interest earning deposits.
Its ironic that even Real Estate has a "Depreciation allowance".
All the Government has to do is remove the distortions they have caused and they might find that people might naturally save money as interest earning deposits.
Because of the Distortionary effects that exist, and with our monetary system, there has been an ongoing MASSIVE transfer of wealth form "Savers" to "Borrowers".
People are wisely saving their money in the form of Real Estate.
BUT will the Government ever try to " clean this up"..... NOT LIKELY... A Capital Gains tax on Real estate will probably be their inane solution.... tax..tax..tax
Even more insane was a home equity tax recommended by a tax review commitee a few yrs ago.........
Neven: what gives a society
Neven: what gives a society the moral right to redistribute the efforts of an individual against their will? A society that sanctions this, justifies force over compassion and charity. Where does that lead?
The 'greater good', is the 'common good', is a very bloodied altar. Who gets to decide what the 'greater good' is? Hint: tyrants justify everything by it.
Finally, what in Trotter's social democrats credo do you vehemently disagree with?
And just by the way,
And just by the way, I'm not a right winger. I'm Libertarian: we're nothing similar.
Plus I've been very frank on this forum: I have no truck whatsoever with democracy. It is a tyranny of the majority, which a civilised society, a free society, that is, a movement toward privacy from the State, has to get itself beyond. We need a constitution enshrining the sanctity of the individual, the non-initiation of force, and a minarchy. That's where justice, and freedom, lay, nowhere else.
It is a pity with
It is a pity with this blog site, that we are not able to pick up the thread of a particular post and put a comment in reply to what that person was saying.
Lose a lot of time trying to work out what e.g. Neven is trying to portray.
Mmm, final one for the
Mmm, final one for the night Neven. Quote:
Utilitarianism is the idea that the moral worth of an action is determined solely by its contribution to overall utility: that is, its contribution to happiness or pleasure as summed among all people.
'As summed among people' - I put it to you that means nothing, other than slavery to 'all people'.
Morality can only be defined by man qua man.
Sally : We all lose
Sally : We all lose a lot of time trying to work out what Neven is trying to portray ! Ain't that the fun of blogging. Bless him !
Extreme Socialism, unfettered Capatalism all
Extreme Socialism, unfettered Capatalism all lead to Fascism and the only winners as long as the Private Debt BASED Monetary System remains in place are the private central bankers.
How are a majority of people meant to save anything when most cant even earn enough to to live with dignity or keep up with true inflation. You can forget the bunkum methodology used for median/average wage, employment figures or CPI used to calculate inflation.
I sum up in this letter to Editor I had published:
Editorials in your paper have laid most of the blame for the current debt crisis at the feet of the consumer and a public you perceive somehow owns the banks. The international banking system preys upon the human frailty of impulsive wants. Credit card and hire-purchase incentives thrown in the faces of people who cant afford them. People who have all manner of mass produced goods marketed at them every day as "must haves."
International banking is a multilayered system, only the lowly trading banks available on stock exchange for ownership by investors, and they via voting structures are dominated by big money, thus the longterm Mum and Dad investors are not the great benefactors you imply.
As for only discretionary debt contributing to current crisis, I give you this for thought.
97% of our money supply enters circulation as interest bearing debt owed to foreign lenders. Even if you do not hold a loan contract in this nation, now that we are in deficit, all and more of every dollar you have in your wallet is owed on your behalf by debt factored into the cost of goods and services you pay for.
If everyone paid off all their loans, as should be a good thing, under the current Debt Based Private Monetary System there would be no money in circulation and trade would collapse.
There sits at the heart of banking a Credit Creation Mechanism, control over which has been debated for 300 years. Banking inquiry desperately needed.
Have a great day fellow subjects of the greatest borderless empire ever created, The Banking Empire. I got to go scrape together some more tribute so they might let me hang onto my assets a while longer.
Mark, can you please knock
Mark, can you please knock it off with your "libertarian" political views on EVERY single article written here?
You think kids should have to pay for their own hospital care. You shouldn't have to pay a nickel of tax towards it.
Fine, we get it.
Iain : I am in
Iain : I am in awe. At 4:54 a.m. anyone else, if they were up, would be wondering where the coffee pot was, or whose underpants they had on. But you manage a lucid moment of deep brain thrombosis and knock out that little spiel. Truely, you are a wonder. Bless you for your dedication to the good cause. Cheers.
Death and Taxes, NO, not
Death and Taxes, NO, not if my viewpoint is relevant to my comment about the thread.
Have you thought about just not reading my posts?
And incidentally, for the record I don't. Go have a look at the latest dairy thread.
Plus at least I have to conviction to post under my name.
Sally It seems I reached
Sally
It seems I reached the point of being an enigma - Excellent! if you want to off list ask me a question then neven@mwk.co.nz is always available
Neven
This is such an interesting
This is such an interesting thoughtful post. Do you have anymore like this?
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