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Here we will include reaction to John Key’s comments on tax. For Bernard Hickey’s report on Key’s speech, which include his views, see here. (Update 1 includes NZICA comments. Update 2 includes Wellington Regional Chamber of Commerce, further KPMG comments.)
Watch Key’s comments on tax on our video page here.
The full speech can be found here.
Here is what KPMG Senior Tax Partner John Cantin said on Key’s GST comments:
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)
Watch the portion of Key’s speech on tax reform on our video page 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.
By Roger J Kerr
Our worse-than-expected employment data on top of the “no change” for Australian interest rates, has combined to provide the catalyst for NZD selling below 0.7000.
I see the selling bias continuing over coming weeks as the Euro continues to weaken against the USD and commodity prices hurt the AUD.
It was always expected that the reaction by global commodity markets to the tightening of monetary policy in China would be to drive prices lower. Any minor reduction in demand by China would tip the fine balance between demand and supply factors that drive the hard commodity prices.
The pull-back in commodity prices over the past week has seen a breaking of the trend upwards in prices over the last 12 months (see chart below of the CRB Commodity Price Index).
I view this as a significant development with so much fund manager and speculative money having been attracted to commodities when the prices were so low in early 2009.
By John Grant
As Katie Melua sings in her hit song, “There are nine million bicycles in Beijing” - well she could also be singing, there are nearly one million bicycles in New Zealand, and that’s a fact!
According to research from SPARC, around one quarter of New Zealander’s are active cyclists.
Cycle importers say about 100,000 bikes are sold in New Zealand each year and the retail cost of a new bike ranges from $200 to $5,000 – and in some specialist cases considerably more.
Its a significant activity with lots of ‘value’ at risk, and one that generates many insurance claims.
Of the 12 companies we reviewed (click here to see the comparisons), only seven insurers provide replacement cover on bikes. This means that in most cases claims will be limited to market value. If a bike has an economic life of 5 years then the value payable could reduce by 20% per year.
By Roger J Kerr
There were no surprises with the weak employment data last week, causing both interest rates and the NZD to decrease.
Yet again the moneymarkets and bank economists have been forced by the economic facts to push their timing of OCR interest rate increases back to June/July form the previous March/April predictions. Go back a couple of months to early December a number of the bank economists were confidently predicting the first OCR increase in January 2010.
Unfortunately you never see any explanation as to why those forecasts were so wrong.
These interest rate forecasters are either just guessing with these very changeable predictions, or they are just so removed from what is actually happening in NZ businesses and industry sectors that their economic theory always dominates over the reality.
Read the rest of this entry »
By Danica Hampton
The NZD/USD shuffled sideways last night, within a 0.6850-0.6925 range.
Overnight, there wasn’t much in the way of fresh global news. Concern about Europe’s debt woes are still simmering away and the weekend G7 meeting didn’t produce any substantial solutions. While European policy makers are adamant the situation in under control, market participants are very still sceptical.
Nonetheless, overnight the cost of insuring government debt in Greece, Spain and Portugal eased a little and European equity markets posted modest gains. EUR/USD rebounded from around 1.3620 to above 1.3700, helped along by rumoured quasi-sovereign demand. While NZD/USD was dragged briefly above 0.6920, the strength didn’t last long. As Wall Street erased its earlier gains and sank into the red, NZD/USD was pitched back towards 0.6860.
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