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Double shot interview: Bernard Hickey talks to Mark Weldon about tax reform
December 11th, 2009Bernard Hickey interviews NZX Chief Executive Mark Weldon about tax reform and the investment climate. Weldon, who is a member of the Tax Working Group, supports the idea of a land tax because it broadens the tax base, is efficient and sends a signal to New Zealanders about where to invest.
He also talks about the prospects for introducing a tax on equity invested in rental property on a Risk Free Return Method (RFRM) and removing depreciation as a legitimate expense for property investors. Weldon likes the idea of a 30-30-30 income tax system where the top income tax rate matched the corporate tax rate and the family trust rate (currently at 33%).
Weldon also talks about the possibility of a differential corporate tax rate where companies making more than NZ$3 million could pay a lower rate so New Zealand could compete with a potentially lower corporate tax rate in Australia. He is confident the John Key-led government will introduce some pragmatic reforms.
“I’d like to see some really big direction of travel commitments, such as a package that moves to tax property and real estate and broadens the base materially in capital markets, and that moves to get rid of the rorts in the unlisted public sector, such as the bizarre situation where Hanover has opted out of regulation and there is no regulator,” Weldon said.
“I think in taxing capital markets you’ll see some pretty meaningful change,” Weldon said.
Your view? We welcome your comments below
Tags: Double Shot interview, Land tax, Mark Weldon, RFRM, Tax Working Group
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December 11th, 2009 at 2:19 pm
A “land tax because it broadens the tax base, is efficient and sends a signal to New Zealanders about where to invest.”…. By where to invest, do you think Mark has his “Bucket Shop” in mind?
December 11th, 2009 at 3:33 pm
“and sends a signal to New Zealanders about where to invest”.
Who will get richer from this again?
Seems to me that when you are reduced to taxing something that isn’t a profit-stream, you’re wringing out the sponge.
Time, gentlemen please.
December 11th, 2009 at 3:51 pm
I haven’t followed the practicalities of how a land tax would be collected.
Would it be paid every year by all owners of property?
If so it seems like something the IRD might have a real mission collecting it and chasing up the defaulters, given although your land may go up in value there is no actual cash payment from anywhere to reflect that.
How much of the actual tax would be spent just collecting it.
I’m not against some tax reform around property it’s definitely needed, but it seems a waste if the method used creates so much admin costs that a large portion of what is collected is just eaten up in this manner.
December 11th, 2009 at 4:13 pm
I think Mark might be a CASPer. Perhaps we could get him on the ‘Monetary System and Policy Reform Working Group’ (or MSAPRWG for short) next.
Hot off the NZMEA press…..
‘Exporters continue to bear the brunt of monetary policy’
The return of non-tradeable inflation to its pre recession levels will prevent any rebalancing towards growth in the real economy say the New Zealand Manufacturers and Exporters Association (NZMEA). The Reserve Bank has signalled a return to high inflation in the non-tradeable sector, a replay of the last decade. The OCR at 8.25% did not work except via the overvalued exchange rate pressing down on the traded sector and we are headed towards the same problem again. We must see some action to reform the policy framework if this is to change.
NZMEA Chief Executive John Walley says, “We are on the verge of replaying precisely the nonsense of unsustainable growth based on excessive house price inflation and domestic consumption that pushed New Zealand into recession even before the global economic crisis hit. Do we really want to roll out the welcome mat for a rerun?”
Reserve Bank Governor Dr. Alan Bollard seemed comfortable with this situation when questioned yesterday despite noting that, “While business confidence has improved, actual business spending remains weak. In addition, the high level of the New Zealand dollar has limited the scope for exports to contribute to the recovery. After some short-term correction the current account deficit is expected to widen in the future.”
“Note ‘current account deficit to widen in the future’; we are already one of the most indebted nations and it seems we have learnt little from the crisis,” says Mr. Walley. “The rise in the dollar following Bollard’s announcement that rate rises may happen earlier was entirely predictable. He seems surprised at the reaction, but a higher dollar was the only possible result. This will only see the problems he identified with business spending and the current account deficit worsen.”
“If any further evidence was needed about the impact of the carry trade, the dollar going up on the anticipation of interest rates going up in six months rather than eight is it. Surely given that the markets are moving on this sentiment the comment should have been designed to keep the dollar low and help balance the recovery a bit rather than make things worse.”
“The tax system and the monetary policy framework incentivise debt fuelled spending over productive investment. We need to change both before we can expect any sustainable economic recovery.”
Got that, “We need to change both before we can expect any sustainable economic recovery.”
December 11th, 2009 at 4:17 pm
Effectively it is just a rates increase with the proceeds going to central government rather than local. Pretty much the same as Labour enacting regulations that passed extra costs to local government which resulted in rate rises.
The problem is the overall % of GDP wasted on overpaid and unneccessary “services”.
December 11th, 2009 at 4:35 pm
What is up with that jacket?
December 11th, 2009 at 4:37 pm
Given I have already paid the Simple Fee… and hold my title document, and a land tax introduces an extra re-occuring annual fee… does that mean my rights of tenure have been revoked or altered?
I can feel a Plackard and Pitchfolk response coming on.
December 11th, 2009 at 4:44 pm
If I recall , mouse , Mark Hubbard expressed some strong views on the subject , a week or so back . He launched into the Gareth Morgan ” big kahuna ” plan with gusto . Some more retrospective legislation coming into our rear-vision mirrors ?
A basket of over-ripe tomatoes would complement your ensemble of placard and pitchfork . Effigies are a nice touch too . And the old favourite of tar and feathers , for the more traditionally minded .
December 11th, 2009 at 5:16 pm
mouse owns a house and because of a fee he’s become a grouse! Look at it this way mouse…you get to contribute to fill the trough that belongs to Bill…think of all the little pigs you will be supporting…hehehe…a mouse supporting the pigs!
December 11th, 2009 at 5:24 pm
Great interview, Bernard. I’d like to hear Mr Weldon’s views more often if he ever gets time. He’s also acutely aware that big changes are not liked by anyone.
December 11th, 2009 at 5:38 pm
I feel a minor rant coming on.
Ever thought Guy Fawkes was before his time.
Another tax on a tax suggested to scam legitimate property owners is not the way to go. Why tax yer MOTHER in her retirement home or your sister, or your brother, or even yourself…..if you have legitimately paid your own way……because of what the IDIOT country does to ITS SELF perpetuating the madness of others.
Just so the PIGS can keep junketing and snorting at the trough.
And we have 1.7 million pigs at the trough in NZ.
Partly it is the people with MULTIPLE properties and LACS and excessively leveraged debt that are the problem.
That includes most of out ILLUSTRIOUS politicians as they rape and pillage…DAILY.
Most of them really LIGHT UP MY FIREWORKS…… No wonder I RANT……..and have become a very SORE and today….LIVID—-loser.
Bring back…Mr FAWKES.
The other problem is the LAZY people in NZ we now support beyond our/your actual means.
We see excess rises daily…to scam even more from the masses….the masses who actually WORK that is.
The list is endless…… Includes ACC excesses, WWF, Social Welfare Cheats & layabouts, Excess Civil Serpents, same old list, same old LABOUR policies, now perpetuated by a flawed NATIONAL agenda.
Sounds too much like UK and USA…..to me…..
The interest rates world wide were forced down to stop the total BANKRUPTCY of those who over borrowed, with no recourse on payment, other than a scam on others who had not got themselves in a TOTAL mess financially.
Over Taxing everyone’s property including the THRIFTY will never address that in a fair way.
It is the over leveraged McMansions and shon-key building practices along with the Governments and Council excesses and way too much over expenditure by the 1.7 million not PRODUCTIVELY working that keeps the 1.8 million over taxed middle classes at the coal face peddling hard….. in the SHAKY ISLES.
This as the crazy bunch sit idly by and watch.
The revolt ….GUYS…..(See MR FAWKES would be proud)…….should be against the 1.7 million idiots, both at at the TOP and the Social dregs, all taking, scamming, rorting and by the way BREEDING profusely at YOUR expense…. at the bottom, because they are the ones worth REVOLTING against.
KNOW THY ENEMY.
Exporting and outsourcing our WORK to China and India and …and …and, but not replacing it with bone fide work will NEVER…NEVER work….
Neither will replacing it with other SHON-KEY Battery Farming practices…..or CRAFAR copiers and half baked make work schemes.
The simple question is…..Why do we all have to PAY excessively for the sins of half the people not WORKING in NZ is beyond my comprehension.
The shaky isles…are getting shakier…..and BOLLARDS to the idiots, who made it so.
Have a pleasant evening.
I am sure MR KEY will be as he junkets around EUROPE.
December 11th, 2009 at 5:56 pm
I reckon we need a Pist Off Party (pop for short…sorry Pop) and SL can be the leader. I’m happy to be Treasurer….send party donations to Wally c/- BH.
December 11th, 2009 at 5:58 pm
Its amazing that such obvious, blatant, simple changes have taken so long to come in. We needed to get a special group FFS just to realise depreciation is illogical because houses go up in value!!!
This guys speaking sound logic though which is good to see after hearing a lot of what some people have been saying on the matter (mostly people keen to see property remain a magical investment that doubles every 7 years, without being taxed or increasing its value produced per unit held…)
December 11th, 2009 at 6:11 pm
Bernard : Purchase a second microphone , plus a decent jacket and tie . Send me the bill . It will be worth it to hear an interview clearly , and to see you togged up professionally . If the total cost is under $ 2500 , I’ll only have to lay off the gummy bears for 3 weeks . All the best : Rogie .
December 11th, 2009 at 6:27 pm
I actually understood this interview – and it makes a lot of sense. While no tax is liked, and there is no such thing as a good tax in my view, we clearly need to spread it around, and a system that taxes income and companies so heavily (and lets land and property get away) and then creates deductions and rorts for people to put yet more money into the untaxed sector, does not make any sense.
The other thing about this is it does seem like these are changes that are doable – unlike the Brash stuff, which is just theory and 80’s stuff all over again. Clearly we need to do something…and to do something…it has to be doable.
December 11th, 2009 at 7:34 pm
Bernard : You have my Email address . ” interest.co.nz ” has become the independent voice of good financial sense in this beautiful land , girt-by-sea . Please represent us , the bloggers & bloggeresses , looking your best . Give the black track-top to the Sallies , and getcha a good shirt / jacket / tie . We are a team , an extended ” family ” . Represent us with pride and dignity . Shag it , at 6 foot 5 you’re too fecking big to be a quivering shrinking violet !!! Stand tall , and be professional .
December 11th, 2009 at 7:45 pm
And then along came a Wally and ruined the party…”creates deductions and rorts for people to put yet more money into the untaxed sector”…exactly what the politicians set out to do!…it is a system that they benefit from both by being in on the rorts and in being supported in their Party by others who are creaming the capital gains because of the system…those who expect all this rorting to be swept away by Key are in for a bloody shock…he is happy with the ’system’…all you will get is bluster and humbug dressed up as change and progress. Anyone out there think Key and English and the rest of this poxy govt were not fully aware of how the system worked over a year ago…of course they bloodywell knew…so why has a year gone by with no effort to stop it….the answer is obvious.
December 11th, 2009 at 9:13 pm
Hi Roger, I believe the poor sound quality is the compression that youtube uses to make the file smaller, as it does sound like the sound has been badly compressed. The microphone looks fine. Bernard looks like he is wearing NZ designed Icebreaker and he looks tidy, and I don’t have any issues with the causal look.
December 11th, 2009 at 10:07 pm
Of course Mark Weldon would be all for a land tax.
December 11th, 2009 at 10:33 pm
We are all being distraced!!!!! We have massive natural oil resourses!!! Why dont we create a gov oil company
Funded though tax free gov bonds (open to every NZ citizen to show how you can make money through areas other than property.) If it costs 10bil to drill according to them there is 60 bil worth of oil. Not to mention jobs. All profits go to debt of NZ. Weldon to run it. Or some other very on to it CEO
December 11th, 2009 at 10:54 pm
Correct me if I am wrong.. but isn’t tax loss on depreciation.. payable back when the property is sold?
So you have a 500k house.. you may claim 10k in depreciation a year.. getting back 3k in tax..
But when you sell the house.. if you sell house for same or more.. then any depreciation claimed is payable back.. so you have to say you had a 10k income on sale.. and end up paying 3k in tax back..
issue is.. how many people really do this law correctly? or maybe they don’t sell the house.. and continuously claim tax back until death…
December 11th, 2009 at 11:47 pm
What Weldon is saying is pretty obvious when you think about it. We have some big black holes in our tax system, and a lot of rorts and…not surprisingly… they happen in the same place. A lot like Hanover – not a matter of finance companies being per se bad, but we need to clean up the hole they live in. Same in tax. What I get from this is that there are some pretty big holes to clean up. Lets hope Key and English have a chat about this over Xmas and make a few decisions!
December 12th, 2009 at 12:15 am
Bernard maybe you could ask him something outside the Monetarist Finger Puppet (Muppet) mantra, such as, does he believe the listed company markets can be distorted by the private central bankers – Primary Bond Dealers, Underwriters, Market Makers, Lead Manager’s – which ever of the names they are given, when they are allowed to take positions in IPO’S with their electronically created credit to provide liquidity to the market, as wrong as that is, it is even worse when they don’t even then bother with what pittance of boundaries they are supposed to operate within, but why would you when the only punishment you get is a threat that the Securities Commission will publish your name, especially when you are already operating under a Securities Commission exemption allowing you to operate under another name to that of your mother entity.
24 . Consequently, the Commission is of the view that the statement by ABN AMRO Capital that the Foundation Shareholders would retain their substantial shareholding for at least 12 months was misleading in the form and context in which it was included.
25 . Freightways Limited gave evidence that its Board had at the time of the IPO made inquiries and had been satisfied that the Foundation Shareholders would retain their shareholding for not less than 12 months. The Commission accepts that the directors of Freightways who were independent of the selling shareholder, ABN AMRO Capital and the Joint Lead Managers had made inquiries and satisfied themselves that the statement in ABN AMRO Capital’s letter that it would remain a shareholder for not less than twelve months was accurate. The Commission is also satisfied that neither Freightways Limited nor the directors who were not associated with ABN AMRO Capital played any part in the sell-down and were not aware of the sell-down until the afternoon of the day on which the shares were sold.
26 . The Commission notes the performance of Freightways shares since listing, and that subscribers to the IPO have not suffered a loss on their initial investment. This means that civil liability for loss resulting from any reliance on a misleading statement is unlikely to be incurred in the present case. The Commission considers that while the subsequent performance of the share price may have protected shareholders from a loss in this case, this does not lessen or remove the obligation on issuers and their directors not to mislead at the time of the offer of the securities.
27 . The Commission is publishing this report to highlight the potential serious consequences of misleading statements in offer documents in all circumstances.
The Commission promotes the integrity of New Zealand’s capital markets. The Commission considers that the matters described in this report do not reflect well on practice in New Zealand capital markets.
http://www.seccom.govt.nz/publications/documents/freightways/01.shtml#background
What? come on folks, you still doubt I ever say anything I cant back with credible evidence from the horses mouth, this re Sec Com name exemptions given to Primary Bond Dealers(central bankers), wouldn’t want the Sheoples of NZ thinking we had any of those well known financial nasties operating down under:
Gazetted on 26 August 2004
Expires on 31 August 2009
Effects of the exemption
Investment statements for debt securities originally allotted by the Crown and onsold to the public will contain information about the Crown as the issuer of the securities, but will not be required to contain information about the wholesale investors offering the securities.
http://www.seccom.govt.nz/exemptions/summaries/2004/sr04-264.shtml
While your at Sec Com site, go to exemptions-exemption notices-exemption summaries and chech out the years of exemptions given to corporate raiders that circumvent our Securities Act.
December 12th, 2009 at 6:36 am
SORE LOSER: Good on you, my thoughts exactly!!
December 12th, 2009 at 6:51 am
Brian Gaynor in the herald today: housing vs shares
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10614936
December 12th, 2009 at 7:26 am
Oh what a great vote winner for Dunne…income splitting…he’s not going to let a good benefit vote catcher slip past him is he!…let’s look at the negative side…it will cost us $450million if the sprog age limit is 18 but only $230 million if it’s 6 years…somebody please tell me how often the income splitting parents would need to produce a sprog if they wished to hang on to their tax saving for as long a possible and let’s not count out adoption…always an option if Dunne gets his way. Oh and by the way…the rest of us will have to pick up Dunne’s missing hundreds of millions in tax revenue…..dumb idea Dunne….
December 12th, 2009 at 9:52 am
Wally..FANTASTIC.
Allied we stand…divided we fall.
Suffer little children to come unto me…YOUR new POP….(Sorry FATHER was taken).
Wally, I hope no one is reading this….but they do not understand the finer points of finance, so it will not matter….that POP and Treasurer scam is a fantastic idea.
For your eyes only….
Donations will be sorely taxed, so we will register POP as a CHARITY.
Will POP down to the nearest BANK for an idea on how we can RORT our donors as the cash comes in.
The Swiss have a great savings book account, will put yours and my names down Wally….. as TRUSTEES….(Need no experience…mate…seems to WORK in our favour).
I suggest using BOLLARDS as treasurer and HOTCHINS as financial adviser. But they will need a pay rise.
I suggest we include as main CHARITY recipients all previous POLITICIANS as they may have to live on barely one or two or three or four or five or fourty million only in retirement.
Must be hard without all those expenses….so a worthwhile BENEFICIARY.
In fact ALL of New ZEALAND is one big CHARITY…and we TAXPAYERS all give to it generously and DAILY, so POP will be competing against ourselves…..sorry…them selves…so they will not even notice.
Will set up a head office in BERMUDA…what sort of chair do you want….or do you want a THRONE.
I think it was always my DESTINY to follow the cloth….so I am going to ordain myself and a few others….
The cloth will be spun gold, so start eating those gummy bears of RODGERS……we will have a great weight to bear.. (get it)…….especially as tithes will be
my/our …(no MY..I am sorry there will only be one head of STATE)… next great financial challenge to bear FRUIT.
POP your replies on a 100$ note and the one percent will go towards the POLLIES BEARish retirement fund….which RODGER can EAT into as fund treasurer.
Bernard can be HIGH PRIEST…and security…(Have you seen the size of the GUY….)
He likes a good dressing down, I hear….You will get on famously.
Will have to get him a robe…too. Cannot have the PARTY POOPERS, thinking we are not worthy.
I suggest a black shirt for informal though. I think it has been done before. mosely in the UK, but a precedent has been set here.
I wonder if he can fly a JET….We have a need for a small Gold coloured commuter ….and a much larger Super Duper jobbie to carry the GOLD tithes to a safer haven.
I understand we have found OIL too….so that we can exchange for some arms.
I want to unite all the followers under one flag, so we will invite all the gangs to the first meeting we arrange. A precedent has been set already, but they may need some more cash for the junket.
We cannot afford to ignore their man-date. They have the best interests of the workers at heart. A magnum or two and an AK47 each , will set the tone we want.
We cannot fail…..We must not fail……New Zealand deserves us…. it is our DESTINY to serve them as others have done before.
No pillaging on the first meeting though, just hymns and a few hers.
PS….Hell-en must come back……we must not have an all male CHOIR.
That would be sexist.
May the POP be with you……ALL.
I am here to serve.
December 12th, 2009 at 9:55 am
Ps…if we could figure out what the E could stand for…..POPE sounds a lot more SOOTHING…..I suppose it could be for EXTASY.
December 12th, 2009 at 10:40 am
28_yr_old – There are some interesting figures in that Gaynor piece.
So much for people touting the superiority of the private sector.
One of the NZX’s, and New Zealand’s problems, is that our large companies tend to “crash and burn” because of “poor governance” and “poorly executed” growth strategies.
For example, the largest listed companies at the end of 1994 were Telecom, Carter Holt Harvey, Fletcher Challenge, Brierley Investments, Goodman Fielder and Lion Nathan.
Telecom is the only one of these remaining in its same form and its sharemarket value is now only $4.5 billion compared with $9.6 billion 15 years ago.
Only nine of the top 40 listed companies 15 years ago are still listed in the same form today.
More here: http://tinyurl.com/yeypwst
December 12th, 2009 at 10:56 am
Hello
Tax an more Tax,hello we are already taxed heaps now.Property an fixing up older houses is the NZ way off trying toget ahead in NZ.
We are the back bone,we create work for so many people.
More tax will only create a bigger black market.GST increases would be the way togo as everybody would be caught in the net.
NZ has to wake up as China is knocking on the door,do you think they will support the huge welfare system.State houses for life,unhealthy people,prisons an hospitals.
Can you imagine them going through the books,Hey guys are you spending more than you earn.As your bank manager we are calling it in ASAP.
Nobody seems to be listening,wake up NZ
December 12th, 2009 at 11:07 am
Good interview. Weldon is right. the tax system needs to be sorted out. Property investment has become the cornerstone of tax avoidance in Aotearoa. The government can’t keep taxing the workers & corporations to death and allowing canny property investors to accumulate wealth. If they do, skilled workers will resume emigrating as soon as possible & more corporations will move offshore to where they will have to pay less tax.
December 12th, 2009 at 11:08 am
Wally,
pps…That guy Burton has the ACC portfolio. We need an inside man. The others will not have a leg to stand on, by the time we are finished .
The Land of MILK em and Hone-y.
That reminds me we need someone to act as the diplomatic Go-between.
A man for all seasons and all serving. A man of the people, a man to be re-con-ed with,
A man with no agenda, a man with no shame. A key figure.
We also need a GREEN person. That guy with the BULK milk em plan for the South, now he is the man…that springs to immediately to mind.
Why milk cows, when there are bigger fish to fry and porcine troughs to exploit.
Talking of sea-beds…..what gives….can we renege and expand our waters to include Australia….That Rudd has a bigger Copenhagen crew than us. The cheek, we will have to catch up with him.
Mobilise the troop Wally…
You are also hereby nominated as Space Invader in-Chief.
I hope the troop is up for it. Where is the plane today. FIJI….?….
Talking of FIJI….There may be a barney there soon….employ more troops Wally.
Your MAN-DATE… Take back our Sovereign right…we bought em …and want to take POSSESSION.
And re-fuel the jet. I feel a JUNKET coming on…FIJI is nice at CHRISTMAS.
Next winter we need to go elsewhere…with a spark of life.
How hot is Aussie….get the boat out……I suppose it is still ……RUDD-ERLESS.
We should invade now….while they are all in COPENHAGEN….
GO WALLY….
PPPPS…I could keep this crap up all day.
Have to go Christmas shopping for a few baubles of OFFICE.
December 12th, 2009 at 12:57 pm
Why don’t we tax holding shares instead, 2% of the value of any shares you hold every year. How does that sounds Mark Weldon? It would be a great revenue earner for the government.
December 12th, 2009 at 1:08 pm
matt,
heard of the Fair Dividend Rate? (FDR).
December 12th, 2009 at 1:21 pm
I don’t understand what he means when he said Hanover has opted out of regulation?
December 12th, 2009 at 3:24 pm
This country is becoming more communist than China imposing new taxes like a land tax. Mr. Welding should try to improve his own investments more, and make New Zealand shares better. Look at international tables over the the past decade, 2 decades, 3 decades etc and you will see huge underperformance of the NZ sharemarket compared with most other countries and New Zealand’s trading partners.
Government’s should not distaught investment decisions too much in Capitalist countries. Taxing capital is just wrong.
I am sorry if I have mispelled anything. English is my 5th language and I try to make good.
December 12th, 2009 at 4:27 pm
Matt, shares are taxed. Overseas shares are taxed at 5%. The idea Weldon seems to be saying is that should tax all things the same – shares and property and bonds, etc. The issue is that right now property is essentially untaxed while shares and other assets are taxed. This is the issue for NZ – the property sector is huge, does not drive productivity, and is untaxed. If we want productivity to go up, then money has to go more equally to all assets – including to companies (via shares). It is pretty simple really.
December 12th, 2009 at 4:28 pm
The other thing is…Helen Clark owned 5 or 6 rental properties – so pretty obvious why labour was never going to look at the rorts in the rental property sector.
December 12th, 2009 at 4:30 pm
For those advocating a land tax tell me how this will capture those that rent, approximately 35% of the population?
There is already an enormous inequality in housing taxation in the form of rates. Rates are levied and paid by the property owner (on housing, not commercial property).
where housing is rented the rates are paid by the property owner and despite all your ill informed ideas cannot legally be charged to the tenant,full stop. By legal definition no tenant is charged rates i.e. taxation for the provision of council services etc. Any payment made to a landlord is totally for the rental of the house and its environs.
If you want to add a land tax on top then you should also argue for a poll tax so that every citizen pays a fair contribution towards those civic amenities.
That would make living in a community fairer and because all those that get to vote in local body elections would then be caught in the rate net we might see some fiscal restraint from local bodies.
The issue of a land tax is a red herring anyway as is CGT.
The central issue is the amount of tax that is collected and that is an open ended boil on the nations arse.
We have an open ended uncontrolled Govt. policy that allows Govt. to spend what it likes on anything it likes with no restraints and like any addict that’s exactly what it does. Govt. is addicted to spending and worse many of the recipients of that speding largess are totally addicted to receiving that largess.
We need a Govt. that stands up and legislates for a maximum level of spending based on GDP and legislates that that and any other Govt. must live within that level of collection, no borrowing to overspend.
Hong Kong has it and so should we. They are limited to collecting no more than 25% of gdp. We currently need to collect some 37% plus various other forced taxes such as ACC. If you want to compare property prices have a look at theirs, makes ours looka tad cheap.
Who is the winner? Not NZ.
December 12th, 2009 at 4:40 pm
No doubt some uninformed will want to argue the case over the right of landlords to recover rates so they can read thier way through this small section of the RTA.
http://www.legislation.govt.nz/act/public/1986/0120/latest/DLM95084.html#DLM95084
Act by section
* Contents
* › Part 2 Tenancy agreements
39 Outgoings
*
(1) Subject to subsection (2) of this section, all outgoings (including rates, insurance premiums, and water charges) from time to time payable in respect of the premises shall, as between the landlord and the tenant, be payable by the landlord.
(2) Subject to subsection (3) of this section, the following outgoings incurred during the tenancy shall, as between the landlord and the tenant, be payable by the tenant:
o
(a) All charges for electricity or gas supplied to the premises:
o
(b) Water charges in respect of the premises (including the cost of charges for standard meter readings) if—
+
(i) The premises have a separate water meter; and
+
(ii) The tenancy agreement stated, at the commencement of the tenancy, that the tenant shall pay for any metered water provided to the premises; and
+
(iii) The water supplier charges for water provided to the premises on the basis of metered usage:
o
(c) All charges in respect of any telephone connected to the premises.
(3) Subsection (2) of this section does not apply in respect of any outgoing which the parties have agreed in writing (whether in the tenancy agreement or otherwise) shall, as between the landlord and the tenant, be payable by the landlord.
(4) In this section standard meter readings means all meter readings other than meter readings requested by the landlord.
(5) In this section premises includes facilities that are exclusively for the use of the tenant.
Section 39 was substituted, as from 1 December 1996, by section 17(1) Residential Tenancies Amendment Act 1996 (1996 No 7). See section 17(2) and (3) of that Act as to tenancies that commenced before 1 December 1996.
December 12th, 2009 at 4:41 pm
@Bert Chan – “Taxing capital is just wrong.”… Absolutely!
December 12th, 2009 at 4:55 pm
Yeah Gibber..that FDR Cullen snuck in before we booted him out is a bummer. Can’t complain too much though…it’s only on the first 5% gain and I’m up 150% since March.
December 12th, 2009 at 5:32 pm
Robert, if you have a look at Miranda’s post you’ll see that some of us just want all investment more sevenly taxed across the board. This, may be fairer in some peoples minds.
Property is commonly a highly leveraged investment and yet it is not being taxed the same as shares, even though there is more risk involved. This tax distortion favours property, and not the sharemarket – and yet the sharemarket requires more work.
You simply can’t put your rent up too high or you will not find a tenant. There are now so many rentals around, you can pick and choose (yay for me). Pretty obvious that there are too many landlords and that the housing market is speculative.
I’d agree with your view that Rates are already a means of detering house buyers, but they’re needed to fund the local councils. If you are well off enough to own a property investment then you should pay for the property’s contribution to the community. It’s just plain mean to pass on all costs to tenants – who do not have the money to buy a house (or choose to rent). Remembering, that a tenant should respect a landlord for providng a roof over their head when they cannot afford to etc.
I agree with what Mr Weldon has said, as the tax will not be on all land as a ‘land tax’, but a tax bearing on the risk free return method (if only I could remember what that meant – but it’s finance 101).
However, I do agree that there needs to be some caps on taxation, but there has been a lot of talk about a more flat tax structure being suggested for next year – whether they follow through with it…. I think a lot of people here are bating National and calling them softies in hope that they will follow through with some hard changes. But no one likes change. While we would like some restrictions on any ‘rampant’ government, I’m not sure what we will do if we get into strife? We have to borrow in the short term. But it is the mistakes of government that have caused the overspending (rather than saving) – as it is unlikely that many governments want to harm their own country.
I think HK is a different market.
ACC shortfall was the last governments present to the new one.
I do wonder whether this property investment tax will work though. However, it doesn’t hurt to try. What I think would be important is to follow the effect of this on the market and install step 2 and 3 if it’s not enough.
I still think that 1st home buyers need to save more so we are not so heavily reliant on the 4 pillars sucking NZ dry (and not that slowly). It’s nice to say to people that want to buy their first house that they can now buy with 95% borrowings, but it’s just not doing anyone any good. Banks are not all bad (I might get ridiculed for saying that), but more responsibility? They have proven themselves not responsible worldwide. People need to be told what to do sometimes, as much as I hate to limit our freedoms in this world. Too much freedom causes distortion in this world (I’ll get ridiculed again). Boundaries need to be put up so people that push hard can be pushed back. And that’s why binding referendums are not good – because the people want all their freedoms and don’t know what they cost.
December 12th, 2009 at 5:44 pm
Wally.. 150 is pretty good. At least you’re in with guts. Care to share? Are you gonna cut and run? Or do you think 2010 will continue getting up?
December 12th, 2009 at 6:00 pm
Wally,
i don’t mind paying tax when I have a dividend. So long as I am taxed on the real dividend I receive and not a make believe dividend as per the FDR.
I don’t mind paying tax when I have made a capital gain and sold, especially if I am acting as a share market trader.
What I do mind is tax on fictitious dividend income as per the FDR. It acts as a disincentive to invest in shares in sharemarkets other than the NZ sharemarket. This is balanced by the disincentive to invest in the NZ sharemarket because of the perception it is run by cowboys for cowboys. Net result. Even less incentive to invest in shares in any shape or form.
I won’t vote Labour as a result of that piece of stupidity.
December 12th, 2009 at 8:39 pm
Seems hell-en will not be able to join the POP culture choir. She has an agenda of her own to take the top UN jobbie…..You can BANKIE on that being another jobs for the boys as she dispenses those E-mission Control Funds around the globe to the waiting recipients.
Fancy the idea of taxing the emerging Nations more than the Americans.
POP would never have thought of that. Wally where did our thinking go awry.
Diabolically clever to tax those without a prayer and running water and let the FAT CAT Americans of the hook for wasting 25% of the worlds energy.
Pity OBAMA was not able to stay so long at Copenhagen, only had a day to waste, cos he had to get back and deposit the cheque and return to the fray.
War is HELL, but quite well paid, it seems. One month in as president and already a millionaire.
Must be looking to put that dividend to good use. What was that companies name. LOCKHEED…..or some thing. Plane silly if you ask me.
Wonder if the deal to buy our mothballed planes will be ratified… Probably why it was KEY to go to Copenhagen so urgently.
Still Obama has a long way to go. Millionaires are two a penny in American and New Zealand politics.
POP may never get off the Ground….. Wally. There was never a hope really.
We should have thought BIG and invited Russel Wat-no-son to bank-ROLL the process.
Our BANKS have not been totally ROLLED yet.
Allied to that we never stood a chance at Handover tactics. Seems that has been a Leeson for us all. Rort a good bank…..and leave the punters poor.
Honk-CONK….the gateway to China. A Leeson to us all.
Money talks. Money Walks.
You cannot expect more from the Trust Worthy.
PLace your bets. And ROLL the dice.
WALLY, we gotta get some of that ACTION.
POP a few more comments. I have to go plan some more strategic THINKING.
And Len, do not get them yo WAKE-UP in New Zealand.
We will be POP-ING up our MANIFESTO soon.
Will be taking the VOTERS by stealth as they sleep.
Will try the old bait and switch….and leave em with more of the same. Nationalise and give em heaps…..
BILLS…that is…..
December 13th, 2009 at 9:12 am
The problem with Weldon commenting is that he is the one person in NZ with the most to gain. It is like Pepsi saying there should be a tax on coca cola to even the playing field.
If they wanted independent advice on a tax commission then you dont include the head of NZX on it.
December 13th, 2009 at 10:27 am
Matt,
that is typical of the small minded, tall poppy bashing crap that keeps this country fighting amongst itself and going nowhere. The govt wants productivity growth, and that means the productive sector has to grow. Simple. That means Weldon, or someone who understands in detail how the current tax system impacts capital allocation must be on there. Notice that Gareth Morgan in on the same lines. Also notice, under your stupid argument, nobody could be on a tax panel – b/c everyone pays (or should pay) tax and has an interest somewhere. In NZ, just get the best people on it, and do these guys the favor of evaluating their arguments, not just taking pot shots at them. Guys like you make me sick and tired of NZ
December 13th, 2009 at 10:44 am
a land tax is an excellent idea – primarily because it is easy to enforce and impssible to avoid AND encourages a use it or lose it mentality. Its the degree of tax which might come under fire. I woudl be promoting 5% plus. The consequent reduction in motgages after a ppty crash would see the additional interst payments effectively moved from paying a foreign bank to supporting NZ’s dwindling tax revenue and maybe even a reduction in personal tax. Its a no brainer, but then so was the end to slavery, its just that sme benefit from the status quo.
December 13th, 2009 at 11:00 am
5% – **** hell jimmy thats taking no prisoners…! Thats a revenue take of about $25 billion pa, assuming the Grimes/Motu numbers for land above 50,000 per hectare are accurate. You could basically set income tax to zero in that case (Currently income tax collects ~$27bn).
More reasonably 1.5% land tax + flat 25% income tax + Morgan’s $10,000 guranteed national income would be fiscally neutral and mean that the guaranteed national income would pay granny’s land tax for her.
December 13th, 2009 at 11:09 am
Yeah 100% agree with everything the man says.
A small country like NZ can easily become exploited by things such as land banking where developers buy up large lots of land to dry up supply for new building, and then drip feed them back into the market once price has inflated enough.
Most of the property bubble has come from increasing land prices, which have increased at stupid levels. Land banking in countries (NZ, Aus) that have highly prescriptive land regulations (i.e residential zoning effectively drip feeds land supply for whole city) leads to prices far removed from fundamentals and in NZ’s case an unbalanced unsustainable economy.
December 13th, 2009 at 11:15 am
The Risk Free Return Method is another key that needs to be implemented also to stop this exploitation of small markets through land banking. When people are no longer able to have their vacant rental sit there and claim back all the interest on mortgage off their tax, then they are motivated to rent it out or sell it to someone who actually wants to live there or rent it out themselves.
If you want to create a more productive country its important to listen to people who create wealth through ever increasing productivity (how any company grows). Thats why its important to listen to people like Mark Weldon, and not so much the people who have figured out some loop-hole or special way of making ‘easy money’ in things like NZ property
December 13th, 2009 at 12:35 pm
Gibber the FDR is a small theft to pay on capital gains. Bevan the prospects for 2010 are good but not without risk. What is!. The mine will be ripping out richer ore through 2010 and 2011..they are drilling the south end of the deposit and expect to increase the ore body..the Banho mine go ahead is a 99.99% certainty and gold is set to keep rising because the US$ MUST slide. Banho should add at least 10c to the price. They are also drilling a large 8sqkm prospect that could prove to be a second Pukham ore body..on top of that GRAM’s share ownership limitation agreement runs out and they may decide to go after the remaining 80% for full ownership..They operate next door to China and BHP manage all sales of all product. So Gibber, I don’t cut and run but I will remove capital as I need it.
December 13th, 2009 at 12:47 pm
…….” the US$ MUST slide ” ……….must ? Why ? And if it doesn’t , what then to the price of commodities , which have already run-up hard this year ? This is gambling , more than just investing . High risk stuff !
December 13th, 2009 at 1:18 pm
Oh yes Roger …please explain why the US$ has fallen so far in the last year!
December 13th, 2009 at 1:32 pm
I understand why it has fallen , to this juncture . But a braver man than me , Gunga Din , to guess for how much longer it will continue to fall . And if there is a ” carry-trade ” as some believe ( not me , as it happens ) , there could be a sudden spike up in the $US , as many try to cover their positions all at once .
Are you assuming that continued QE is gonna correlate with continued weakness in the $US ?
December 13th, 2009 at 2:32 pm
That’s great Roger….give us your understanding!
December 13th, 2009 at 2:36 pm
Well pardon me ! But you did ask . Take a running jump , pal , if that’s your attitude .
December 14th, 2009 at 9:22 am
“Gibber the FDR is a small theft to pay on capital gains. Bevan the prospects for 2010 are good but not without risk. What is!. The mine will be ripping out richer ore through 2010 and 2011..they are drilling the south end of the deposit and expect to increase the ore body..the Banho mine go ahead is a 99.99% certainty and gold is set to keep rising because the US$ MUST slide. Banho should add at least 10c to the price. They are also drilling a large 8sqkm prospect that could prove to be a second Pukham ore body..on top of that GRAM’s share ownership limitation agreement runs out and they may decide to go after the remaining 80% for full ownership..They operate next door to China and BHP manage all sales of all product. So Gibber, I don’t cut and run but I will remove capital as I need it.”
So what company is this you own shares in?
December 14th, 2009 at 9:29 am
It’s pna Ray…check out their site! Pan Aust on the asx. Banho and Banphon are not the full names of the ore bodies. You will figure it out.
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