By Alex Tarrant
Labour is trying to get back on the front foot over its tax ambitions, saying any tax changes resulting from its Working Group's recommendations won't be put in place until 1 April 2021, after the 2020 election.
The move comes after a series of attacks, including a "let's tax this" campaign ad from National, after Jacinda Ardern had said she was keeping the right and ability to introduce recommendations before 2020 if that was what Labour thought was required.
Meanwhile, Labour finance spokesman Grant Robertson acknowledged that a revenue-neutral set of proposals from the Group - if this was what it came up with - could see income tax rates cut if new tax bases were identified or other existing tax rates were raised.
He refused to be drawn on what extra changes to the tax system outside Labour's existing bright line test extension there could be to help 'fix the housing crisis', declining to comment on the possibility of a tax on vacant land.
Labour released a document bringing together all previous announcements on tax policy, while confirming a Tax Working Group next term will not be allowed to make recommendations on a capital gains or land tax on the family home/land, or an inheritance tax.
“We know it is important to get this right, so we will balance the need for certainty and urgency by ensuring that any potential changes will not come into effect until the 2021 tax year. This gives multiple opportunities for public input, and a general election before any new tax would come into effect," Grant Robertson said.
Legislation would likely be put in place before the 2020 election, although changes would not come into force until 1 April 2021, allowing the public to have their say by way of the election.
"To avoid any doubt, no one will be affected by any tax changes arising from the outcomes of the Working Group until 2021. There will be no new taxes or levies introduced in our first term of government beyond those we have already announced." (Read already-announced changes below.)
Read the policy document here. An announcement from Grant Robertson and Michael Wood is further below. Watch a media stand-up with Robertson in the video above. Read National finance spokesman Steven Joyce's response further below, and TOP leader Gareth Morgan's reaction.
In the media stand-up Thursday morning, Robertson made a number of comments. These included:
- A set of revenue-neutral proposals is possible, particuarly as the Group is being put to work on fairness across the tax system
- That this could mean income tax rates are cut if there is a corresponding new tax base found (or rise in other taxes)
- That the Group's terms of reference are to review “balance and fairness in our tax system, with a particular focus on making sure that we crack down on property speculation.”
- And that this had been the position since Ardern had become leader
- He would not be drawn on other potential tax system changes to address housing, other than extending the bright line test - when asked about whether he could see the Group recommending a land tax on vacant land
Change of priorities?
I asked Robertson whether the Group’s direction of travel had changed slightly – all the talk under Andrew Little was about fairness across income, assets and wealth. Now the main reason for setting the Group up appeared to be to ‘help fix the housing crisis’. Was there an actual change in stance?
“No, I think it’s a focus,” he replied. “That is where we believe the most important rebalancing of the tax system has to happen. There are loopholes in our tax system that encourage speculation on property. I think all New Zealanders understand that when they go to work every day, pay tax on every cent of income that they earn, that they want that fairness to be seen across the system.”
The terms of reference of the Working Group remained “balance and fairness in our tax system, with a particular focus on making sure that we crack down on property speculation.”
I put to him that the bit on ‘assets and wealth’ appeared to be gone – with the Group not allowed to consider the family home or an inheritance tax. “Nothing has changed in the way that we’ve been doing this since Jacinda became leader,” was the response.
Housing crisis
“We cannot sit around and let the housing crisis get worse and worse as Natinal have done over the last nine years. We’ll do the work, we will make sure New Zealanders see it, and if they don’t want it, then they won’t have to have it," Robertson said.
I put to him that Labour had already ruled out CGT on the family home and land tax on the family section, and that Labour had already announced the bright line test to five years. So what else was left that could be imposed with the express intention to tackle the housing crisis, from a tax system point of view? Tax on vacant land?
This was the job for the Working Group, he said. “We have put forward our policies this election…about a direction of travel towards rebalancing our tax system. The Working Group’s job is to see whether or not there is more that can be done in that area.”
I tried again: What else could be recommended other than tax on vacant land? He disagreed that's all that was left. “We’ve still got the issue of what happens with speculation more generally in the property market and we’ve got to make sure we do everything we can. We owe it to New Zealanders to make sure they can get in, buy their first home, make sure that our housing market is not part of a speculators dream. We have to do something about it," he said.
Wouldn’t that be tackled by extending the bright line test? “The bright line test only goes out to five years. The question for the Working Group is, is that enough?”
Capital Gains Tax & wealth
Robertson was also questioned on whether a capital gains tax would apply to other forms of capital than housing. “We’ve ruled out capital gains tax on the family home, we’ve ruled out a land tax on family land under the family home. We want the Working Group to be able to find a way of rebalancing the system,” he said.
In 2011 and 2014 Labour was talking about collectables and other elements of wealth. Will the Working Group be looking at those as well?
“What we are signalling is, the Labour Party’s policy is that our focus is on fixing the housing crisis. That is our focus. The Working Group have been given the mandate to get a fairer and better balanced tax system. We will then look at the recommendations. A future Cabinet may or may not take up all of those recommendations, as has been the case in previous terms," Robertson said.
The Group’s ambit was to get a “fairer and better-balanced tax system with a particular focus on moving ourselves away from property speculation.”
Revenue-neutrality
I asked Robertson, of all the recommendations Labour might legislate for, would he expect them to be revenue-neutral?
“That will be one of the things that I think the Group will certainly be looking at,” he said. “It’s quite clear that if we are rebalancing the tax system, a revenue-neutral outcome is one of the outcomes that is quite likely. But, we want to give the Working Group the ability to come back to us, and come back with what they believe is best for New Zealand. But, revenue-neutral outcomes could indeed be one of them.”
So we could see a reduction in income taxes if new tax bases were recommended?
“That is indeed one of the possible options. If we are looking at a rebalancing of the tax system, it may well be a revenue-neutral outcome. That is one of the things the Working Group will be able to come forward with.”
Progressive, fair tax system
Robertson had earlier opened the press conference saying Labour was committed to a progressive tax system where everyone pays their fair share. Labour had committed to not increasing personal income taxes, corporate taxes or GST. National’s tax cuts would be reversed to fund spending promises for health, education and housing.
He called out the National Party for spinning lies about Labour’s tax policy, particularly on income tax. “New Zealanders will not be paying more in personal income taxes in the future under a Labour government than they are today.”
Robertson also said the major focus of Labour’s tax plan was to crack down on speculators “who are exploiting loopholes in our tax system. In particular, that means cracking down on negative gearing, and also extending out the bright line test that the National Party brought in, that effectively taxes the capital gain on a property that is not your family home that is being sold.”
He touched upon Labour’s plans to crack down further on multinational tax avoidance, and Labour's policy included the proposal to get rid of secondary tax.
But it was the comments on Labour’s planned Tax Working Group that were the most awaited. Robertson said the party was still committed to setting the Group up to look at delivering “a fairer tax system and a better balance in our economy between speculation and productivity.”
'We've listened to New Zealanders on this'
The Working Group’s work was “urgent and important,” he said. “That’s why we need to get it underway. But we also need to balance that urgency with the certainty that New Zealanders need from their tax system.”
While a Labour government would undertake the review and take chosen recommendations through the legislative process before the 2020 election, no outcomes would come into force until 1 April 2021, he said. This would give New Zealanders certainty over Labour’s plans, he said. This was also the position National was in this election with its tax package.
Put to him that this was an admission that Labour had taken a political hit from National’s campaigning, Robertson said: “What we’ve done is, we’ve listened to New Zealanders who want to be involved in this process.” The timeline for the Working Group provided for numerous opportunities for engagement, he said.
On legislating for any changes before 2020, but allowing for an election before the changes actually come into effect in 2021, I put to Robertson that the latest position was a compromise between the previous stance under Andrew Little, and Jacinda Ardern’s more recent stance of maintaining the ability to impose recommendations before 2020.
“It is Jacinda Ardern’s stance. She is seized of the view that we have to urgently address our housing crisis and that our tax system plays a big part in fuelling that crisis. We will have done the work, we will have passed the legislation, but nobody will be paying any tax as a result of the Working Group’s outcomes until 1 April 2021," he said.
Why did Labour wait so long to make the decision? “We have listened to New Zealanders. New Zealanders want to be involved in this process. It’s quite clear that when it comes to taxation, we need to provide both certainty, but also that sense of urgency.”
He later said it had become clear through the election campaign that Labour realised it needed to balance its sense of urgency with the desire of New Zealanders to have a say on the process and recommendations.
Already announced:
Labour in the policy document drew together what it had already announced, including on negative gearing and secondary tax:
- Reverse National's proposed tax cuts and re-invest that money in a fairer package of support for families and in core public services such as health, education, housing and police
- Crack down on housing speculation by extending the bright line test to five years. This taxes the sale of properties other than the family home
- Create a level playing field for families to buy their first home by removing a tax loophole that speculators use to avoid paying tax – as recommended by both the IMF and the Reserve Bank
- Set up a Tax Working Group, to ensure that there is a better and fairer balance between the taxation of income and assets, in particular the capital gain associated with property speculation. The outcomes of this Working Group – if any – will not take effect until the 2021 tax year
- Introduce tax incentives to encourage research and development
- Eliminate Secondary Tax as part of IRD’s Business Transformation Programme
- Take strong action to ensure that multi-national companies pay their fair share of tax.
Read the announcement from Labour below:
Labour is committed to a tax system where everyone pays their fair share and where we start to address the imbalances that have fuelled the housing crisis, says Labour’s Finance spokesperson Grant Robertson and Labour’s Revenue spokesperson Michael Wood.
"Today Labour has released its full tax plan, bringing together a number of previous announcements and more detail on the Tax Working Group. Given the amount of misinformation being spread, it is important that we have all the information in one place.
"Labour will not make any changes to personal income tax, corporate tax rates or GST.
“What we will do is reverse National's proposed tax cuts and use the billions of dollars to make 70 per cent of families with children better off and invest more in health, education, housing and other public services.
"Our policy also cracks down on those who are exploiting weaknesses in the tax system by speculating in the housing market. Labour will end the practice of negative gearing, and extend the current bright line test that taxes the capital gain on the sale of a property other than the family home to five years.
"We are establishing the Tax Working Group to explore other options to make our tax system fairer, particularly in terms of the balance between taxing income from salaries and wages and property speculation.
"To be absolutely clear, under Labour the family home and the land around it will never be taxed. There will also be no inheritance tax.
"Labour will not shy away from the hard issues such as fixing the housing crisis and we are determined to do what is right, but we also know we must take New Zealanders with us as we do that.
“We have heard the call for New Zealanders’ voices to be heard. We will involve the public at every stage of the Working Group, as well as Cabinet and Parliament's consideration of any changes that arise from it.
“We know it is important to get this right, so we will balance the need for certainty and urgency by ensuring that any potential changes will not come into effect until the 2021 tax year. This gives multiple opportunities for public input, and a general election before any new tax would come into effect.
"To avoid any doubt, no one will be affected by any tax changes arising from the outcomes of the Working Group until 2021. There will be no new taxes or levies introduced in our first term of government beyond those we have already announced.
“Other highlights of Labour's plan include ensuring multinationals meet their tax obligations, a Research and Development Tax Credit and the fast tracked abolition of secondary tax as part of the Business Transformation Programme at IRD,” says Grant Robertson and Michael Wood.
Read Steven Joyce's response below:
The Labour Party has postponed two new taxes but has left five more in place that would slow down the New Zealand economy and restrict growth, National Party Finance spokesperson Steven Joyce says.
“They’ve postponed the introduction of two taxes but have reaffirmed their intention to impose a water tax, regional fuel tax, tourism tax, income tax increases, and bringing farming into the ETS,” Mr Joyce says.
“In particular, Labour keeps denying they are putting up income taxes but they have today confirmed again that would legislate to remove the tax threshold changes that occur on April 1. That means someone on the average wage would be $1060 a year worse off if Labour becomes the Government.
“They’ve begun the long march back but they’ve got a long way to go.
“This is about the fifth version of their tax policy in the last month. They are just too vague on a whole range of policies and it shows.
“It’s interesting that it was a “captain’s call” to allow for a capital gains tax but the captain was nowhere near the back down.
“We know that Labour desperately want to put a capital gains tax and an inheritance tax on farms, small businesses and the family bach. They have had it in their policy for two elections and they have only dropped it this time because they were rumbled by the public.
“The public simply can’t trust Labour on tax.
“The big puzzle that remains is why Labour wants to restructure the New Zealand economy.
“Even Labour agrees that by nearly all measures New Zealand’s economy is performing well. They need to explain why they are proposing such a major change in economic direction in tax policy, trade policy, industrial relations, spending and debt.
“Voters have a clear choice in this election. They can keep New Zealand moving forward with a strong National government or change direction and go backwards under Labour.”
TOP leader Gareth Morgan:
The Opportunities Party Leader Dr Gareth Morgan says today’s decision by the Labour Party to abandon any major reforms of the tax system until 2021, is a betrayal of those who have already cast their votes expecting any real change to the worsening statistics around social equality and the housing crisis.
“Scared by the latest poll results the old establishment party of the left has abandoned struggling New Zealanders by kicking any change to our broken tax system for touch until 2020,” says Dr Morgan, “This leaves TOP alone in having a fully costed plan for a Fair Tax system that will benefit 80% of all New Zealanders by giving workers a 30% income tax cut, and finally closing the tax loophole that lets the rich get richer, while condemning future generations to a miserable future as part of a divided treadmill economy.”
Gareth Morgan believes the abrupt U turn by Labour on tax is also a major betrayal of the tens of thousands who have already cast their votes in the 2017 election and may well now be regretting their decision to back a party which offers no alternative to the destructive tax policies being pursued by the current Government.
Today’s announcement makes it even more important that thinking voters make a choice for real change this election.
Care, Think, Vote for a fair tax system.
461 Comments
Hardly any investors negative gear these days, those benefits went out the window when LAQC structures were banned by National. There is so much misinformation out there.
Grant Robertson came to a Capital property investors meeting last month, of the 200+ strong crowd there a question was put to them to raise your hand up if you negative gear.
Not one person put their hand up much to the embarrassment of Grant Robertson.
It isn't a major deal but my focus will be more on achieving break even and there are 3 things I can do to achieve that 1) increase rent, 2) get better deal on mortgage, reduce other income expenses like management fees etc. if I was losing $100 a week previously I got $33 of my other income tax. Now I'll be tempted to attempt to claw some of it back.
It isn't a major deal but my focus will be more on achieving break even and there are 3 things I can do to achieve that 1) increase rent, 2) get better deal on mortgage, reduce other income expenses like management fees etc. if I was losing $100 a week previously I got $33 of my other income tax. Now I'll be tempted to attempt to claw some of it back.
Jacinda is bouncing back and still slippery in her replies, watch:
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=1…
Todd Barclay selling home for large profit before heading overseas! He's a clown...
https://www.stuff.co.nz/national/politics/96832790/todd-barclay-selling…
Interesting differences in the two recent taping scandals:
John Key says a journalist deliberately recorded him illegally, the police raided multiple media companies over it. Later John Key pays the journalist an undisclosed sum for defamation, and admits that the journalist did not record him intentionally.
Bill English admits to police on record that a National MP taped their co-worker, the MP refuses to talk with police, 450 txts from Bill to the victim are deleted, and the police shrug their shoulders.
And in each case, the taxpayer bears the cost...not sure how that gels with "standing on your own two feet" and "Capitalism!"
John Key uses taxpayer money to pay off his defamation: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11609307
And Bill English claims his communications were not done while wearing his ministerial hat so are irrelevant...yet National use taxpayer funds to silence Glenys Dickson. How can public money be used to make the issue go away yet communications around the issue are somehow still private.
When will their voters actually hold them to a consistent standard?
I am so thrilled to have lived though both religious and economic Prime Ministers who are honest as the day is long and can spend our money wisely as they go about earning their daily bread. in the National Interest.
We are so lucky to have been had by them by crikey.
I think hard Labour, may be a little hard to stomach after such largess on behalf of the simple taxpayer. and citizens and residents bought in from overseas.
Who works the system these days, not abuses it, unduly..for a simple roof over ones noggin, by their own Labour systematically. Only a National Supporter would think otherwise.,,to our detriment.
We may even return to the days, when hard graft is rewarded and each and every citizen may be thanked for coming and working in this many Party State of ours.
I know how stupid I was to have worked the way I did....I should have been Politically motivated, not cared about money earned via hard graft..
How hard can it be, when one is so simple....and one is not.
Agreed, here is the floundering bit from Mr know it all Twyford:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=119…
Why? ... does that upset you DGZ? ... I take it that that was a curious question, not a personal offence..
No hate, I just don't like to be taken for a ride and despise anyone insulting my ( and other NZer's) intelligence .... so they have to be exposed if they are fooling the public !!
Because EcoBird owns investment properties and Labour wants to tax the land, extend the CGT to 5 years and abolish negative gearing which all means a lot more taxes to pay for a landlord and consequently dropping property values. I'm really surprised about your question DGZ, I thought you owned investment properties too ?
Yes I do own properties but not many. I asked the question coz I am just curious...nothing personal. The way I am looking at it is that all of the above are measures to prevent the housing market from crashing, which can be a disaster for everyone. I still haven't made up my mind which is the right party for the country. I just want to do the right thing.
Yes I do own properties but not many. I asked the question coz I am just curious...nothing personal. The way I am looking at it is that all of the above are measures to prevent the housing market from crashing, which can be a disaster for everyone. I still haven't made up my mind which is the right party for the country. I just want to do the right thing.
I think you're just trolling, but it's all good. Particularly on issues of economics, politics, and science, trolls are a window into society.
Now you really lost me DGZ, how will all the above measures "prevent" the housing market from Crashing? ... it will Actually inflate the housing ( rental) market in a form never seen since 1970 .... If some landlords sell, then this already tight rental market will shrink and rents will need to go higher -- No landlord will keep investing extra expenses of 15 -20% of the rent income every year in addition to the Land tax !! , how is that going to bring prices down? ... I hope you dont believe that that is True. Most renters are not capable to buy their rental homes anyway even at a discount...
Plus, Is it ok for a Government to intervene to Crash a certain class of business or investment in order to provide housing as they claim??
Everyone talks about empty HNZ houses and there are docos on that portrayed how the Gov is selling HNZ homes or simply closing them and putting people on the street !!
No one bothers asking if these houses are fit to be inhabited according to current H&S laws, or if they are P contaminated of just uneconomical to repair !!
If you are running a business, then don't let your Green heart get in the way ... it is not about how many you own either ...
Darklords are like 5 year olds in a sandpit that won't share their toys....I got here first and I'm not sharing...oh and you can't bring your new toys into the sandpit...and if you want to play in my sandpit give me your lunch...and you're not allowed to make the sandpit bigger...and if you change any of the rules I'm going to cry like a little girl...
Ok, I will try to explain this one more time to you and others who still believe in this urban myth :
there is a difference between " would Like" and " Can" and that mostly applies to the major cities where there are the most capable property buyers and renters ...
A tenant pays X amount per week - Today, this amount hardly covers 50 -60 % of the interest paid on the capital invested to make that rental available for them ... and would only represent less than 50% of the total running cost of that property .... so simply put, If that family is to buy that rental, they will need to pay twice ( or more) the rent amount per week just to cover its cost..... Why? because the days of 6 and 7% yield are gone as property prices have significantly increased.
Now even after assuming that the property was sold to them at a 20% discount of its current market value, then the new owner will still pay about 1.9 times the rent he used to pay for living there - Why, because almost 50% of the expenses are not related to selling price ( like rates, maint, and insurance) .... not mentioning any major repairs, replacements, and upgrades etc ....
How many renters would be able to afford that now?? .... if you don't have an answer to that because you probably live in your own home, then ask around some renting people you know if they can afford paying twice the rent to buy the house !!
SOme people Can, but the majority can't and won't buy them as they could buy a more modern new home at just about the same cost and "would Like" to upgrade !!
Food for thought ...?
Make the house prices drop so the house prices won't drop. Great logic. National / RBNZ have basically killed the capital gains. Best thing to do is restrict lending, keep interest rates low, improve incomes and affordability will improve. Helping first home buyers be screwing over first home buyers who bought recently doesn't seem to be particularly fair.
Make the house prices drop so the house prices won't drop. Great logic. National / RBNZ have basically killed the capital gains. Best thing to do is restrict lending, keep interest rates low, improve incomes and affordability will improve. Helping first home buyers be screwing over first home buyers who bought recently doesn't seem to be particularly fair.
Agree with the thrust of the comments above.
This has now turned into a disastrous campaign for Labour.
No party can get away with chopping and changing a key platform in its policy just 9 days out from an election.
Tangible and irrefutable evidence that Labour lacks the competence to govern.
Politics is a sucky game. You enter politics because you have a vision for the country and you want to better it. You come up with policies to achieve your convictions but then you have to backtrack because you realize the policies you want to put in place won't get you elected. It's not a dig at Labour, it applies equally to all parties
Agree - and you get the whole devolving of conversation into silly talking points, propaganda, half-truths, even outright falsehoods. It detracts from reasonable engagement.
Funnily enough yesterday, Eco Bird and I had a dangerously deep and civil conversation about the betterment of NZ society over time and the potential for intergenerational war...And of course, we have far more in common than differences. We both passionately want a better NZ in future.
But at least we are having some discourse. And it's not at American levels of silliness yet - albeit we typically lag a few years behind trends like that.
The Vice documentary A House Divided is really worth a watch for people from all sides of the spectrum. I found especially interesting famed Republican strategist Frank Luntz's comments on recent elections and how things have changed.
https://www.youtube.com/watch?v=pdVl3WvgJ50
http://variety.com/2016/tv/news/vice-shane-smith-documentary-obama-trum…
That's when you have to ask do our issues lie with the politicians or the people voting for them.....when the politicians have to back track on what they want to do because its unpopular - even though there might be significant long term benefit to exploring the idea.....
Agree Yvil. The issue is none of them have any real vision other than the economic growth dogma.
My post from another thread:
I am yet to see any political party outline a vision for where they want to lead our country to. An overall picture that we the people can align with. Without this, mere policy tinkering will never achieve the desired result if no one knows what we're aiming for.
Therein lies the problem. We the people have no united vision for what we want our country to look like, what conditions we want to live in. We are allowing ourselves to be led blindly instead of leading ourselves.
Without a vision of what we want OUR future to look like how can we possibly implement the best actions/policies that aid us in achieving it.
Another perspective on CGT and why it hasn't worked so well in Australia.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=119…
People are all focused on Jacinda's announcement today and have missed the bigger news: The Chinese Central Bank has today relaxed its measures introduced earlier to stop the flight of capital into western housing. Expect a new tidal wave of speculation buying from China that has the potential to cause an absolute catastrophe here. Unless of course we have a Government that is prepared to stop them (i.e. Labour). Bill English will do nothing so this has the potential to rocket the unaffordability index up from 10 to 14 which is what it is in Hong Kong. Then of course the bubble will burst as did the Chinese stock market which dropped 30% overnight. This would cause the biggest social catastrophe in our history.
Will we have to wait for the National caucus to consult with Jian Yang on the issue first?
National will not do anything to reduce the possibility of a Chinese buy up of Auckland. We have seen that already. Denial will be the order of the day, as it has been through the last nine years.
Young Kiwis from Auckland, say good bye to your chances of owning a home in Auckland.
Read that. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=119…
Had been wondering how John Key had sold his property to a buyer in China given the crackdown on capital controls. Maybe this explains why.
We don't know when settlement date is though. Nor do we know what position Chinese buyer may have to have first knowledge of change in policy.
Given all the media re China's crackdown on capital controls and limiting overseas purchases of property thought it strange that a buyer in China could bypass all this to purchase a $20M property in NZ.
I saw that and thought "oh sh..".
Then I thought, ya know what, let's let democracy work.
For the first time in the last 3 years of watching NZ turn to hell, I thought let's let National win.
Let's stoke the fire of demand and see where it all gets us, because obviously the majority of people don't want to heed the words of a few experts. Perhaps they need a bit of reality to anchor them a bit.
Like I said a few days ago, $1000 per year is nothing compared to what a collapse of the market will do with our current debt levels.
Has anyone actually looked at the detail?
https://www.bloomberg.com/news/articles/2017-09-08/pboc-is-said-to-remo…
At this stage it isn't really any easier for an individual to get money out.
That could happen in future, but you can't believe every property rev up you see in the NZ Herald.
Delboy1953. But Cindy is going to stop foreigners buying house .... by Christmas. Oh, sorry, being relentlessly naive we thought you could, you know, kind of flick a switch and it would happen. But apparently it's not that simple. Santa might not be delivering this little present after all.
I have over 300 different tenancies all over the country.
Be assured that if expenses go up, whether by increased costs or fewer deductions, there will be over 300 rent
increases within 6 months. Those who do not pay will be given their marching orders.
There will be no vacancies as demand is 10 times greater than the supply.
The end.
This boils down to the capitalism vs democracy issue again.....BigDaddy thinks that well he's the BigDaddy.....but at 300 vs 1 at some point the 300 are going to reaslise how badly screwed they're getting. And if I was a politician, and I backed my policy to support the tenants, well I like the 300 to 1 odds...it would be a landslide victory...
As Churchill stated the best argument against democracy is a 5 minute conversation with the average voter......I'm more or less convinced that the average kiwi is a financial idiot (sorry).....we haven't been burnt badly enough before with housing to realise that expensive real estate is a failure not a success....but we'll learn in time...every debt must eventually be paid....and you can only kick the can down the road so far...
I think TOP understand economics, but they don't understand people (irrational)...so no
No I didn't. I think democracy coupled to capitalism is going to result in continued boom bust cycles and left/ring swings in populatrity. Look at the last 20 years. Capitalism creates haves and have nots. Eventually the have nots outnumber the haves, get sick of status quo, kick the current government out, confidence falls, markets crash. Cycle resets and starts again. 2000, 2008/09 (now...or perhaps soon....)
And that's exactly the point....well spotted paashass...have you read any of Malcolm Gladwells books? Tipping Point is a good one where you see how people operate in herds and chop and change their views collectively...but there's a certain threshold that needs to be passed before change occurs. How is this relatable? Politicians are trying to win the vote of he many, but the many are all trying to out do one another (capitalism)....under capitalism a certain group will win under certain governing conditions, but that will generate a large number of losers...who still have a vote...and there will be a tipping at which they'll vote for change....next government will come in and set new rules that under capitalism will allow another group to have he competitive advantage..and win and generate the next round of winners and losers...and the system will keep flip-flopping along for decades...its not going to be very efficient because we're fighting against one another instead of working together towards a common goal....
And that's where you ask - what is Nationals vision for NZ? Collectively where are we headed? How do we work together for the greater good? At this point in time, I honestly have no idea where the country is headed, nor do I think BE does. He's just reading the polls, doing and saying whatever is popular in any given week or month - but that's been driven by the average NZ who has even less idea....so right now I'm absolutely certain that under the current government we have the blind actually leading the blind...it's seriously not ideal...
I think TOP came in too late with too much that was so radically different to what we think of as normal, that people haven't had time to really get their heads around what they are about. Then add on to that the surreal nature of this election and their message is well and truly lost in the noise.
If Morgan truly thinks he is on to something, he can work towards having his ideas accepted. I hope he does stick around, I wonder if he has the patience to, but we do have to start looking at alternatives to the status quo, as technology changes the world around us in a way we would not have dreamed of just a few short years ago.
What he is suggesting is not really that new - variations on it have been proposed (mostly overseas ) for ages and pretty much invariably failed to get traction .
I do not see how the technology changes in train currently really feed into his argument any more than the previous waves of technology changes ( some of which have pretty much turned the world economy upside down).
His ideas are mutton dressed as lamb ; they failed before and will fail again.
"I have over 300 different tenancies"
That specifically precludes renting by the room.
He just opened the conversation up with that statement and made it our business. To what ends, I dunno.
Anyway, the only case his costs would go up is if his properties were below the specified standard. So, read into that how you will.
I'm just saying if he expects us to believe that he has a portfolio of that size, I don't.
It is what businesses do when costs go up. Labour of course want to screw you over by destroying the value of your portfolio forcing you to sell so first home buyers can have a 'fair' go. They will take down the first home buyers that busted their guts to buy a home as a result. There is a myth that all investors are rich and out to screw over tenants. My investment property isn't making me any money at the moment. Making money off it isn't my primary motive. I want to keep it and not have it cost me too much. It seems it is ok for supermarkets to make money. It is ok for water companies to make money but as soon as you make money on a property you are evil. Food and water are more important than accomodation. I'm not saying accomodation isn't important but I bet there isn't a homeless person that hasn't eaten for 10 years.
Why not increase rent anyway? Do you have a set moral amount of profit you feel entitled to, or you a real capitalist who will put the rent as high as the market will bear. I would suggest at 300 properties you already have rents as high as the market will bear.
As an aside, increasing the accommodation supplement like National is planning will definitely give a signal to landlords that they can increase rents, as the market will be able to pay more.
In the video interview, G Robertson says at 1 min 06 sec "New Zealanders will not pay more taxes under a Labour government than under National" This is not true. because Labour will reverse the tax threshold put in place by National, the average Kiwi will be just over $1'000 worse off per annum
In the video interview, G Robertson says at 1 min 06 sec "New Zealanders will not pay more taxes under a Labour government than under National" This is not true. because Labour will reverse the tax threshold put in place by National, the average Kiwi will be just over $1'000 worse off per annum
This article provides a snapshot of how various families would be impacted by the major parties;
https://www.stuff.co.nz/national/politics/96830228/how-national-and-lab…
Simon. But if those capital gains are from income earning assets, they will be paying tax on the income derived from the gain portion. You seem to be proposing a second tax on the capital gain itself, be applied. If so all enterprise assets would need to be thus levied. If Googles assets in NZ appreciate then send the taxman over to silicon valley to extract a cheque from them. Oughta be a pretty simple exercise !
You see what happens when all you have to offer is TAX AND SPEND , middle New Zealand is simply horrified that any Political Party would have had the audacity to campaign for an open ended cheque-book , and not even suggesting how they would pay for it .
We mistrust politicians way too much for that
If labour really wants to help renters and FHBs and cut off " Speculators" as they claim, then extending the brightline to 5 is a GOOD thing ...
However, on the other hand they will be doing damage to the same people if they abolish Neg Gearing or lose fencing - this is not about chasing stray tax that is escaping the IRD, this is stupidity and ill planning when the talk about renters having a home and improved accommodation etc ... you just wont achieve that by pulling punches with landlords ...
just common sense !!
If landlords sell then renters can buy, the house does not cease to exist.
If landlords could charge more rent then they would now, not wait for their income tax offset to be removed.
The myth of negative gearing removal causing rent increases in Australia has been debunked numerous times.
Rick. You'd either need to remove negative gearing for all enterprise (fraught, impractical proposition) or target just housing. Problem is housing provider organisations who use negative gearing as a legitimate strategy during their establishment period, just like any other business. You'd then need to establish a legitimacy test to separate the tax rorters from the genuine providers and it starts to look awfully complicated.
I don't think we've thought through the ramifications of putting ever higher barriers up to people wanting to 'have a go' at rental property, to the point it's no longer worth the hassle.
I see too many disturbing images of shop workers/owners being assaulted, robbed and even killed. How many of these robbers are doing so because of high rents? Is it yet another example of innocents paying for the greed of others? Is there a lesson for the Indian community? Voting National is bad for your people!
So not mental health issues caused by living in a horrible neo liberal society then?
Is this not a possibility in some circumstances BoatMan?
Oh I forgot who I was talking to. It's the "peoples situations is all their own doing" guy. The individual severely lacking in empathy and morals.
Or maybe you're just a bit dumb?
...Does you transcript look much like Stephen Joyce's, then?
Why does the USA allow a write of of mortgage interest payments, Boatman?
Have a look into that one. I'll give you a hint - It's definitely not because it is a good policy.
Put your post grad economics brain to work and think why writing of mortgage interest payments is about the most terrible tax break around and why it would unleash havoc on NZ.
@ nymad you are crazy as well as clueless .
So are you saying The Netherlands, Switzerland, United States, Belgium, Denmark, Ireland and Sweden, which all allow mortgage interest or a part of mortgage interest as a tax deduction , are wrong ?
To use your words " a most terrible tax break "
Did this unleash havoc in those countries ?
The last time I checked , all the above countries were stable democracies with exceptionally high living standards ,and the highest home -ownership levels.
Denmark had the most content and satisfied population in the world ( and its a flat featureless boring place and has terrible weather )
Boatman.
I'm the one who is clueless?
You are arguing that an effective subsidisation to the real estate industry (inelastic in Auckland's case) is exactly what we need to increase property affordability.
That is clueless.
Deducting interest payments from tax does one thing and that is to incentivise the increase debt in order to speculate on housing.
Plus, you seemed to hate TOP's notion that a house returns an imputed income. The only way this tax break would make sense is if you recognized that.
@nymad , you are simply wrong........... here's why .
Right now , property investors DO get a tax break on interest payments , while homeowners DO NOT , they get nothing .
If you gave homeowners in their own homes the same tax break on interest payments as we give to investors and speculators , it would neutralize much of the the tax benefits and financial advantage that PI and speculators enjoy .
It would go some way to leveling the playing field for all players in the market .
I have advocated this before , and people thought I was insane , but is works elsewhere in the OECD
Boatman,
Tax break = subsidy = increase in ability to pay.
In an inelastic supply situation, that just raises prices. Due to the fact that we leverage debt to buy homes, this means that there is a greater than unity increase in price. Therefore value to income ratios (affordability measure) will increase.
That's econ 101.
Like I said, if you are advocating this type of tax break you must agree that there is some sort of imputed income from housing. Thus I never again want to hear you bemoan the TOP tax policy regarding such things.
"Which OECD countries get a tax break on interest payments for their principle place of residence?"
- USA , Netherlands etc. - we have covered that on another thread ( you asked a question there ) ; if you want to be taken seriously arguing about tax at least do you home work. It is not really hard for anyone with half a brain.
@ fluid36 , YES that is the list of countries who either allow a full or partial tax deduction of interest payments on your principal place of residence ( your home ) and allow it offset against your income tax
And it works , proven by the fact they ALL have very high levels of home ownership .
I am sure if you google "countries allowing tax deductions on your home " you will get some details .
Yes but do they allow it in conjunction with negative gearing or as an alternative?
That is the answer that is key here and I think you will find it's generally as an alternative.
Hence higher home ownership due to lower levels of negatively geared investors.
They also have limitations on foreign ownership.
Absurd political expediency.
- Capital gains tax and land tax exclusion on the family home will only drive up the capitalization of the houses and value of the land. The poor who Labour are trying to help get into the market will be shut out.
Proper policy is to:
- cut the immigration rate to something sustainable
- remove the capital gains tax
- introduce land tax instead & all land, even if the rate is different for urban and rural
- force local government to rate of the same basis & allow local government to land tax crown land to boost local government funding to deal with wastewater, roading, tourism infrastructure deficits etc
- also use the increase in local government rates to temporarily reduce (cross - subsidise) building consent fees & then work on a way if increasing competition to drive the fees down
- remove developer contributions completely (increases up front capital cost of housing) and collect it all via targeted rates & infrastructure bonds via cashflow.
- have the government build lots of smaller affordable homes to temporarily boost the lower value supply (even this will be hard as land prices are still way to high & its equivalent to the government subsidizing new cars for the lower incomed. I.e. the lower incomed don't normally buy new houses)
- increase the competition in the building supply market.
- remove all district plan land zoning and replace it with a national zoning system based on effects via a national policy statement as the RMA was originally intended
@Kiwi_overseas , this is one of the best posts I have ever read , you are basically 100% on the money .
If we want more houses we need less regulation , fewer rules, less taxation , no DC Levies and zero fees for building plans , rates holidays during construction , subsidised water connections , ban on land-banking , have more competition , and to break the monopoly of the cartel of building material suppliers.
Why have we got to this? Have a heart people!
Woman collapses on street, people walk on by...
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11922191
They should never have caved. They would have had a stronger vote if they stood by their principles on tax. Tax is good, CGT would be great. Higher income tax would be even better along with a tax free threshold and a lowering of GST. I personally would be worse off under this situation but I'm happy for it to happen for the greater good.
Caving into this nonsense from National has made them look indecisive and I really hope this does not have a negative affect on the result.
It really shows that a large proportion of the population are made up of greedy and/or stupid individuals. A sad state of affairs for what was such a great country.
Stick to your guns Labour, Nationals behavior has exposed them for what they are
Its very interesting to me that the confirmed phasing out of negative gearing against other income by Labour (without grandfathering existing properties) is not seen as that dramatic a move. And by dramatic I mean one that would never allow them to come to power. I live in Australia and no political party would dare touch negative gearing without a grandfathering clause as there are so many 'Mum and Dad' property investors among the population. Far from only being used by so called 'property speculators' it is a common tool used by 'Mum and Dad investors' with only one investment property and is well accepted as the norm when property investing in Australia. Yes, a certain rate of capital growth is required to make running at a loss on a property worthwhile, but even moderate rates of capital growth (e.g. 3-4% a year) can still make it a worthwhile strategy. However, if it were removed many would not be able to afford to have an investment property - or it would not be financially sensible for them to do so. Not all property investors are 'speculators' and not all people who use/need negative gearing (including against other income) for property investment to be worthwhile to them are speculators!
I reckon people only vote for winston because A. they think he's handsome or B. He rattles on about immigration and favouritism to Maori and selling land to people that foreigners.Thats about it. He's void of anything meaningful beyond that. Oh yeah and state run power companies and like it used to be 50 years ago. Hes like the butter in the fridge thats been there too long! Pure at heart but sour and needs to go...
Like any business any additional costs incured from Labour's changes around property will be transferred to my tenants, if Labour do not understand this they soon will. As for Mr Shaw having Maori as a option for my children to chose to learn is great but compulsory learning because the Green's decide it's a good idea I say F#%@&$ off............
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