Labour more discreet than NZ First in gauging public opinion on the introduction of a capital gains tax through an online poll

Prime Minister Jacinda Ardern

Labour and New Zealand First are conducting online polls to gauge public opinion on a capital gains tax (CGT).

Labour is asking people to sign petitions via its website, either in support of or against a CGT.

Respondents are then invited to indicate how they believe any tax revenue collected from the introduction of a CGT should be spent.

The options it presents are: an income tax cut, changing the tax threshold, making some income tax free, support for small businesses, innovation grants for businesses, a cut to KiwiSaver tax rates, or increasing spending on alleviating child poverty.

The tax survey on the New Zealand First website is more in-depth.  

It asks respondents to indicate which tax issues they’re most concerned about; a CGT being one of seven taxes presented.

It then invites respondents to spend about five minutes answering questions about any property they own and their understanding of the current tax system.

It ask respondents questions like whether they believe the tax system is fair, whether they know how much tax they pay on their income, whether they support a CGT, whether they are aware three CGTs already exist in New Zealand, whether they’re aware of the FiF regime that taxes some capital gains on overseas investments, and whether they know the two-year bright-line test was introduced by the previous National-led Government.

While the survey is featured prominently on New Zealand First’s website, Labour hasn’t promoted its poll or “petitions” on its website.

Asked why Labour is conducting a poll, Prime Minister Jacinda Ardern said: “I wouldn’t call it a poll, because it’s hardly scientific when you ask Labour Party supporters for their opinion on an issue.

"We’ve been very open since the Tax Working Group came back – we’re looking to hear people’s views on what the Tax Working Group has proposed.”

Since the TWG last month recommended an extension of the taxation of capital income, government ministers from Labour and New Zealand First have been coy, while those from the Green Party have made their support for this very clear.  

Prime Minister Jacinda Ardern has positioned herself as being responsible for “building consensus” among the Government’s coalition partners, rather than being an advocate for a CGT.

Meanwhile New Zealand First Leader Winston Peters, who previously opposed the extension of a CGT, has remained tight-lipped, making the odd comment signalling he’s mindful of the impacts on farmers and also not making the system too complicated.

The Government is expected to present its response to the Group’s recommendations in April.

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

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55 Comments

Its coming. Debt speculators chasing tax free gain as the sole reason for investing better work -33% into their calcs.

Oh crap....did I pay to much?

Capital gains taxes don't work to reduce the cost of housing.

Agreed. Much prefer a flat land tax on everything and and increase percentage for those with external tax registration, offset against lower income tax. Better cash flow, Extremely difficult to avoid, less bureaucracy, and protects NZ owner occupier paying tax in NZ.

So?...

CGT is not only for reducing house price but to bring fair tax system specially in housing market for speculators whic anyhow is comming if it is dluted that will remain and farmers and small business may escape this time but housing market speculators BE AWARE.

Market Speculators pay tax already via the Brightline tax. Builders speculate building their own homes only needing to hold them for 2 years family homes that under a CGT will escalate out of all proportion. It's just rubbish that any tax will reduce house prices when family homes are exempt

That's a might lonely statement you've got there. Care to explain how reduced property investment and speculation incentive won't make land cheaper?

Capital gains taxes will not reduce property investment and speculation. Look at other jurisdictions with capital gains taxes of one sort or another, property bubbles all over the show.

Govt should admit Kiwibuild is a total fail, dump it, buy Fletchers and build 30000 state houses instead. It's the homeless who need sheltering, not bozos with jobs who can't get a deposit together.

Instead govt confirms it is blind, death and dumb by tiptoeing around, insisting the market should provide. Both left and right are guilty and this malaise needs to be eradicated.

Capital Gain Tax with proper checks and balances is required. Understand that many who have been enjoying tax free profits are bound to cry and shout BUT CGT is coming at least to housing speculation so be ready to pay tax on flipping.

Met a colleague who is a CHINESSE and just confirmed that many of her friends are selling house as are worried about CGT (Do not understand why worry as already have CGT in the form of brightline test) but the fear that has been created by national and its supporters is so BIG that many are rushing to sell. Selling as house price will fall in future is understandable but rushing now for tax.......how will they escape with brightline test as is same as CGT as far as investment house is concerned.

What a mouthful.

Reduced speculation will result in reduced construction. A Capital gains tax will likely make it so that buying and selling is less lucrative. What will likely happen is that buying and leveraging will become the new defacto property investor strategy. Where once an investor may have sold real estate to free up capital for an alternative venture he will now instead hold the real estate and either not start the new venture or only start it if they are able to leverage sufficient funds off of the real estate.

As a consequence fewer properties would come to market driving prices up & fewer capital intensive enterprises would start.

Developers don't make their money on cap gains. They make it on the profit on sales and are already taxed on that.

Man alive! Each party must have some pretty sophisticated analytical programs on board in order to seperate all the wheat from all the chaff, that they are going going to gather. Will we ever know what the outcomes are exactly? Unlikely, methinks!

I just put three lots of chaff in there, all pro CGT. I want Liabour to take this to the election and be at odds with NZF.

Oooh! You're so dangerous and Machiavellian. Sticking it to the man

And woman. Equal opportunities.

Given this new tax is never going to get railroaded thru before the next election , National should campaign offering a binding referendum on whether Kiwi's want this Capital Gains Tax or not .

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It ain’t coming in because they are out and National will just repeal it anyway!
Such a waste of time and this COL should be concentrating on growing the country business wise rather than trying to screw the people who do work!
Such a bunch of jealous unbusinesslike nillers!

If it ain't coming in stop wasting your and our time talking about it. You're starting to sound like a broken record.

starting?

CGT on real estate sales: yes or no. Sounds simple enough for the plebs to decide at next election. Then the politicians can stop shouting if they like.

Wonder if real estate/legal fees will be tax deductible??

Awesome, I can tell Labour I don't support it, but I can't tell them why; nor can I show my disappointment they're talking about taxing inflation despite the RBNZ being required to make inflation happen.

Talk about stacking the deck.

Inflation, ergo tax on inflation, is the foundation of western capitalism.NZ interest rates will be pushed to zero and the RBNZ will be buying bonds within a decade.

Te Kooti,

Your little sound bite merely illustrates your lack of knowledge. I suggest you go and look at long-term inflation rates for say,the US,the UK,Australia and NZ and you might be surprised by what you find. In all these countries,inflation started to fall decades ago and despite numerous false alarms,remains subdued today. After that,you might start trying to understand why.

Hmm, taxing inflation. Aren't your wage or salary increases tied to inflation and taxed? The GST you pay in the store is a tax on inflation.

Moral of the story - inflation is a BS "phenomenon" of "money". Moral of that story - your money is only a belief system and has no real value.

The respective surveys sadly indicate that it seems that both Labour and NZ First are more concerned about the popularity - and consequently votes in 2020 - of a CGT.
Morally - both for equity and fairness reasons - both parties should be supporting a CGT. I have no axe to grind as I have and most likely will continue to do well out of capital gains.
Unfortunately it is going to be NZ First (read Winston) who are going to torpedo a CGT as it not in the interest of farmers - a constituency they are clearly targeting with their trumpeting of their Regional Development Fund spending.

For te same reason CGT will be diluted as cannot be ignored being Labour party election promise and diluted version will give exception or some relief to farmers (WPwill be happy) and also to small business.

With this even Labour supporters will be happy as are more looking at curbing / taxing housing speculators.

Apologies - dp.
Fingers too fat for i-phone.

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Awesome leadership, when in doubt and you have run out of funds to pay a working group, just hold an online poll ! priceless. WTF are we paying these politicians for ?

.. what happened to Labour during their 9 years on the opposition benches ... did their brains turn to complete mush or something ... 'cos they need 100 or so working groups to suggest to them what to do ... and they're deaf to the business community and to the workers of this fine nation ...

By all means strengthen the CGT which the Gnats introduced , the " bright-line test " ....

... but why on God's green earth would anyone take Sir Micky's CGT proposal as a serious consideration .... they ought to have disowned it and ran a million miles from the damn thing ... it's big , horrible , and hairy .... anyone with an ounce of commonsense can see that ....

... ahhhhh .... got it .... now I see why the Greens love it ... and why Taxcinda is mulling it over .... penny dropped for the Gummster there ...

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Sam Morgan $200m tax free capital gain on sale of Trade Me.
Gareth; $47 million tax free capital gain on Trade Me and similar amount on sale of GM Investments.
Makes one wonder why a factory worker earning $30,000 a year should pay more tax.

A business pays taxes on their profit, Sam Morgan would have been required to pay tax on his income. The consideration he received for transferring his TM shares is the net present value of all future net cash flows (after tax). So the amount he received is already discounted for future taxes Tradme will pay.
If people were being taxed on capital gains, the amount Sam received should have included the present value of all those future taxes to be paid. Then he could have paid that today to the IRD. Now, the new buyers should be allowed to deduct this upfront paid cost from their future taxes (unless you argue for double taxing future profits of the business). Except for the time-value of money, there is no real difference to NZ tax intake. At end of the day, employees salaries and wages reduces business profit. The PAYE received is offset by the company tax reduced.

Yeah nah. He obviously wasn't required to pay tax on all his income. He didn't pay any on his "capital" income.

Therein lies the problem, this false distinction between revenue and capital income. Think about it, the so called capitalists in power and writing the tax laws wanted others to pay tax, not themselves. Citing that it allowed them to create businesses and employ people was and still is propaganda to deceive the masses. They don't care about creating employment hence why the first option is usually to cull employees. If they could make money easier (which they did with slavery) they would. Why else do we see the massive investment in M&A's during the 80's and 90's, the dotcom boom peddling the latest gimmick, every Tom, Dick and Harry piling into non productive housing and equities? Free and easy money is all everyone wants.

Makes me wonder why we are titling the entire tax system to take from those who work full time hours or more to give to those who must be working less than 40 hours a week to be pulling in less than $34K.

Britain had its poll on EU exit.

NZ is about have a poll on CGT.

Big decisions need to be made by experts weighing the pros and cons NOT by public opinions for the sake of so called democracy.

General public normally knows nothing about any details and ALL devils are in the details.

Britain like NZ does not know what the hell it is voting for.
There should be a web site that specifies just what us mugs vote for.....as it matters in the future of all man kind
Not just one kind.
There should be a fair and equitable tax system for all people of all persuasions.
But NZ is run for the benefit of the Capital proletariat.....not a fair and beneficial system for one and all.....
Spelling out just what the future brings is what one votes for....not "Guesswork" to avoid tax....yer thieving mongrels...
And ye know just who you are...as do I.
So I vote...we sit back and see what the LABOUR taxes will be....in total, in future and inviolate....
But spell it out for us mugs.................not let us guess....you gormless clique of Poll-lies.

... it's a fair point that you don't like the government spending money on so many polls ...

If you want them to flag it , you could ask them to put it to the people ... via a poll ...

Frasturation at best... Fear of loosing tax free benefit in millions that are about to be taken away....

https://www.newshub.co.nz/home/politics/2019/03/we-ll-back-the-cgt-if-it...

This coalition of losers is totally out of it's depth. They can't see the outcomes of these stupid actions.

Coalition can see who the loser will be with CGT :)

Can someone explain to me...if a property increases in value at the same rate as inflation, will that still be subject to CGT? If yes, what is the logic driving this?

... Sir Micky himself said that the CGT will not rebate you for inflation .... ergo , it's a stealth tax and CGT wrapped into one ... even if the rental you eventually sold only increased in value by the overall rate of inflation , you'll pay tax at your marginal income tax rate on the whole of the increased value ...

OUCH !

This petition is rubbish.
It only allows a yes /no answer when most thinking people would be prepared for a tidy up on some aspects of a capital gains tax in a modest and reasonable way especially if the sale of family homes were caught as well.
The obscene tax free profits Mums and Dads make on selling their homes for 100% guaranteed tax free gains is the root cause of the run away house prices we have seen over the last 10 years .
The proposed CGT will make this problem many times worse.

... comment of the day , in my opinion ... Good one !

Nonsense Big D. It is all an illusion. The houses are worth exactly what they were, provided they have been refurbished to as new standard. The money has become worth a lot less. The process impoverishes many, but enriches a few arbitrarily.

https://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_inflation...

Cullen walks in Lenin's footsteps it seems.

Really its just putting the feelers out to judge how CGT will affect their re-election chances. If it goes down like a lead balloon it will disappear overnight.

As it has done in three previous elections.

Obviously a CGT is very much at the forefront of debate today – sadly in my view much of it uninformed.

Without a doubt there is an issue of equity and fairness with our current system – well documented by many international commentators over long time frames.

Let me begin by stating what I regard as two non-negotiable premises namely:

• We need to provide the appropriate incentives to favor investment in productive enterprises upon which our future economic well-being will rest.

For a number of historical reasons, including past failures in our the equity markets, taxation issues favoring housing, land supply constraints and high levels of immigration – coupled with the increasingly eager lending capability of our banks driven by record low interest rates - housing has for many years past become a bit of a no-brainer among investment options.

Whilst individuals can prosper selling houses to each other, and many have - thus reinforcing the arguments above – a nation indisputably cannot.

It is therefore critical that we introduce initiatives that will incentivise new investment into productive enterprises in place of housing. Of course we need extra housing – just not at the exclusion of all other options.

• All income should be taxed equally

Rather than rejecting outright an admittedly totally flawed CGT proposal, I would suggest a window now exists to offer a carefully considered alternative that has the support of many well respected economists e.g. Arthur Grimes ex Treasury and Bernard Hickey ex the FT.

It is well to remember that the National party strongly opposed the introduction of GST despite the strong economic arguments for its introduction as a consumption tax.

Today our GST forms and absolutely critical and internationally envied consumption tax that delivers a very significant share off Crown revenues. It is both growth and inflation proof and delivers very predictable revenue streams to the Crown.

The constraint subsequently added to the working group’s brief excluded a land tax option by excluding the family home. A foolish move that demonstrated the total lack of understanding of real-world business experience and cabinet experience by the new Prime Minister.

• Alternative Proposal: Re-Introduction of a Universal Land Tax

A universal land tax will meet the first objective of incentivising investment into productive enterprises versus land. Housing values today are dominated by the land component – not the house itself.

Because of the huge complexity both implementing and ongoing compliance for any CGT - we need to find an appropriate optimal proxy and it is my considered opinion that taxing land is by far the best proxy available that meets the targeted outcomes we seek to a high degree.

A huge risk with any CGT that seems to have escaped the working group, is the very high possibility property markets could remain stable for many years at a time, which coupled with a changed investor behavior response quickly generates a scenario where CGT revenues substantially evaporate.

Yet the revenue neutral proposed tax giveaways would be locked in and virtually impossible politically to remove leaving government with what could be large deficits year after year.

A land tax is virtually impossible to avoid, and is both growth and inflation proof, and will deliver a dependable revenue stream year after year with little fluctuation. It is thus a very good – not perfect - proxy for capital gains on housing.

Another huge benefit for a land tax versus a CGT is the implementation - it Is almost trivial and very low cost. It simply involves adding another line to existing Council rate bills. They already have land or unimproved values on the bills. Councils would thus become the collection agents for the Crown and pass on the Land Tax – just as they do with the GST component of their rates bills currently – and what they did prior to 1992.

One immediate criticism of a land tax will be that it requires a cash payment annually, exactly as your rates bill does today. For those in a cash poor situation, typically the elderly living in a highly valued house – Councils already offer a roll forward of rates with interest and a charge held against the property until sold. It also incentivises those to sell and move to a lower valued property – a desirable outcome.

In some respects – this is a back to the future scenario as Land taxes were only removed in 1992 with the wholesale structural reforms undertaken at that time.

Rather than exclude the family home, political acceptability to implementing a universal land tax has another route which would simply exclude say the first $ 500,000 or for example the median land value in a particular region, by applying a zero rate to the initial tranche of land value. Trivial in it’s implementation and I suggest more likely to be seen to be “ fair “.

After many years in business both internationally very large and very small, and again blessed with hindsight, simplicity both in implementation and ongoing low cost compliance are critical were we to make changes to our relatively mature and stable tax system that has evolved over longtime periods.

A major flaw in the tax working group proposal is that it incentivises new investment into one’s own home versus business or new residential housing – both subject to CGT whilst one’s domestic residence is excluded.

This proposal thus incentivise the exact opposite to what we should be targeting, namely productive enterprise.

This outcome has been well documented in Australia and is known as the “ Mansion effect “. They too of course have struggled with this issue with very debatable outcomes - again for the simple reason one’s own home is excluded. This is also the case with their superannuation asset testing thus exacerbating this effect.

The whole debate on CGT became a nonsense the moment domestic residences were excluded from even consideration.

Rational tax law as you well know requires as little exemptions as possible and applied universally at a low rate. That is why our GST system with a single flat rate and no exemptions is very much the envy of many countries.

The many structural changes we have made to our economy over the years are what has delivered the very strong economy that we have today – the envy of many.

Low debt, low unemployment, high growth, continuing surpluses to GAAP standards.

The reason we can currently borrow long term in New Zealand $’s at less than the US is no accident and the result of hard fought and won structural initiatives going back over many years from both National and Labour.

It is easy to forget the significant structural changes that have delivered the outcomes we now enjoy. Reserve Bank Act, Floating $, SOE’s, Fiscal Responsibility, GST, Dividend Imputation, ITQ‘s, Electricity Authority, Pharmac, Kiwisaver …..

The time has come to address the known structural excesses in our economy of property investment – a long held criticism from many well considered international observers.

Couple this with the need to bring equity to the taxing of all income, which is very much inter-related to excess non-productive housing investment and the time is now for a Universal Land Tax - with minimum cut ins !

TLDR. Did you have a point?

Ardern goes on about being FAIR!
Is it fair that people that make capital gains on their investment houses pay no tax!
Well they pay tax on rental income just as any business does!
Is it FAIR that when she leaves parliament she receives a massive superannuation payment paid by the taxpayer for life?....
No it isn’t FAIR Jacinda Ardern, and what are you going to do about that being scrapped, as it is not FAIR that you should be able to retire on that large amount when others don’t get anything like that?
This COL is not fair in that they should not even be in power as putting 3 loser parties together to beat one more popular party , is just not FAIR!!!

That's what the Cullen Fund is for. It ain't for ordinary folk.

Coalition performance so far: Fair

I would say a fair bit less than fair!!

Given this new tax is never going to get railroaded thru before the next election , National should campaign offering a binding referendum on whether Kiwi's want this Capital Gains Tax or not .