Some questions for critics of CGT

Opinion: John Pagani has a few questions for critics of Labour's Capital Gains Tax plan

14th Jul 11, 4:17pm by John Pagani

By John Pagani*

At the risk of hectoring a little, let's look at some of the criticisms of Labour's tax package today, and ask some questions back.

* "We don't need a new tax. It will plunge a dagger through the heart of growth."

Well how do you intend to pay off the debt? What is your big idea for changing the our economy?

It's been lagging for years, and we will continue to spend more than we earn overseas unless we stop giving tax breaks for investments that don't help jobs and exports.

* "The economy is doing fine. Our tax system is the envy of the world. We can't change a thing."

If it was fine why do we have a huge number of kids who are unemployed, and skilled workers heading overseas looking for higher incomes?

What we need are higher incomes and more jobs. And to get them we have to start driving investment into more productive parts of the economy.

We won't get there by selling down our assets.

* "It is all about soaking the rich. It's a tax grab."

Something like 98% of people people will pay less tax. It's just that the other 2% have a lot more access to microphones. (Or should that be megaphones?)

Is it ever possible to broaden the tax base and make it more efficient without being accused of a tax grab? We are more reliant on personal income taxes than just about any country in the world. A capital gains tax makes the tax system work better.

True, you're not 'rich' just because you get a good salary over $150,000. But you have had a windfall tax cut at a time when we couldn't afford it. The new top rate is just reversing out that windfall.

You're not rich just because you've bought an investment house, but the new tax doesn't stop you investing in housing. It just reduces some of your gain - you still keep 85% of the income you get from capital gain.

Labour has made a big call with this package. It is going to upset a lot of people who will have to pay tax that they don't currently. But a lot of others will get a break they need.

At least it's looking forward at some news ways of doing things. What do you think will happen if we keep doing things the old way?

*John Pagani is an independent political consultant and writer who has worked as an adviser to Labour Leader Phil Goff. He writes his own blog at http://johnpagani.posterous.com/ He is a former radio journalist and television producer.

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10 Comments

by Wolly | 14th Jul 11, 5:15pm 1310620523

Excuse me but who is Pagani..?

He appears to be a spin machine for Labour.

by I Am The Man | 15th Jul 11, 9:05am 1310677503

Excuse me but who is Wolly..?

He appears to be a spin machine for National.

by muzza | 14th Jul 11, 6:45pm 1310625950

Well he's in a spin, like the rest of the Labour Party. The next opinion poll is going to be a downer for them, although at 30% they could be at their core consstituent support, I suppose.

by philthy | 14th Jul 11, 9:14pm 1310634866

Labour couldn't do much worse than National have, they've been pathetic even their biggest supporters would have to admit.

Running up debt like no tomorrow, did nothing to rebalance the economy away from property apart from take away interest free loans, in depreciation that property investors shouldn't have been getting anyway, even then they all cried a river, like a bunch of sooks. Now we are seeing it all over again.

Now the governemt are they're telling us how much worse they are going to be, selling off all our assets, what joke, they aren't what I voted for

by bob | 14th Jul 11, 11:16pm 1310642160

Q1 he is suggesting that giving "giving tax breaks for investments" is the only reason we "spend more than we earn overseas"

Q2 he says "What we need are higher incomes and more jobs" and says we will achieve this through more tax and lowering incomes

Q3 he says only 2% of people will pay more tax - rubbish.

Irrespective of whether it's a good idea or bad that's the most pathetic defence of Labours CGT plan I've read yet.

by Kermit The Frog | 15th Jul 11, 9:14am 1310678099

is an independent political consultant and writer who has worked as an adviser to Labour Leader Phil Goff.

So he isnt independent at all....and he obviously needs to have a chat to Goof.....because his 98% claim is at odds with what Labour has been saying. Who is right ?

Good of you to provide the Labour party with a platform to promote their tax grab Bernard. You planning to give the Govt the same amount of space to put their side of the debate ?

by Bernard Hickey | 15th Jul 11, 9:24am 1310678695

Kermit,

We publish all sorts of views from all sorts of people.

Here's Cactus Kate from the right

http://www.interest.co.nz/opinion/54421/opinion-cathy-odgers-cactus-kat…

cheers

Bernard

by David B | 15th Jul 11, 10:11am 1310681518

I'm surprised, Bernard, since you like to publish a broad range of opinions that you haven't sought the opinion of Michael Cullen about Labour’s new taxation policy. After all I'd be very interested to learn from him as to why, given that these are such brilliant ideas, as to why he didn't introduce them himself while he was the Minister of Finance?

Are these new policies a vote of no confidence by his former colleagues in his and Helen Clark’s economic stewardship of the country between 2000 – 2008?

by jomosapian | 15th Jul 11, 9:38am 1310679496

Mr Pagani

1. Why does Labour think we need more tax.. reduce government waste is the answer.. this will reduce debt..

2. Not sure who said our Tax system is the envy of the world but a GCT is not going to encourage our young to start companies invest in property and shares.. Our Young leave simply to explore the world.. (Most of my peers including myself have done 5 years or so overseas - we do return). we are isolated and it's a big exciting world... Im not convinced anything would stop people leaving to seek out an adventure. its human nature to boldly go out into the world.

3. You are deluded.. how can 98% be better of and the 2% pay so much more that it compensates for assett sales, tax cuts, gst fiddling and repays debt.. You are stupid... Oh I see a property isn't a person so it's the property thats worse off not the person.. madness..

My opinion no tax on income upto 45k... and a 30% GST ..30% company Tax and 30% top tax rate.. This means if you live an expensive lifestyle you pay more tax..

by David B | 15th Jul 11, 10:01am 1310680885

Increasing taxes has never increased the wealth, the innovation nor the opportunity of any country. As soon as that penny drops for people, the better off they will be.

We need to grow this economy, not its government.

Let me give every New Zealander who reads this a very clear warning. If you want to continue the poor economic performance that this country has had for far too long, then vote for Labour's tax package, because these are exactly the sorts of policies that are doing it. And be under no illusion about it.