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TOP's Geoff Simmons & Andrew Courtney on why we need to bite the bullet and include the family home in an equity tax

TOP's Geoff Simmons & Andrew Courtney on why we need to bite the bullet and include the family home in an equity tax

By Geoff Simmons &  Andrew Courtney*

There is growing awareness of the need to tax assets in New Zealand, but this morning the Labour leader reiterated the party was ruling out a capital gains tax on the family home. Taxing the family home may be politically unpopular, but exempting it will kneecap any serious attempt to reduce inequality and improve the allocation of investment in our country.

Labour wants to get experts to review our tax system, but this has already been done in 2001 and 2010, and those experts stated that it was a ‘no brainer’ to include the family home. This blog explains why TOP’s tax reform includes the family home, and why we should not make an exception.

TOP would like to introduce an equity tax through which income from all productive assets, including land and houses, would be taxed.  

One thing to make clear is that we do not have an issue with people owning their own home, quite the opposite in fact. We just want to make sure that all New Zealanders have a realistic chance of having secure, healthy housing. This is something that the current system is making incredibly unlikely for everyday Kiwis.

Here are three reasons why we shouldn’t exempt the family home. We will finish by looking at, if we did want to create an exemption, what the fairest way to do so would be.

1. It is the biggest tax break, and is the root cause of rising house prices.

Currently the centre of the unfairness in our tax system is owner-occupied property, due to a loophole in our income tax regime. To exempt it would, in effect, not deal with the issue. As it stands this loophole is worth around $11 billion dollars per year in forgone tax revenue. The vast majority of this loophole - some 60% - is from people owning their own homes. Exempt that and you are only dealing with less than half of the problem.

Here is why. If you are saving to buy a house or simply have money in the bank you get paid interest, on which you pay tax. You are then free to spend your net interest income on renting a house, buying smashed avocado breakfasts or holidaying in Bali. But remember you have paid income tax on the money you’ve saved and also tax on the interest those savings generate.

If however you have enough savings to buy a house, you avoid that second tax. The savings you now have invested in property return you at least two material benefits: firstly, a house to live in but being both the landlord and the tenant you don’t recognise the underlying or imputed rent for the house; and secondly the untaxed capital gains.  Because no money changes hands, no tax is paid. This is a large loophole that is distorting how we invest our savings.

Because everyone is chasing this tax efficient investment, it’s little surprise that housing is the most favoured place to invest our savings and it’s also no surprise that property values keep rising.

Even if we taxed the capital gains in property it wouldn’t make much difference. Recently capital gains have been as high as 25% per annum in some parts of the country. Think about that for a second. If you owned a $500,000 house in 2016, and sold that house in 2017, without giving it a single lick of paint you would have made around $125,000, and in most cases you would not pay a single cent in tax on the way through. 

Yes that is an extreme example, but even the average New Zealand house rose in value $48,142. That’s almost exactly the same as the median wage. Sure, speculators and property investors are among those who are taking advantage of these prices, but it’s only rational, they are simply doing what the system encourages. TOP’s tax policy will remove the tax advantage of property ownership, but the reality is that 60% of the houses in the country are owner-occupied, and if we exempt them, we will in effect, not deal with the issue.

Those who are lucky enough to have a foot on the housing ladder are able to reap all these benefits. The rest of us – about 50% of Kiwis – are forced to pay rising rents that are steadily outstripping wages, and we have little prospect of ever owning a home. Yes, people have traditionally worked and saved hard to buy their own house, but for a growing number of people hard work and frugal living is no longer sufficient to get them on the property ladder. TOP’s tax reform is all about giving your kids and younger generations the same opportunity you had.

2. Exempting the family home means the tax loophole remains.

Some family homes in New Zealand are worth $50m. Do you think those houses should be exempt too? Exempting the family home will only incentivise wealthy people to invest more in their family home. That means they will buy the place next door and extend on to their section. Expect more McMansions as a result of that policy. Instead of five houses worth $1 million, you will just get one worth $5 million.

If you are going to dole out tax breaks, exempting the family home is a very poor way of doing it. Far better to tax everyone, and spread the gains fairly through reduced income taxes. Then most people (80%) in fact, will be better off. This is TOP policy.

3. Exemptions are the enemy of any tax system.

One of the major benefits of TOP’s tax reform is that it’s comprehensive. All assets will be required to generate a minimum rate of return, or be taxed on the assumption they do. A business is not actually a business unless it generates a taxable profit at least equivalent to what can be earned in the bank. It is more likely to be a tax shelter for the proprietor’s personal expenses.

Making the tax comprehensive with no exceptions means we fully close this loophole. Having exceptions, such as not taxing the family home, will only make manipulations possible. And believe us, wealthy people can afford to hire accountants to make sure they exploit any loopholes better than anyone else can. After all, what actually defines the family home; does my bach count? What about the family farm? Or the family business that operates out of the family home? Is it only one house per person, or per family? In that case can I gift one house to my brother, and one house to my sister, one to each of my grandchildren?

There are all sorts of ways to skirt the system, and when such large sums of money are involved, you can guarantee that people will.

The fairest way to create a tax break

No doubt when TOP gets into negotiations about how to implement this policy there will be pressure from establishment parties to exempt the family home, as Labour have shown today. For all the reasons above, exempting the family home would be a dumb idea.

Instead, if there was a desire for exemptions, The Opportunities Party would prefer to set a threshold per person. How much tax free equity do you want each person to have? Before you answer remember that 40% of Kiwis own nothing. Okay so how much should the great Kiwi tax break be?

$100,000? $11b just became $7b.

$200,000? $11b just became $4b.

$500,000? You get the picture.

Such a system is still avoidable, people will start gifting money to their relatives that are under the tax free threshold. It sets a better precedent than an unlimited exemption on the family home but it protects tax dodging – that is both unfair and a drag on economic efficiency, productivity, income and jobs. Why would you do it, except to favour your political mates?

Do we really want a fairer society?

The whole premise of this policy is to create a fairer society. One third of the wealthiest New Zealanders are not in the top tax bracket, not because they are breaking the law, but because of the legal tax breaks provided by our system. What this means is that workers often pay a higher rate of tax than those with significant property investments. The family home may be held sacred in New Zealand, but this is just stupidy en masse.

The current system is not working; it’s making an already unequal society more starkly divided. You may get incensed at what you see as an attack on your home, but such a reaction is founded on a lack of knowledge. Remember, most New Zealanders (80%) will actually be better off under TOP’s tax regime. It’s the wealthy who will pay more, and even then, these people will benefit from a fairer, more vibrant economy. 

It’s no longer enough to just fiddle round the edges. We need to make drastic changes to our tax policy, and the sooner we make them, the better. Not just for you and me, but for our kids, who will always wonder how it was possible that Aunty Jane could own 14 houses, when they can barely afford to pay the rent.


*Geoff Simmons is Deputy Leader of The Opportunities Party and its candidate for Wellington Central. Andrew Courtney is a researcher for The Opportunities Party.

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so my mum who is a retiree and has built with her late Husband a rental portfolio to retire comfortablely will be ripped apart by your nonsense. No thanks, national..TICK


Have a bunch of properties and wealth? Yup we'll protect that wealth for you.

Don't have anything? Too bad.


Not only that, but "Got to buy your properties on the back of the affordability efforts of the bulk of the 20th century? Great - enjoy the windfall since we stopped all that for the following generations!"

Things are out of kilter at the moment. Housing affordability was for most of NZ's history one half of the equation, the other half being the Pension. The Pension was predicated on people owning their own home in retirement - at least the majority.

At the moment we have the young still being asked to fund the retirement of the old, but being asked to forgo affordable housing so that the old can enjoy their windfall unencumbered.

I'm not saying TOP's answers are necessarily the best ones, but at least they're looking at the problem.


Labour's housing policy includes:
1. Banning foreigners from buying existing homes. This reduces demand.
2. Increasing the bright line test for investors to 5 years. This lowers the incentive to speculate in the short term.
3. Ring-fencing. This takes away the only tax advantage of buying a rental property.

Everyone in Wellington knows what happens when a Labour government is elected. Property prices go through the roof here like 2002-2007 :)

You can voluntarily pay tax in NZ. If Gareth is so upset about the unfair tax system then why didn't he pay a capital gains tax on his Trademe or GMI profits when they were sold? Simply because it's the tax them not us approach.

"Simply because it's the tax them not us approach."

You make him sound like a property investor, when you put it like that.

And I suppose you will be voluntarily paying capital gains tax on your rentals because you know deep down that your intention was to make money from the increased prices

If I have to pay a CGT I don't care as never sell anything. I invest for a yield only. A CGT will make no difference to prices here, as it hasn't in Canada, Sweden, Norway and Australia.

Before someone says I have added no value, I have developed 3 properties in Central Wellington on back sections. One which was on my own home's land was sold years ago to a couple who still thank me when I see them. They were stoked that someone had the initiative to build them a home and add to the supply instead of moan and groan and do nothing. A huge achievement.

Prices in Wellington are up 35% in 10 years, hardly something to get up in arms about. If a working couple who both earn 80k per annum each can't afford a house in Wellington for 600k then they don't want it badly enough. People like this have no right to moan and need to have a good hard look at themselves.

Incredible envy on this site, so many people who are jealous and moan and groan waiting to feed off the hog's back. I mean as if a Government can help them with their problems, they never have and never will do no matter who is in power.

Too many 25-35 year old people (not all as lots of them are champs) have grown up in families where Mummy and Daddy always save them from trouble and teach them no initiative other than entitlement and the 'someone will save me' attitude.

I take my hat off to those 25-35 year old people who haven't listened to the gullible media and have gotten stuck in on the ladder of home ownership with success. Those are the young people we should be talking about, the ones who have had great initiative and a 'self help' attitude.

you forgot to mention smashed avocados and lattes.

Urgh. You and The Man are two peas in a pod. Everyone is jealous, envious and lazy except for yourselves. Attitudes like yours are why NZ is going down the toilet.

Wildcard, sometimes the truth can hurt!
If the many moaners took advice from the property investors on here, they would be better off financially.
This site I thought was designed to help people be more financial rather than moaning!

So lets say we take your advice for real TM2 and everyone (literally everyone) decided to become a landlord....who would be the tenants?

Independent Observer. There will always be tenants.
Not everyone has the ability to be a successful property investor.
The reality is that not everyone is going to be financially successful and will always need to go to work.
No one needs to read anything that is put on Interest.Co,and that is their perogative.
If you want to be financially successful you need to do more than just work for wages as I have said many times before.

Landlords can also be tenants.

Every comment you make is stupid. The value of my house in Wellington is up 39% in 3 years, your figures are made up gibberish to support your false argument. Perhaps if you weren't such an entitled and ignorant fool you would have something of value to say.

The figures are 100% right. Property was terrible for 8 years in Wellington. 2007 onwards there were gains lower than inflation. All significant growth in last decade has been in past 2 years.

When Helen Clark was in for 9 years prices went up over 100% from 2000-2007. It was gold. Hope Labour get back in.

Privileged. Haha. Not when you grew up in Taita and had poor parents.

I just chose to help myself rather than think the world owes me something.

Nobody owes you a thing. Life owes nobody anything.

I'd say I'm in that range, but I passed on buying an additional property for investment over bootstrapping a tech startup with a couple of other founders.

I'd like to think that our startup (even though it's quite small) contributes more to the economy than if I had funneled the capital into property.

The thing is, the technology investment environment in NZ is near non-existent compared to overseas. It's just seen as so much safer to keep it all in property and never even consider other options.

I also invest in NZ tech it's a great sector. Keep up the good work. Well done!!

Oh Dear !
Here we go again !
Dear "prop kingo" there is nothing particularly clever in buying a house and renting it out !
Honestly the way the NZ tax system works it was a requirement
Accountants had you do it if you were not already
So let's be clear there's no genius in rental property portfolios !
It is long overdue that property taxation of 1.5% be paid on every property transaction to the city council
Also long overdue that a rating of at least 1% maybe 1.3% be levied yearly based on a assessment system
This works in big cities all over the "developed" world
The present rating system has had expensive property paying disproportionately lower taxation and all governments have done nothing about it either !
Poor young working families of today who don't have wealthy parents to give them a deposit on a house.
That's not a great policy either and shouldn't even be necessary

Not clever? If it is so easy then why are you not doing it?

I house 26 different people in Central Wellington flats. If I got sick of the pathetic left wing no hopers giving me grief all of the time they would hurt the very people they are trying to protect. Imagine if I converted my flats in Mt Victoria back to houses, only seriously rich people could afford to buy them. The 9 people that live there currently wouldn’t be able to live within 2 minutes of Courtenay Place. If all investors like me did the same thing there would be no young renters living in Mt Victoria, once again the very people your lefty parties are trying to protect would be the big losers.

Don’t bite the hand that feeds you.

Wouldn't you be increasing the supply of available houses for purchase by owner occupiers, thus reducing price?

The main point of my comment above has been lost on you.

The only outright houses that I own were built by myself, so I actually added to the supply. I own large villas which are converted into flats in prime areas of Wellington and I do a huge service to the community housing young professionals. If it wasn’t for the likes of me the government would have to provide these people with accommodation (all of my renters are transient and uninterested in buying property), it would then cost the tax payer a fortune to do this. Most Governments know this.

I do not believe in owning houses in suburbs as rentals which should be occupied by owners not investors. This is the only specific time that I agree with the left in that single rental houses which provide low rental returns are not investments.

But someone has to house renters, there are so many people that are just not interested in buying property as they may travel or don’t want the financial commitment. It is not for everyone. But I am sick and tired of being harassed by people who know nothing but listen to uninformed views from a gullible media which are inept to say the very least.

What about the price of food in this Country? How did we all get trapped in a duopoly situation caused by 2 supermarket chains? Don’t people know that most supermarket owners are multi-millionaires at the expense of the public? I’m astounded that this is not an election issue. I was in London recently and overfilled a supermarket trolley at Tescos for £97 (NZ$160). This would have cost me $400-$450 in NZ.

A joke!

Here's the latest Market Update in Auckland everyone!

If I have to pay a CGT I don't care as never sell anything...I have developed 3 properties in Central Wellington on back sections. One which was on my own home's land was sold years ago to a couple

A veritable Schrödinger's property investor, having sold and never sold at the same time.

I've developed 3 times. Still renting out 2 of them. The only one that I've sold was part of my owner occupied property. Which are non taxable.

I have young professionals living in the other 2. All are transient and aren't interested in buying. Ive created property for a total of 10 people in 3 different houses I've built.

What have you done to help the shortage of property?

Fair enough clarification.

Tech sector - did you buy Xero shares early?

Nope just a bunch of start ups in NZ

Did you read the article P-K, I want this tax reform. All productive assets will be taxed no hiding your money from the tax collector. We live in the best country in the world, keeping it that way costs. Moving money away from land and towards more productive industry's.

Like duh.....the very idea is GM will be one of the few paying more tax as a result of his policy.

Second the TOP policy taxes those not paying (or paying little) tax and reduces the tax burden on those paying the rump of the tax bill so the burden is more fairly distributed.

Really / I am not sure about the TOP tax plan , I dont understand it fully

Rick you have got it around the wrong way, Pensioners have paid their taxes for their pension. The younger generation are now prepaying for their own retirement. Sick of hearing your argument that the young are paying for pensioners retirement. They paid for the younger generations upbringing.

Imhenry, NZ's pension is not self-funded at all. It's a promissory arrangement between generations. Pensioners now have not funded their own pensions.

You're right that they've been contributing to the social benefits younger Kiwis receive. Younger Kiwis are funding their pensions (and now, likely, much of their own via Kiwisaver). It's the imbalance that's creating that's the issue. Reduced what's going to the young in terms of opportunity, but expecting the same from them in looking after the old.


Yea, poor 'ol mum.
She could always sell that portfolio and passively invest the proceeds.

I suppose that's a crazy notion, though.

Rental properties are a passive income, unless you are a developer. Rent from the properties is already taxed. The TOP policy should have no effect assuming the rental properties are getting a normal return.

Passive - Really? How do we know that?
Does she have a property manager who deals with all the maintenance, bills, etc? Keywest never mentioned that...

If so, we know she is happy with returning bugger all on her investments. So the question becomes why is she not seeking an arbitrage via managed/passive fund investment?

Maybe I assumed given that she is retired, but mainly because regardless of the definition of active/passive, I consider rental properties to be generally in the passive investment category unless you are a developer.

The point is that it is already invested in rental properties. TOP's policy is only trying to target those assets which are not already giving an adequate return.

Like the family home or is that exempted?

I Guess i introduced my mummy into this arguement however she is only acting in proxy of the bigger picture at stake. To be fair I also want to protect my assets as well in my property portfolio, and I take no offense to any of you, however you are dreaming if you think I will ever pay an extra cent in taxes from assets I have accumulated over my career, TOP is a nonsense party run by a man that owned a garage and has a smart son

Sorry, I missed what the 'bigger picture' is.
Please elaborate.

Or, is it simply as j3y states above?

Bigger picture meaning retirees and property owners

How does it affect either of them?
Unless of course they are fabulously wealthy.

Dear Keywest
I presume you might be living in Florida ?
Anyway you would have 0 to fear from any property CGT at all !
The tax would be phased in

It's people like you that are the problem - You don't want to pay tax on assets you accumulated tax-free but you want others to pay more income tax.

Why should I pay tax on capital gains? Where will that money go? Am happy to pay capital gains if you plan to reduce my income tax bracket to 20%, or do you want everything I own?

This is TOP's policy - reduce income tax by introducing a tax on capital. For the 80% of the population who don't own multiple properties, this will result in a lower overall tax bill

This is the classic case of the Temporarily Embarrassed Millionaire.

Even if you're in the 80% who'll be better off, you dream of being in that top 20% someday. You ultimately end up pushing for conditions that favour that top 20%.

This was your point all along?

Ever care to read things before commenting?

"Why should I pay tax on capital gains?"

How about explaining why you shouldn't? Why should other capitol gains from stock or other investments be taxed and not gains property sales? Or are you implying that we get rid of capital gains altogether?

@kiwimm , I note you are a well balanced personality , with a chip on each shoulder.

Just how does one "accumulate tax free assets" to which you refer .

I bought and paid for my first and subsequent homes with money on which I had paid PAYE , so it was with after- tax income .

I never accumulated any tax-free assets in my life .

But I would sure like to know how anyone did

I do like a nice chip :)

The fact that your after-tax dollars paid for an asset doesn't mean the gain should be tax-free. Everything you buy or invest in is with after-tax dollars. The money saved in the bank is after-tax dollars but the interest is still taxed.

See my example below regarding fairness.

Why "prop kings" likes his moms rental portfolio is probably because he "helps manage" it !
Always follow the $$

Wrong again. I had a poor upbringing and have done EVERYTHING myself property wise with no help from anyone financially.

You can't accept this because guys like me make pathetic losers like you look bad.

None of us have done EVERYTHING ourselves, but we've all benefited from Kiwi society.

None of us has built our own roads, hospitals, schools, amenities etc. It's the extent to which we benefit from society and the extent to which we should contribute back to it that takes up most of our time bickering back and forth :)

Or you get people on this site wanting something for nothing. Nobody has a 'right' to anything. Thinking young people are deserved of a house is as good as saying they have a right to a round the world trip on the tax payer.

Agree re: kiwi society, but what this fool was implying was that I'm sponging off a relative financially. Not surprising really as that is the first thought of someone who has been protected form the world all of their lives and is desperate for someone to save them. No guts!

Irony. fairness, I'd like to see young people receive similar government involvement and fostering vis-a-vis affordable housing as existed in the past (because I'm not seeing the free market doing it, currently), and a retention of young people providing for the old via the pension. I see them as two sides of the same coin (especially given our pension is predicated on people owning their own home in retirement).

Each could be cast (somewhat uncharitably) as "something for nothing", but together they are really just part of our Kiwi society historically looking after each other to create a great society.

"Nobody has a right to anything"

And yet property investors continue to want the right to avoid a capital gains tax. Funny that.

TOP policy is to tax that passive investment portfolio as well , so it does not help a bit.
Confiscation to finance bribes and hand outs.

It's a tax on all capital (wealth). Just move from property yielding 3% to another investment yielding 4.5% and your income from these assets will be unchanged

and which asset would be that ( 4.5% ,yield inflation-adjusted )?

that's up to you but some options would be: property outside of Auckland, shares, bonds, P2P, long-term cash deposits

No wonder you avoid answering - those things either do not come close to the 4.5 % inflation adjustment return or ( shares) are entirely unsuitable as a main component of an individual's pension pot.
Why do you not just be honest and say "screw the pensioners" ?

Shares are the main component of 80% of the world pension pots. I don't see why you would think these unsuitable. if you are really set on property, do as I suggest and invest in property in high-yielding areas,

Shares are entirely unsuitable for an INDIVIDUAL's pension fund ( for an individual that is already of a retirement age ). Simply too risky. Pension funds generally recognize it and hold bond portfolios to cover commitments for the already retired ; share are held to cover future obligations .

Not true. If you plan to spend a good length of time in retirement then you need assets that grow as well as safe assets to cover cashflow for the medium-term. Switching to all bonds is a surefire way to poverty in old age. the 4% rule is based on a 60/40 equities/bond split for an individual. In many ways, property is riskier as it is illiquid and hard to diversify

The point is that you could not possibly get to 4.5% , inflation adjusted as you suggest is possible f you have a sizable bond allocation - which everyone knows a retired person needs to have . The 60/40 split ( which is too risky for most old people , anyway ) would not nearly achieve that in current conditions.

bond portfolios are from the days when retirements were short. With the prospect of 30+ years in retirement, you need to have a larger equity holding or risk running out of money. Given we have a backstop of NZ super, the equity risk is the better path. A 60/40 portfolio has historically returned 10% before inflation.

J3y you sound like Robert Mugabe? Why would we not protect assets, hmmm have a think about that why don't you?

That escalated quickly...

Do we incentivize (and even encourage) the protection of wealth in real estate? Or should we maybe try redirect it to other more productive and innovative sectors?

Wouldn't it be better for pretty much everyone if NZ were at the forefront of technology, but with low and possibly declining house prices?

You can invest all your money in snake oil and a religious cult to try and catch the hale bop comet for all I care, but don't tell me what I should do with my money...

I think that what people are forgetting is that it is YOUR money not gareths, not the labour parties, not nationals, so best to hold onto it

So you don't pay income tax on money you earn?

I think you'll find the government already tells you what to do with a % of your income and expenditure (GST).

The government does plenty already to try disincentize spending, it doesn't mean that you literally can't spend on it.

Tax on cigarettes would possibly make it more attractive to spend on food? Doesn't stop you from buying them though.

Tax on real estate would maybe make it more attractive to invest in other assets? Again, doesn't stop you from investing in real estate.

Why is it your business to tell me how I should spend my money? never know who is behind these usernames. Maybe it's your mum, in which case it's definitely her business.

Certainly not my dad...

I dont own residential investment property , but those who do have forgone alternative consumption and saved to do so , why destroy them ?

Capital gains taxes haven't destroyed people overseas. Why would it destroy people in New Zealand?

The introduction of this as a new tax like CGT is destructive . Other countries have had it for decades , and its already factored in to their investment decision making .

Besides , most countries have struggled to get much form CGT which is way too easy to avoid paying

That makes sense that it'd be destructive to implement it suddenly. Genuinely curious, but do you have any suggestions on how we could shift investment away from real-estate in a gradual manner?

Which is why it is better to tax capital on a yearly basis

TOP aren't talking a capital gains tax though are they. They are about a pure capital tax. One that does not apply to shares.

I will pay 1% tax on my house equity, but not 1% tax on my share equity.

If a 1.5% tax on equity will "destroy" them then they must be focused on speculating on capital gains rather than income generation.


This is the funniest comment I've ever seen on this website. "My poor mum only has the wads of cash from her rental portfolio and the mounds of CG's to wipe her tears with because her properties might be subject to some perfectly reasonable tax". - Paraphrased.

Not to mention she gets a damn pension from a fund that they will have sucked dry by the time many of us retire.

My mum and many parents and pensioners will have their wealth wiped off by this party, can rest assured they will stay below 5%, my mum and hundreds of thousands of pensioners like her...You can rest assured all pensioners in NZ will be running for the hills when it comes to voting for Gareths McCully silly dilly party...

Sounds like I'm going to be extremely well rested... You're right the boomers have no interest in making this country fair or equitable or rewarding for those who actually work hard instead of relying on the advantages gifted them by their parents. The boomers numbers are starting to thin, this is why we're about to get a change of government. If TOP keep campaigning, they might get in at the next election, or Labour will introduce enough progressive changes to make TOP surplus to requirements. That's all Morgan really wants to achieve anyway.

Sentiment seems to go in cycles as people get hurt by different policies. The wealthy have done extremely well out of neoliberalism since the '80's. The shift is coming.

What does neoliberalism actually mean?

anything he does not like at that particular moment.

Good one ........... just curious your name translates from Dutch into Easter Bunny right?

Yes .. I really wanted "paashaasschaamhaarverzamelaar" but it was too long for the system to accept.

Don't come on here as a commentator and expect people to take you seriously if you don't know economics 101 and are unwilling to Google a basic term. I will humour you though. Neoliberalism is the common economic mantra hanging over from the 1980's that the invisible hand of the freemarket solves what ails you. It's the classic trickle-down, laissez-faire, supply-side-only economics, and seems to also include a fair helping of socialism for the rich or for corporations.

Ocelot I can't even spell theasaurus as Apple spell check doesn't pick it up, but if it did I don't think people take me that seriously anyway...

TOP should just start with taxing human capital using a deemed rate of return based on age. That way everyone get to experience the tax beginning at the same time (fair). Work out what public sentiment towards deemed returns using the human capital tax and then use that to determine if a real estate capital tax is viable!

Don't write off us older folk. I am too old to be a boomer but I detest what has happened to NZ and I have nothing but disdain for those that have not been able to provide for their retirement without having to exploit others.

..ypu have overlloked that it is impossible for all to retire at the same level as you desire - there are not enough resources. So hold back on the disdain - a finite world is the restrictor, not personal effort.. most must miss out.

Really? An annual 1.5% tax on her capital will wipe out her wealth. It might reduce her income a bit and make her think of moving her money to a higher yielding asset that covers this extra cost.

It would wipe out her annual income by 75%, wholly shit really, 1.5% tax on assets, they are trucking dreaming

Exactly, it would not wipe out her wealth (=capital). Redeploying her capital to more productive sources would generate the extra income to cover this.

And where will those productive zombies sleep?

In housing currently.

A tax on capital will always wipe people out. As it can be greater than income.

What would a 1.5% tax on the share value do to share price?

It would not affect her income because the 1.5% tax would effectively be an interest-free reverse-mortgage with the IRD, to be realized on death. 1.5% over 25 years is about a 30% reduction on equity.

I'm a retired Auckland homeowner - a modest wealth tax will take a long time to seriously dent the wealth I leave to my kids. And I do hope to live a long time. My worry is that any tax at any rate will kill the value of the land component - for me that would drop my property from say $1m to $300k. Less wealth tax next year but little inheritance for the kids to share.

But...less need for an inheritance too, as their share of the inheritance will go toward a house (or other) just as it would now. The proportions would probably be similar, but their income would go much further.

It would also have the effect of pushing NZ back away from an inherited wealth based model of society, towards a meritocracy that rewards hard work and provides real opportunity. At the moment we're declining toward a model where inherited wealth will mean everything.

If your mum is returning rental income in respect of her properties then my understanding is there will be no change in the tax payable on her rentals (she may even save some money if the tax rate is reduced due to more broader coverage of all housing).

She will have a deemed income/rent amount on her owner occupied property (assuming she owns the house she lives in) but dependiong on the equity in her home, and the deemed rate applied to properties, she may end up with a net tax cut.

and of course when she kicks the bucket you expect to inherit it all tax free.

Hardly surprising then you wont want to change things, just thinking about yourself.

Steven, make no mistake I am thinking 100% about myself as I am currently very important to me

The present property tax is full of loopholes and is obviously unfair to anyone with half a brain.
Someone renting and working on a low paid job has to pay 33% of his money in tax.
Someone owning more than one property for say 2 years and sells it for a capital gain of say $200,000 pays no tax. This only encourages people with money to pour it all into property at the expense of others.

Most other countries have a capital gains tax to make the tax system fairer.

While vested interests now control our political system, I cannot see a fairer tax system being implemented.

Tax makes little difference. Ask Australia Singapore Hong Kong Canada Norway Sweden.

It'll disincentivise people to sell making the shortage worse. That's what's happening over there.

An Aussie govt official commented a few years back that in Australia they wish they'd never had a CGT. It's made little difference to prices and the tax revenue is spent on employees administering it all.

@keywest. Your comment is typical of many who read the policy and quite obviously don't understand it.

Don't think so, if a pensioner has a multimillion dollar home then they are up for 30 to 45k a year in TOP taxes, what part have I missed?

For your own home the policy is tax neutral. Read it again.

I think Top have addressed the idea of retirees. Visionary and fair but bound to be unpopular because it doesn't appeal to people's baser instincts.

Or because people genuinely think it is unfair to target the asset rich but cash poor.

If you're asset rich. You're cash poor by choice.

Yes, I suppose my grandma has a choice between living securely in her retirement in the house she has lived in for the past 30 years (at least), or selling up and renting somewhere else.
I'm glad we live in a country where she has the choice, and is not forced from her house.

my parents just sold our family house to downsize for retirement. no reason your grandma can't do the same. but she does't have too, it's her choice.

These asset rich, cash poor people are part of the housing problem. One of the bigger parts.

How are they part of the problem? By buying a house to live in? Good logic. By the same logic, I am a big part of why umbrellas are so expensive, because I bought one.
No thought as to how many manufacturers of umbrellas there are, or the availability of material for umbrellas to be made etc.

She doesn't have to rent somewhere else. Sounds like if the equity tax is overly burdensome her property must be worth a fortune, she could easily buy somewhere else and have mounds of cash left over.

How many renters are forced from their homes every year, this would likely measure in the hundreds of thousands.

"She could easily buy somewhere else".
Once again, I'm glad we live in a country where she has the choice, and is not forced from her house.

Rules around renting a property are an entirely separate issue, and I would hate to think that TOP supporters are just playing the revenge game? Surely not...

TOPs policy doesnt not force here from her house.

No, it defers the tax until she carks it and then the beneficiaries pay it out of selling her house. It's a barely disguised inheritance tax.

And what about someone who has a house paid off but is on a low income, say they are disabled, or sick or unable to work a stressful job, what happens to them?

Oh thats right, the authoritarians will say "they are LUCKY" so its OK to take their assets

no one is taking anyones assets.

if they can't afford a house that big/flash/central then they can downsize so they can afford the repayments. Or they can borrow against the house. They have options.

How many people live in a $2m house mortgage free earning $50k a year? Hardly a reason not to implement the policy.

"They have options."
You sound like the godfather, making us an offer we can't refuse.

So you have no problem stealing from disabled people who own their own house......

Cause by your logic they are in a minority so its OK.

Stuff off

Exact opposite. It appeals to the base instinct of robbing anyone who became better of than yourself through hard work and thrift.

I am well off but I welcome this tax. It encourages capital to flow to productive assets and allows the wage earners to take home more money

Asset classes you can invest in: Cash (term deposits), bonds, property, shares.
All return income by way of interest, dividends or rent.
All of these income returns are taxed equally.
Capital gains made in any of the asset classes above are taxed if you are deemed to be trading. The only difference being that recently there has been a bright line test applied to property (of two years), meaning that you are deemed to be a trader if you sell an investment property within two years. This makes the tax laws on property more strict than the other asset classes.

Exactly how is property taxed less than the other asset classes?

Why do people invest in property as opposed to shares?
1. People with money (mostly baby boomers) still haven't got over the 1987 crash. Next there was the finance company crash, that people mistakenly equate to the sharemarket.
2. Leverage. You can amplify your returns by borrowing for a house. Banks don't typically lend money for you to buy shares unless you are borrowing against a house anyway.
3. Offsetting losses against personal income, thereby reducing your PERSONAL income tax. Ring-fencing would solve this.
4. Lack of education. This follows from point 1, but people actually think that property has outperformed the sharemarket, which is incorrect.
5. Lack of education. People think that property investment is safer than the sharemarket.
6. Lack of education. People think that all companies on the sharemarket are equally risky.

I think we need to add why (mostly) baby boomers have invested in property. As you say they have not got over the 1987 crash, but also they want to secure their retirement in their old age and be able to provide for themselves rather than being a burden on society.

I could own shares and look at the fancy share certificate every day to cheer me up. Instead I bought an Auckland property and walk around my garden to cheer me up. OK I do pay rates but then again they do empty my bin and all the rates and insurance for the last decade are a small fraction of the increase in value. That is why I own property.

I think you need to go back and reread the article.

Nobody is making the case for owning shares/stock instead of owning the home they live in.

A lot of people invested in the finance companies that were just ponzi schemes. I was surprised at the number of people that I knew who invested in those companies, and the stories from friends of friends. They put a lot of trust in individuals or companies by putting their eggs in one basket.

You can trade on margin and depending on the shares you can borrow 60-70% on a lot of shares. Obviously going above 50% and risking a margin call would be kind of mad though. Yet banks will happily lend 80-95% on a house. I don't think the risk from housing is priced correctly.

Overseas shares are subject to a tax on capital similar to the TOP policy. Your Kiwisaver is already paying this tax.

Irrelevant to the topic at hand.
This tax is one of expedience, and in recognition that most overseas companies reinvest earnings back into the company at a higher rate than NZ companies (generally), as opposed to paying higher dividends. This way of taxing is very specific to shares and helps to level the playing field between taxing NZ shares (mostly higher dividend paying) and taxing overseas shares.

Not quite. It allows taxing of income and capital gain as one based on a fair rate of return. This eliminates the need for complicated income and capital gains calculations and distortions. No bright line or intention test needed.

Under this regime,it forces you to evaluate the total return on your investments versus cashflow. I.e. you have to pay to hold the shares which rely on capital growth

Yeah not really. There are still dividend payments. For example in Australia the dividends are paid out and franked. Then you have to tax tax on the net dividend you receive. There are dividends and they are double taxed.

Worth a re-read dictator. I didn't say there aren't dividend payments. Franking credits (Australia's equivalent of our imputation credits) are another topic again.

It's a terrible topic too.


CGT is fine, but the whole paying an annual tax to live in your own house is rubbish....

"annual tax to live in your own house is rubbish" that sounds like Auckland Council annual rates.. you are paying a sizable sum of money for bugger all service from the council!

Yea, super crazy huh.
It's actually nearly as crazy as paying annual tax on your financial investment returns.

No investment class is taxed on the capital!

Are shares taxed? NO
Are the dividends they provide? Yes

Is cash in the bank taxed? NO
Is the interest taxed? Yes

Is a house taxed? No
Is the income from a house taxed? Yes

Yet you still want to tax houses? Does this mean you also want to tax shares and cash to even it up?

Once you fix one problem with capital gains it will emerge elsewhere and will need to be evened up later. The whole purpose of the exercise is to try to get houses back to being for living in rather than being most of the household investment portfolio.

It is a valid point, but I would have thought that is a simple fix.

Balance the scales by implement the existing rules across to housing

Otherwise you are just piling more weight on to one side of the scale and waiting for it to tip the other way.

FIF shares as already paid by your Kiwisaver fund

That's not the argument.
When did I say they were taxed on the capital component. In fact I specifically stated "return".

A house as an asset provides a period return.
This is the argument for taxing the equity contained within the asset.

Remind me what the total return on an investment is made up of?
1. Income (rent/dividends/interest)
2. Capital gain

Is there another component I am not aware of?

I'm sorry, what's your point?

Does a house not fulfill those stipulations?

I think the point is simple.

A house doesn't provide a return unless an income is derived from it.

No income = no tax.

The average family home generates no income.

Lets make it simple for you to understand.

Bill has $100k to invest.
Wendy has $100k to invest.

For simplicity sake, rent is equal to a risk free return of 4%. ($4,000 p.a).

Bill buys a house and lives in it.
Bill now pays zero rent.

Wendy invests in a portfolio equal to the risk free return rate. She returns $4,000 (gross). This is taxed at 25% (again, simplicity), so she nets $3,000.
She has rent to pay of $4k per year, but her investment returns only $3k. Wendy has to top up her rent account $1k.
Wendy is sad.

What do we learn from this?
Who would you rather be - Bill or Wendy?

If bill derives no income from the house, then where does he pay the $4k in rent to?

Ah the old it has to be an investment example.

When does Bill make an "Income"?
- Is it when his zero rent has nullified the $300k+ interest he paid on his mortgage over 30 years?
- or is it when his rent has covered that plus his rates, insurance, maintenance, and repairs? plus all the other costs a renter doesn't have.

Oh wait, Maybe it's when he sells it next year after having bought it last year and watched it drop 10% in value?

Bill got taxed on his rates, his insurance, his maintenance, his repairs.

Bill has paid $5k in tax for every $1k in tax that Wendy has.

Bill is sad.
What do we learn from this?
Who would you rather be - Bill or Wendy?

This is like teaching people algebra.
Remember, what you do on one side of the fence, you have to do on the other...

- If Wendy took out a $300k loan to reinvest, the outcome would be the same. She'd be taxed on her return minus her financing costs.
- Rent is a function of rates, insurance, maintenance, etc. So, again, that doesn't matter.
- If Wendy sells next year, taking a 10% loss, she, again is in the same position.


Wendy is a hip young lady who grows her own tomatoes, capsicums, and lettuce in a small hydro kit she keeps in her kitchen. As a result she no longer buys these from the shop.

You are right, she must be taxed! Think of all that GST poor Bill is paying. It's just not fair.

That doesn't prove any point...

Obviously tomatoes is small fry, but let us assume that Wendy is Vegan and rather than investing her 100k in shares, she invests in a renter compatible growing system, that provided 100% of her annual food.

Bills annual food budget is $5,200 ($100 per week) of which 15% is GST. Does that not mean Wendy is gaining an unfair return from her investment? She is now deriving $5,200 per year in untaxed benefit.

Or do we have to include Bill's lack of rent in the equation?

But wait....

What about another renter called Millie, who has a husband James and two small kids. They invested all their 100k in DSE shares, and lost everything. Their annual food bill is closer to $12,000 per year. Maybe Wendy's return is actually this number?

My point is that you (TOP) are insinuating that "not spending" constitutes earning "income". This is a very precarious position to take for a tax system.

Now these examples you give are irrelevant.
You aren't comparing apples with apples. You are now comparing marginal utility/preferences. Not the tax on return derived from investment.
Essentially the tax saved from no GST equals the tax paid for the productive goods plus the time taken to grow the food.
Bill is much better off as it is much cheaper/more efficient to buy retail produce (including tax) than to grow it, for the average person.

"My point is that you (TOP) are insinuating that "not spending" constitutes earning "income". This is a very precarious position to take for a tax system."
The Swiss do it (well, some Cantons at least)...

You got in Nymad. Wendy is now paying zero tax on her investment. Naughty naughty better tax her.

The mistake you make in your scenario Nymad is to assume that home ownership for the sake of living in a house is the same as home ownership for investment purposes (i.e. to rent it out). You equate the two simply because it is a house in both scenarios. That should be irrelevant.
It's like when people compared the cost of water to the cost of petrol, simply because they are both liquid.
This is about personal assets versus investment assets, whatever they happen to be, e.g. an aeroplane.
No one cares if I spend my money on buying an aeroplane for my own enjoyment.
However, it becomes an investment as soon as I hire it out, because I have made an income from it.

Suppose it was argued that aeroplanes were far too expensive. Would you therefore say that the problem is this "loophole" that allows people to own areoplanes tax-free. No you wouldn't, because that would be silly.

firstly, a house to live in but being both the landlord and the tenant you don’t recognise the underlying or imputed rent for the house

So lets apply this stupid logic to owning a car - being both the driver and the occupant you don't recognise the underlying taxi fee - lets charge owners of cars the same rate as a taxi fare


People are advocating a Tax on someone else's opportunity cost.

The "income" of a family home is the imputed rental. You don't have to pay rent (or you can think of it as paying rent to yourself) and this is regarded as income. It is calculated as a part of our GDP.


I don't think your first statement is accurate. Both shares and property can be subject to CGT in certain circumstances;frequent trading purely for capital gains being one possible example.

I chose to ignore CGT, and focus on returns. Shares and Property are indeed subject to it, but again the tax is on the return (Profit) rather than the original capital outlaid.

Using the "equitable" and "Fair" arguments being thrown around here, you wonder if we should have a CGT on Cash. i.e. when deflation happens your cash is worth more so boom, tax it ;-)

Yes, tax just houses. Return to what they are supposed to be - homes, then those who have money to invest can go and invest it in proper commercial interests, with higher risk, yes, but at least no CG tax. I would happily do just that and will be putting it to the Labour party as well. Be bold, and make no excuses for it, I reckon.

why is it rubbish exactly?

..its rubbish to many who either have not read it or do not have the intellect to understand it. Some who disagree of course have read and understand and one can have no problem with that.... rational debate with alternate views is always required.

But unfortunatley most vote for the pig with the reddest lipstick.

Rastus.... Are you the one who gave Gareth that Line..?? As trump would say are fired.! :)

I loath Political correctness... So good on You..and good on Gareth..

Your attempt to insult just proves Rastus' point.

Shame on you.

Hey i don't care. The events of Trump, Key, Brexit and now Labour have shown that most of the populice decide an issue based on some other factor apart from policy.

A TOP policy on housing would do me no good on a personal basis - but would go a long way toward evening up the bias towards the asset class that exists in most areas of public law/ policy.

Easy to pick holes in TOP policy, namely because they are a new party, they take a new radical approach , they have few to examine, so are easy to zero on. They are not helpful to the established asset class who have no interest in adjusting the sytem they have manipulated so well. Ppty investors thats you.

Side by side they stand up to far more scrutiny than most comparable main party policies. We need these policies, but wont get them. Instead we will muddle along wondering why so much anger and frustration builds amongst the have nots. I guess we can just keep building prisons... or one day even a wall?

It is rubbish because it is all based on some rather extreme (and in my personal opinion - incorrect) assumptions.
1. That is that housing is unproductive, where-as other things, such as shares are productive.
2. That everything must provide a return.
3. That they are doing it to ensure equality across all "investment" types.
4. That the family home is a purely financial investment.

1. Housing is infinitely more productive than a share. Housing provides a need for materials, labour, consumables, services, all of which are ongoing for the life of the house.

A share on the other hand provides an initial bit of cash to a company in the form of an IPO (although the reality in most IPOs is that the money goes to the original owner who simply gets rich, rather than increasing production, training staff, expanding etc....) After that it does nothing. I can literally hold a share for 100 years and it will not generate one single bit of additional economic productivity.

2. Not everything has to, or can provide an economic return.
- does the photo of your family on the wall provide a return?
- does your beloved pet provide a return?
- does the long lost sock in the back of a dryer provide a return?

3. How can taxing one asset class, but not another provide equality? We don't tax the capital held in shares, or the current market value of shares, we only tax the dividend they return. So why would we tax the house.

4. A family home is just that, a family home. I did not buy my home in order to be a millionaire, in fact from all of my experience a house is a liability, I have interest on the mortgage, rates, insurance, maintenance, repairs, and consumables, all of which eat up my annual income (none of which is provided by the house) - oddly enough this is exactly why the house benefits the economy as a whole.

I think the single best example of all of the above it the example of the ignominious Mr Eaqub.

For years he has bleated on about there being no financial incentive to own a house. But as he also found out - there is more to the family home than finance.

By all means tax second, third, fourth, x properties.
Tax the rental properties, the vacant properties, even the Holiday house/bach/crib

Just leave the Kiwi family home alone!

Kids, this is why you should study economics.

So in the future when you argue with economists about economics and policy, you don't look stupid.

Kids, this is why economists should stick to lecture theaters preaching theories to the uneducated, rather than open their mouths up to the masses.

Yes, so that policy can be designed around the unique perspectives of much smarter people like yourselves.
I'd love to see that world.

In fact we should apply that one to all disciplines.
The natural sciences would be a prime candidate.
We'll just give Arts grads a blank canvas to make things all better with hugs, safe spaces, and the rejection of the scientific process.

Unique perspectives? Um TOP are polling sub 5%. I don't think I am the unique perspective.

But at least we finally come to the crux of all your pointless arguments - You honestly believe economists are smarter than everyone else?

You are right of course, we must not hesitate. Doctors, electricians, dentists, engineers, judges, labourers, coders, mechanics, and pilots should all immediately be replaced by economists.

It is the only chance we have to ensure we live in a better future.

At least I finally see what TOP means - The Opportunities for economists Party. I guess TOFEP just wasn't as catchy.

"But at least we finally come to the crux of all your pointless arguments - You honestly believe economists are smarter than everyone else?"
No. But I believe that when talking about ECONOMICS they are smarter than the overwhelming majority of others.
This is the point.

When you go to your Doctor with an enlarged prostate and he says he needs to stick his fingers up your bum, what do you say?
"Sorry doc, ya know what, I've been reading on the internet and I just disagree with you opinion in this case. I know you have the title Dr and all, but I just think I know more about this than you."

Fair point, But you are forgetting this isn't economics, it's politics.

Come election day, GM will only be remembered for a hopeless soccer team, his Death wish to all cats, and his Lipstick on a pig comment.

Maybe he should stick to economic, and leave the other stuff to smarter people.

The problem is basing a political wish on a prayer not how the world really works is courting disaster. Just who are these smarter people? the ones are lining their wallets? yeah right.

Noncenst try this for bias.

I have $500k but no home. My $500k produced income, enough to pay my rent if it were not for the tax. so I need to top it up by (lets say) $100 per week to cover my rent in full.


I have a home worth $500k, so I dont need to rent nor do I pay tax on the $500k income. The income being the use of a home (and thus no rent). I dont need to kick in another $100 as its tax free.

Both have the same invested and both get a return, but only one pays tax. And thats before we factor in the other bias, the saver gets no wff because he fails the asset test, whereas the home is exempt.

So those who have saved, but are renting, are permanently penalised by the tax and welfare systems.

Oh for goodness sake ............. its called CHOICE , something we value in our democracy , freedom of choice .

You can choose to invest in a home which is tax free , or in shares on which you pay dividend tax .

Either way , its CHOICE , you are free to choose .

Just because the homeowner has some short -term gain arising from that choice , you need to doff your hat to the winners

Wrong......again. Some can't afford a house. One reason being they are too expensive due to,tax and policy bias. Thus all they can do is save and invest. They can't reach the home ownership level and enjoy the tax breaks.

a $100 per week top up sounds a lot cheaper than the rates, insurance, maintenance, mortgage interest required to be paid on your own family house.

I see what you are saying, but it just doesn't hold true.

Let us compare two people, who both have $100k to spend.

Person A buys a $500k house. They have a 30 year mortgage at 5%
Person B buys $100k of shares.

Neither are taxed. Seems fair to me - don't you agree?

From this point forward
Person A pays out $495 per week.
Person B pays out nothing else

Again neither person is taxed. Again seems fair.

10 years down the track,

Person A is still paying out $495 per week.
Person B is making $5,000 per annum.

Person A has made $0 in income
Person B has made $50k in income.

Person B is taxed, Person A is not. Still seems fair to me.

20 years down the track
Person A is still paying out $495 per week
Person B is still making $5K per annum

Person A has made $0 in income
Person B has made $100k in income.

Person B is taxed, Person A is not. Still seems fair to me.

30 years down the track
Person A has just paid the last of their mortgage. They still have not made any income.
Person B is still chugging along nicely making $5k per annum.

Now over the course of 30 years. The totals look like.
Person A: Expenditure = $772,490. Income = 0
Person B: Expenditure = $100,000. Income = $150,000.

and you now want to tax Person A as they have the "unfair" advantage?

Why are you still making these stupid comparisons.
Compare like-for-like. The failure to do this is why you cannot grasp the basic logic.

If you are going to give person A a loan, you have to apply that to person B.
i.e. Person A spends %500k on a house, with a $400k mortgage. The comparison needs to be made with person B who is borrowing $400k in order to re-invest.

OK nymad apples with apples (I'll even make sure they are both Braeburn, to avoid all doubt)

Person A has $100k + $400k mortgage @ 30 years and 5%
Person B has $100k + $400k loan @ 30 years and 5%
We will only look at gross returns.

Over the course of 30 years. The totals look like.
Person A: Expenditure = $772,490. Income = 0
Person B: Expenditure = $772,490. Income = $750,000 (($500k * 5%) * 30 years)

We will assume zero capital gains on both, as everyone here likes to remind us (Housing doesn't always go up)

That is literally as apples as apples as you can get. Now you still want to tax Person A. Why?

Alternatively lets look holistically at it.
Mr Eaqub (Economic genius) is opposed to owning a house on financial grounds?
Mr Morgan (Economic genius) believes a house is not "productive"?

So can you tell me, as an economist - how can it be financially advantageous to rent and invest, and unproductive to own a house. Yet the homeowner has a productive financial investment that is better than any other, so needs to be taxed?

I give up.
If you can't work it out, that's your failing not mine.
Maybe someone else can sub in and give it a go.

Eaqub was opposed to owning on the basis that he could realise more productive use of his capital by renting. His choice to purchase came down to changes in his marginal utility of ownership.
Morgan does not believe that a house is unproductive. He believes that housing as a speculative asset is unproductive. More importantly though, he believes it should be taxed in the same manner that all other assets providing a return are.

I seriously have no idea why you all take exception to his proposal as it is highly likely that there would be no net difference in the amount of tax payable each year for you people.


You sum it up here, and I agree with this "Morgan does not believe that a house is unproductive. He believes that housing as a speculative asset is unproductive"

The minute he includes the family house (Which he is) he is deeming all housing, by all owners is speculative.

All I, and many others are saying, is that is clearly not the case.

If he kept the family house out of it, he would be fine.

I thought that TOP was finally being honest, by talking about taxing assets, but then they still trot out that old "loophole" line. It is dishonest.

1. No it isn't.

If there was a veritable feast of misalignment shoving money into housing, NZ would be building a world leading number of houses. In fact NZ has one of the slowest construction rates for new housing.

Which means the TOP will not solve the problem, but rather will do even further damage to the incentive to build houses. Thus by misidentifying the cause the TOP is actively campaigning to prevent your grandchildren having a house.

Why bother investing in innovation and technology when we can all shovel money into housing?

Then after everyone's money is in housing, keep that money safe and discinventivize investing in anything else.

I can understand introducing a CGT on investment property. If you have an investment property you are already completing financial statements, including anything you spend on the property. This makes it simple to work out what the actual capital gain is.
It is not the same with the family home. For example, if I build a deck on my house and it costs me $20k. If I sell my house after that for $20k more than what I paid, I shouldn't be paying tax on that. But I would have to keep records of everything in order to claim back the expenses against the gains made.
What a nightmare.

The title was enough for me NOT to read this article because I know that these guys are a waste of oxygen !!..

Pot, kettle.
(paraphrased, in case you were wondering)

Could you please precede your comment with a TL/DR next time for the same reason?

This isn't particularly new or exciting. It happens elsewhere.
"All homeowners in Switzerland must pay an income tax on their home. This tax is called the Rental Value Tax and is calculated by determining how much rent the home would theoretically yield if rented out."
The only difference might be the finer details of who can claim what against what, and when..... (eg: Negative Gearing is quarantined against property a singular/multiple properties and can be warehoused for 10 years on a sliding scale etc)

In the US they pay property taxes of upto 2.35% per year on the full value of their properties

Property tax is just rates, based on assessed value. In some places like California, this is limited in how much it can go up every year, the idea being that this would keep people from being taxed out of their homes. If a property is sold then the sale price is the new assessed value.

They can also offset this against their income as an expense

here is a senario...
Family buys a family home for $1 million and they borrow $500, 000
TOP taxes them each yr on their equity.. over 10 yrs ...say $70,00 in home equity tax
( say pretend income of $50,000 ( 5% of equity) taxed at 30% = $7000/yr )

10 yrs later they sell the home for $700,000 ( because the mkt has crashed )..
Their $500,000 equity is now , $200,000... and they have paid 10 yrs of TOPS "equity" tax. ( probably at a high valuation ).

Where is the fairness in that..??
IF something is based on underlying first principles, underlying reality, it should stand up to the scrutiny of all sorts of different scenarios..

TOPS tax is a nonsense in my view. All they are trying to do is tax Capital gains, before they are realized, and their "pretend income tax" is the only concoction they can come up with to justify and rationalize taking something before it is earnt.

ask yourself.... If there was no Capital gain...and house prices stayed the same , would TOP still be promoting this policy..?? I don't think so, but they would be compelled to because they believe in this idea of a "pretend income" that we earn by living in our own home... ( ie.. a socalled tax free benefit ) .. or so they say.

AND... To TOP out their sense of fairness they are going to exempt ALL financial assets..

I certainly don't see them as the fairness party.

It would be better to do the sums factoring in the effects of land tax on prices - i.e. lowering them due to reducing speculative investor demand. You also haven't factored into your scenario reduced income taxes that balance out the above.

What we know from NZ's own history is that land tax was used to break up land banks and get land into the hands of everyday Kiwis - so it's hardly all doom and gloom.

Might not be the most attractive news for investors, obviously. But for Kiwis wanting to own a home, one could see the attraction of a reduction in income tax, and a reduction in speculator-driven housing bubble pricing.

"What we know from NZ's own history is that land tax was used to break up land banks and get land into the hands of everyday Kiwis - "

Let us say this is correct for the sake of the argument - it still has extremely little relation to TOP policies. .
They do not propose to tax land bankers in a graduated way as was done in the past ; they propose to heavily tax ordinary home owners to finance handouts elsewhere. You are well aware of this of course.

They're also proposing to drop income taxes, as I noted, so that 80% of people would be better off.

In the end, the more home ownership plunges the more these ideas will get significant airplay.

How do they know 80% would be better off?

You cannot tell me they have polled a bunch of homeowners on income v house value.

A quick run around my friends, and a 1.5% house tax v a 10% income tax rebate would see 7 out of 9 homeowners worse off.

The stand out reason seems to be because we all purchased the house with two incomes, and are now down to 1. Either due to Kids, job losses, or separations.

I can imagine that the above scenario would likely apply to more than 20% of the population. In fact it would probably apply to >80% of FHB, which is the very group TOP are claiming to help.

The "80% off" statement is simply plucked out of thin air . They have not done their sums ( impossible to do without having a detailed policy on income tax reduction).

Would be better to do CGT, but the owner pays provisional chunks every year based on GV - then when the house is sold the difference is reconciled via a tax refund.

TOP's followers on Facebook come across like a cult following their Messiah. It's like find and replace has been used on fundamental religious dogma e.g. "don't you care about your grandchildren's future?". The FB profiles for these people include anti-vaxers and others I suspect are ex Green supporters. No doubt attracted by the thought that TOP will do its best to burden evil property owners with taxes until they see the errors of their ways.

Who cares. TOP has no chance of getting into parliament so their policy is as effective as Mana/Internet parties were at the last election. Same outcome as them. Yawn

Precisely! TOP's objective is to "Make people think!!". What better way to shake up the 'established' parties than by throwing 'outrageous' policy into the mix. If TOP can't stimulate discussion, then which party will? ( Given that, as Alex wrote this morning, they don't want to 'Scare the Horses")

This country fears the TOP policy because it may require work, thinking, sensible allocation of capital all leading to higher productivity and a higher standard of living. Anything making us more prosperous doesn't bear thinking about for some.

Nobody cares about TOP or what they have to say other than that they are a laughing stock.

Maybe. But if you had a choice just between Labour's CGT and TOP's Rent on the Family Home, who would you vote for?

Thankfully we have more than two parties to chose from.

You are not selling me.

"1. It is the biggest tax break, and is the root cause of rising house prices."
Major assumption being that it is a purely financial investment. Which it isn't when it is a "Family" home.
Come on, there is zero proof that the tax free aspect of the "Family" home is causing the price increase?

"2. Exempting the family home means the tax loophole remains."
Yes, but a very easy loophole to close.
1. Owner(s) must have lived in the house for x period prior to sale, or
2. House must not have derived a rental income for x years, or
3. Property must not have been bought and sold within x period - (We already have that one for the current CGT)
or all of the above.

"3. Exemptions are the enemy of any tax system."
Agree wholeheartedly, but sometimes exemptions are just, fair, and right - that's why they are exemptions.

TOP (in fact all the pollies) need to sit down and ask themselves one question.
Who Votes?
a) Corporates
b) Lobby groups
c) Trusts
d) Individual Citizens

Last I checked it was "d". So Leave the family home alone, and go enact a revenue (Income) tax on corporates, rather than taxing profit. Alternatively let me only pay tax on my "profit" each year, i.e. Income-expenses.

Green Party press release from today below. When I read the headline I was genuinely enthused - I thought they were finally announcing that they would include 'the family home' under CGT. But, no. They're still trying to call it a "comprehensive" Capital Gains Tax followed by "(excluding the family home)."

Greens will finally close property speculators tax loophole

The Green Party in government will end the tax advantages property speculators currently enjoy under National by implementing a comprehensive tax on capital gains, the Green Party said today.

The Green Party is the only political party to have consistently called for a comprehensive capital gains tax (excluding the family home) for more than 15 years. The IMF, OECD, and the Government’s own Savings Working Group have called for a tax on capital gains. National’s 2009 Tax Working Group found that the inconsistent taxation of capital in New Zealand breached all the principles of a good taxation system and significantly distorted investment decision across the entire economy.

“A comprehensive capital gains tax just makes sense and it’s time to just get on with it,” said Green Party Co-leader James Shaw.

“We’re facing a housing and a climate crisis so a capital gains tax and a proper price on carbon are two measures we want to see addressed in a first term of a new government.

“New Zealand is one of the only countries in the developed world to not tax capital gains consistently, which has helped to fuel growing inequality between those who don’t own a home and those who now own ten.

“A capital gains tax will make houses more affordable for young buyers who are currently priced out of the market, while property speculators will lose the current tax advantages of investing in and sitting on property.

“A comprehensive capital gains tax would also benefit the economy by shifting capital out of property speculation and into productive enterprise, creating more jobs and lowering the cost of borrowing for business.

“Exporters would gain from a capital gains tax as it would help take the pressure off our overvalued currency – driven higher from highly leveraged borrowing in the housing market.

“Taxing capital gains more fairly is one of the most economically transformative initiatives we could take, and delivering a fair and workable new capital gains tax will be one of our priorities in government,” said Mr Shaw.

Green Party policy principles for a capital gains tax:

·         inflation adjusted

·         realisation-based

·         applies to assets sold in New Zealand

·         includes a blanket exemption for the family home

·         treats capital gains as income for tax rate purposes

Inequality is getting worse in NZ. That is inequality of wealth. Wealth is accumulated capital.

What is fundamentally wrong with a wealth gap as long as society looks after the vulnerable and allows the rest to access resources to be productive self-supporting members of society, if they choose to use them?

There is always a range of wealth. This tax wont change that. The purpose is to ensure those getting rich on the back of increasing asset prices pay a fair share of the tax.

- Property investor structures mortgages so he makes an income of say $50k from rent and uses the capital to constantly acquire more properties. Sells after 10 years (but never meant to) and makes $10m. Total tax paid is $80,020.
- Brain surgeon makes $1m/year for 10 years. Same total return of $10m but he has paid $3,209,200 in tax

Is this fair?


Yet another example featuring the evil property investor. Why not use a FHB, after all Gareth wants to tax them as well?

I don't hear anyone saying let investors get away with it. I do see a lot of people saying leave the family home out of it.

A FHB has little capital so will be mainly paying income tax. They would pay a third less tax under the TOP policy.

You could replace the property investor with a company owner or anyone who uses capital gains to make a large tax-free gain

"A FHB has little capital so will be mainly paying income tax."

A big assumption...

Looking at my peers (all FHB in the last 5 years) we are all late Gen-X/early millennial. We have a partner, and few if any kids. Combined net income (at purchase time) is probably $1.5-$2k a week.

We have also actually listened to our parents (boomers) - just don't tell them that. We know interest is bad, we know it compounds, and we know it has been (and could be again) 20%.

So what do we do?
Answer: We pay our mortgage off quickly, using a very simple trick.

Looking at my peers, we were all renting while saving the deposit. As soon as we own this double up in expenditure vanishes.

Pre-house: Rent = $500pw, deposit savings = $500pw, other expenses $500pw
Post-house: Mortgage = $1,000pw, other expenses $500pw
End result, no decrease in lifestyle but we now pay the mortgage off at twice the rate we saved the deposit.

So now we probably have a lot more equity than what TOP (and our parents) think.

On to income....

What is a common reason for buying a house?
Answer: to start a family

Again, looking at my peers a lot are down to one income, mostly due to Kids, but there is also the odd job loss/separation.

So within 5 years, many of us actually have half the income we did when we purchased.

So now we have a whole cohort of FHB that within 3-5 years of the purchase of their house have high equity and low income.

How exactly will TOPs policy benefit FHB?

Because TOPs asset tax will come with an income tax reduction. I'm tired of paying income tax while lazy rent seeking parasites pay nothing. NZ rewards non-productive parasites far more than hard work.

Is inequality getting worse because of bad life choices , no savings culture , wasteful and fruitless expenditure of fast food, alcohol and ciggies , and worst of all not living within their means ?


Because there are people who are careful and save , dont waste money on rubbish , or fast food , dont incur expensive debt on things they cannot afford , dont gamble , and live within their means ?


Is it something else causing this ?

Wealth transfers upwards when asset prices, or return on investment exceeds GDP growth. That's a key conclusion from Piketty's Capital in the 21st Century.

There was a separate piece of research carried out by, I believe, Harvard that concluded that inequality occurs between people that don't invest and those that do. The conclusions point to the same issue with investment asset inflation.

@ dictator thats the key premise of Piketty's work , that compounded return on investment will exceed GDP growth over time and more so from one generation to the next when the wealth is handed down , and he is essentially correct .

Our growth in wealth worldwide is due to this, but my question remains , why should those who have been frugal and saved and invested be punished with some form of wealth tax ?

@Boatman the reason for those that have done well paying proportionately more (whether income tax or equity/capital tax) is because they are benefiting from the economy everyone is contributing to. This allows for those that are at the bottom to benefit from that economic success.

For New Zealand that economic benefit is paid substantially to pensioners so they can pay bills and eat rather than die from not being able to afford basic human rights.

Based on mine and my wife's siblings it's a range of things, not least of all the ability to find a partner and remain with them.

Yes , divorce is expensive and destroys wealth at a spectacular rate

not least of all the ability to find a partner and remain with them.

Good God, lets tax them

In my personal experience...

Prior to working in poverty alleviation in the Third World, I wholeheartedly would've said most problems among the impoverished in NZ are down to bad choices.

After working in poverty alleviation in the Third World, and after noting how similar the problems we have among our impoverished here, I'm much less inclined to think that way.

The question we have to ask ourselves as individuals is, "Were I born into such circumstances, what makes me think I would buck the statistics and turn out differently?"

I spent more than 15 years working in developing countries. There were a multitude of reasons why people were relatively poor in those countries, and likely to remain so.

Aid projects focused on health, education and governance but ultimately it was the existing societal wealth, rate of its growth and the number of people that shared it that determined their future individual prosperity, distorted in some cases by corruption.

Having watched these countries work it made me realise how important it is to have individual enterprise grow the cake rather than focus on distributing it. I also realised how hard some people will fight for a chance to improve themselves. They were stunned by the base support given to their equivalents in NZ.

built a rental portfolio to retire comfortablely will be ripped apart

Built up with savings I can apperciate. Built up leveraging capital gains i cannot.

The democratic process will show in 31 days that NZ simply does not want to return to pre industrial England where the few owned everything, and everyone else was a rent slave. By the increasingly stressed looking posts by Ponzi supporters, it seems to be dawning that NZ is still a democracy, and that those sick of how out of balance this has become are about to vote for big changes.

Vote for the few (specuvestors and record bank profits), or vote for the many (everyone else).

Regarding the old mum with a rental portfolio. Well done to her. I'm sure based on her original investment prices she will easily be able to live on the rental income to support herself. If she cant, then clearly it is not structure properly, or developed to highest and best use. If she does not want to develop, sell it to someone who does and enjoy the money.

Your talking about hundreds of thousands of pensioners in the same posistion, WTF should a pensioner have to sell up to pay money to the NZ government after years of prudent saving and sacrifice while the beneficieies and the to lazy or scared or both have their hand out, life is to be equitable but not equal...

Tax my home and I am buggering off to Australia .

I already pay Auckland council rates of nearly $5,000 a year, and that's too much tax for the council which no longer does much of what councils traditionally are supposed to do for ratepayers .

sounds like a win-win to me ;)

I don't think you'll bugger off when you get a corresponding 30% income tax cut here in NZ, and then realize Australia's top income tax brackets are 37% & 45%, and they have a CGT and stamp duty.

How does this work? I have a modest rental property in a small rural town. I have worked hard so it is now mortgage free. Still have rates, insurance and repairs and maintenance to pay. Estimated value $350,000. I have great tenants who have been there 10 years and pay $250 pw rent. If the property should return 5% or $17,500 - I will need to raise the rent to $336 - about 30%. Is this the intention or have I got it wrong?

The deemed rate of return of $17,500 is then taxed at your rate, say 30%, so tax payable will be $5,250. This is also offset by a reduction in your income tax rate by say 10% (figure is not yet confirmed and will be set at a rate that is neutral overall)

It might not be 5%, it would less than or equal to the risk-free rate.

But ask yourself: if your property isn't earning you what you could earn by sticking the cash in the bank, then why do you have that property at all?

Or is it that you are getting over 5% return? In the form of untaxed capital gains, perhaps?

Taxing people who own their home in pursuit of some egalitarian socialist agenda to address inequality is focusing on the the symptom and not the cause of that inequality.

People have become poorer that the wealthy for many reasons , the list is endless , so why punish people who are slightly more successful than others

Asset inflation is a direct cause of inequality Boatman. If there was a CGT on housing it would result in lower house prices in many regions. As a result people wouldn't need to pay so much CGT and houses would be more affordable.

Inflation is caused by Governments , so why should I be penalised twice , once when my Dollar buys less due to inflation and again because the same inflation has caused my home to increase in value ?

As to your second point that CGT would reduce house prices , I have but one question for you .

When has a new tax EVER in the history of mankind , made something cost less ?

Its simply either delusional or plain wishful thinking if anyone ever thought a new tax that has to be paid by someone, would magically make something cost less.

I would simply ask more for whatever I was selling to cover the CGT , and if I could not get my price , I would not sell the asset .

The total tax take is the same just capital is paying a share for a change. Your income tax will reduce. 80% of people will pay less. The 20% paying more are those with large amounts of capital.

TOPs approach is an equity tax so you might pay 1% on the value of your asset (whatever the suggested amount is). That constant outgoing cost would have to be factored into investing in property. Although you've suggested that it wouldn't decrease house prices, you could be right the general population may be so stupid that prices don't go down as they want to pay more tax. That's good for anyone generating an income as that would allow income tax to decrease a lot more.

So 1 % of the value of my home is around $20,000 which will have to be paid from after-tax (PAYE) income , implying that a huge chunk of my annual income , PLUS Auckland council rates of just under $5,000 a year , will be shelled out as TAX .

While I could afford this each year , I doubt most people could .

If it was in place it would make people structure their retirement portfolio so that they would have income to cover tax costs like that.. At the moment people are heavily loaded up on housing and many don't seem to have much income. Asset rich cash poor. It doesn't seem to create a problem for many retirees right now. You could say it might encourage better behaviour.

Becoming wealthy from rampant capital gains via property has nothing to do with being successful, Boatman. You just had to be born in the right year, buy a house when they were affordable and wait 25 years and then sell it.

There are many people in my age bracket 56 to 65 that are renters , including family members .

My cousin too could have bought a home 20 years ago , both were working , and had good jobs , the breadwinner was a C and C machinist having done a trade in the early 1980's but instead they job hopped and spent every cent they earned each week , always had the newest and the latest Holden on credit , saving nothing and living the good life .

Now they are stuffed , in their 60's and struggling to make ends meet .

I feel sorry for them , but they had choices and I never understood why they never bought a home

Imagine a whole generation of people in the same boat as your friends who made bad choices. Instead they don't have a choice because housing is unaffordable.

@dictator ........... you are right , they dont have choice now at these house prices , but why penalize or attack those who made other choices which involved sacrifice and discipline , which resulted in better outcomes ?

The whole younger locked out generation is a problem , but it has more to do with immigration increasing demand than anything else

Its really no different to a rugby match or the America's Cup competition , there are winners and losers and an occasional draw , but your decisions affect the outcome , and those decisions are training , team selection , tactics , game-plan , strategy , and execution which will make you more successful than another .

It would be unthinkable to have an All-Blacks test match where the losers get to take 10 points off the All Blacks score and have it added to the losing team score because the losers played less well or made bad choices

@Boatman that simple comes down to political belief. You can go more capitalist if you wish. While I like the benefits of capitalism and can thrive in a market environment (I couldn't see most of our MPs doing that as they are beneficiaries and useless), some can't for various reasons. The world is unjust and some people need help from the community. It's up to voters to decide how much we provide for those that are worse off.

I hope that provides some insight as to my perspective.

I like the comparison between housing and the America's cup competition - at the moment the winners make the rules so that it is easier for them to keep winning. However, the big question is for how long this will continue...

TOP's proposal is an equity tax, not a gains tax - so not sure why they keep comparing their proposal to a CGT. To me, it's an apples and pears comparison.

Isn't the policy comparison that between an equity tax on capital and a gains tax on capital? Massive difference, I'd have thought.

And once again, no mention of a simple land tax as another option in the mix.

These are the comparisons/questions that I would hope Labour's tax working group looks at. And it would be really useful I think to their argument to point out that in respect of the current/various tax proposals on the table by the various parties, not all the options are in the mix - hence the need for a first principles review. If they make that an open and transparent and publicly interactive/collaborative consideration - all the better. So many ways to use technology to get a real feel for the whim of the general public on this important but complex topic.

That's correct. CGT is a poor description.

i would have thought a tax on the value you own would be preferable to a tax on the full value of the land

I think people are mentioning CGT because he talks about it in the article in respect to exempting the family home.

This idea is nothing but Tall Poppy syndrome on Steroids .

Why should I be taxed on the equity in my family home just because I chose to pay off my mortgage many years ago by the age of 50 ?

Everyone on the median wage had the same option as me to do so , and if they chose not to , that's a life choice .

Why should I now pay tax on a deemed benefit that I planned for and paid for with after - tax earnings , and which took me almost 30 years to achieve ?

Have a read of this book. There's a number of conclusions at the end that would excite people involve in the immigration debate as well. It's a length read but quite an interesting approach with evidence.

I ordered Pikety's book when it came out from the Auckland Library , and let me just say , I got really annoyed my view its a load of left-wing nonsense .

He refer to the French wealth taxes of before , and how they amounted to very little and the fact the wealth never really changed hands ........... what does that tell you /

Quite simply , some of us are clueless about money, how to make it and how to keep it

Of course it's left-wing but when you distill down the issues causing severe inequality it's worth considering. As you've pointed out in your last sentence there's no cure for inequality, but that doesn't mean we shouldn't do something about it.

I am sure the conclusions would excite . Trouble is that if you actually read the book and examined the evidence you would find they are entirely without basis.

I see you've provided a complete list of the publications decisively refuting the his book in your post.

You can find plenty of publications pointing out the flaws in his statistics..
Perhaps the most glaring fault is the complete omission of any consideration for age pension entitlements which have grown dramatically over the period he investigates.
Applied to NZ situation it would mean ignoring NZ super completely ; per Pikkety if you are 65 in NZ and have no assets you would be dead of hunger within the next few weeks.

Is there anything worthwhile published that you can link. It would be more helpful than just drive-by comments.

So what is your response to the pension entitlement omission in his analysis ?

Theres a lot of bitter posts here , just remember astute investors will work with a CGT an wont lose sleep.
But there's a lot of paper millionaires out there,who rely on capital gains

People are upset that they might have to pay tax on their capital income. There was a similar fight when income taxes were first introduced. Somehow the world didn't cave in because of income tax.

You are confusing CGT with TOP policies.

This is just crazy

Assume the wealth tax is set at 1% of the value of the assets , this would mean that I would have to find up to $20,000 each year to pay the asset tax on my home alone .

PLUS Rates of almost $5,000 per annum to Auckland Council

Plus Income tax at 33%

And GST at 15%

At this rate of taxation , I would do better to emigrate to Australia with my capital and assets , or stop working and go on the benefit until I get the NZ Super !

pop quiz:
- Person A earns $140k/year and owns a $2m house mortgage free.
- Person B earns $200k/year but doesn't own a home. They rent a house worth $2m to live in.

Question - who is wealthier? Which financial position would you rather be in? Who should pay the most tax?

Answer 1 - our current system says Person B is wealthier and should pay the most tax because they earn more income
Answer 2 - TOP say they are roughly equivalent and should pay about the same tax
Answer 3 - I don't think TOP goes far enough and person A should pay more tax

It's a question of fairness.

So it is irrelevant to "fairness" that Person A has paid for his house out of his after tax income some time ago ?

who said that was the case? Maybe person A inherited the house? Maybe they sold drugs and bought it with the profits?

The point is it doesn't matter how they got there. The tax system only looks at what people own or have earned in the last year. The history of how they acquired that doesn't matter for tax purposes. Those are the assets and income streams they have today.

So given that information for this tax year, how should our system tax those two individuals? Who should pay more?

"who said that was the case? "
Of course it is not the case for everyone. It is the case for some ( myself included)- but that obviously does not matter to your sense of "fairness."
"So given that information for this tax year, how should our system tax those two individuals? Who should pay more?" - the person with the most INCOME in this year, as it is the case in every country of the world.

Assets ( or a large part of them ) represent accumulated savings from tax-paid earnings . It is convenient for an asset-less person to overlook that but it remains simply a flimsy moral justification for plundering..

Boatman you need to read more and type less. Overall the TOP policy does not incerase tax paid. It merley shifts it to all income sources. And hate it as you might, a free home is income. Panic, not, as much is it should, it wont happen. Instead we wil get the mickey mouse cgt.

@rastus , I know that this argument is academic, TOP dont have snowballs chance in hell of forming the next Government with this new-fangled tax nonsense , which most people dont understand and cannot conceptualize

I understand too that an asset tax will replace some income tax , but what about my kids who have virtually no assets whatsoever .

They pay zip ?

Yes, your kids pay no tax on capital and also get to keep more of their salary through reduced income taxes.

My home is only worth $2,0 million due to Government incompetence with its immigration policy and Auckland councils utter ineptitude in planning the orderly growth of the city to accommodate those new migrants.

Now we have some jokers come along and say, that due to Government mismanagement , you are suddenly miraculously wealthier and must find a huge sum of money to pay a 1% wealth tax on that deemed wealth

Pull the other one, it may have bells on it

@Boatman I think you'll enjoy the Greens new policy of CGT. An actual tax on capital gains with no exceptions, no TOP style equity tax. I think they are trying to make sure they don't end up forming a Government.

@ dictator , thanks for the link , I think you are right . The Greens are showing signs of wilting completely from the NZ Political scene .

I predicted this a fortnight ago when the whole thing exploded , but even though I dont like them , they have been excellent in raising awareness of environmental issues .

They should have stuck to that as their core values , instead of wading into debates about other unrelated social issues and ills

..I suspect you underestimate the public sentiment for a cgt.

Imagine how you might vote if assetless? ....and more and more are as the asset owners have vacummed up family homes like slave masters.

@rastus My adult kids are " assetless" to use your word , but they are very ambitious and I dont see them voting Labour or Green , although my eldest daughter who is influenced by her work peers might vote Labour .

She is on the Novopay payroll , which gives you some idea of her situation , she will never afford an Auckland home without our help , which is both tragic and annoying .

Your help need not be purely financial. It could also be in the form of opening up discussions again about the role of (for example) Public-Private Partnerships in fostering affordable housing across NZ's history.

Some of the exact same issues were faced in the past. Developers building large, unaffordable houses because that's where the profit is. A shortage of affordable housing for hard-working everyday NZers. The market didn't solve those problems by itself in NZ's past.

@rickstrauss A thoughtful response , thank you .

Maybe the market will not sort out the housing crisis without intervention , but we need to do something .

A new tax will not sort it out , and if anything will curb our ability to help our children ever buy a home .

The massive increase in the deemed value of our home is a direct result of Government incompetence in seemingly unregulated immigration -without -a - plan and Auckland Council strangling the city's growth through poor planning .

I agree a tax won't sort it out, and definitely agree with the factors you've cited. They're major issues.

I think a tax of some sort could deflate speculative air out of the housing bubble. At the very least, the five year bright line and removal of negative gearing could address that partially.

Seems like we need a multi-faceted approach from a government willing to take action. That's the main problem I have with the current lot...I simply don't believe based on the last nine years and the refusal to admit there's a problem that they will ever take meaningful action that has a chance of having real effects.

I don't think Labour is perfect, I've never voted for them before, and I'm not yet decided who I'll vote for this time around. I simply think that National doesn't have the answer for your children or my young relatives.

It reads 'Under the Green Party policy, capital gains would be treated as income for tax purposes, a blanket exception would apply to the family home, and the tax would be inflation-adjusted and realisation-based'

As far as CGTs go this is more reasonable than most, which is good as I might have to vote for them to ensure they get in parliament and spoil a potential WP/Adern government which then leads to a WP/BE government which does stuff all for three years. Then I finish working, Labour gets in. My son and I get free tertiary study which I apply to a helicopter pilot course because everyone wants to employ a 60 year old new graduate. I need a lie down.

I’m not convinced CG on property will have the desired effect. All it will do is tax those FHb again when the assets (family home) is sold through the parents estate and distributed to the next of kin.

In addition we could be in for capital losses for the next 10 years - who knows?

CGT may also result in less stock turn, as owners hold onto property indefinitely.

Taxing CG is enormously complex and expensive. Accountants will make a heap, as will lawyers and valuers. And IRD

Once CG is bought in there’s no turning back.

Commentators on this forum are hoplessley confused between the asset tax being proposed by TOP and Capital Gains Tax as proposed by Labour .

Both are quite awful in my view .

Its called communism and the worst kind whereby only the corrupt elite party members, bankers and the upper echelons of large corporations live in nice homes the remainder will only be able to afford to live in prefabricated kit set homes in housing estates and the elderly will be shipped off to live in increasingly awful retirement "homes", oh and by the way there will be no escape as you will not be allowed to end your life. This will truly be the end of the middle class.

Err...but that sounds awfully like what we're creating now, under the guise of "capitalism". Our brighter Dickensian future.

You are correct, both unfettered capitalism and communism it seems to me, eventually ends up with the same result. Goodness knows what the answer is, but I personally would prefer capitalism as people are generally healthier mentally if they are able to achieve a sense of self worth without excessive long term hand outs from a government. I think Winston is the closest we have in NZ at this present time of reining in both schools of thought.

A bit of both works best, that is why the political centre is where elections are won.Having said that, we are going to be facing a future where capitalism as we have known it will not deliver as it has in the past. We are going to have to get our thinking caps on to work out how we prosper in a time of reducing population and the takeover of technology.

Yes, that is why there is going to be increasing civil unrest, so someone had better get a wriggle along, my thinking cap is somewhat limited and rapidly decreasing in size. I had hoped there was a political party out there that would put our best interests first and believed part of my tax was paying for this. Maybe politicians should be paid on a commission/performance based system.

I remember having to go to classes on how to fill in your leisure time as we would all be working a 30 hour week with the introduction of computers. Well that never happened. LOL

A CGT on the family home is plainly wrong. I spent most of my life not having holidays, going out for dinner, eating takeaways and nor did my children have these luxuries so that we could have a home and it would eventually be passed on to them. We may as well of just gone out and partied up like the rest who decided buying the latest fashions and phones was more important. We would of been better off. I am now thinking it would be better to give my house to my children now and hope they don't throw me out before I die.

To bring some numbers to this debate:
Based on a 10% income tax cut and a 1.5% capital tax, anyone with equity less than 6.67x income would be better off

E.g if your household earns $100k and your equity is less than $667k then you are getting a tax cut.

And Super for a single person would increase by about $2k/year

i would have though that taxing a personal asset is the start of double taxation. This starts the ball rolling on the complex issue of what constitutes a tax and what is a duty and what is a rate able service charge. If you tax a personal asset then double taxation occurs at various times in the life cycle of the unit of purchase or the abstract unit of money and its transformation into various forms of personal assets. The we move right on to what personal assets are taxable and the time interval , the rate , the definition of a personal assets and a business asset. ...... and thats just the simple start of the conversation...i really dont think people realise that tax has already been paid on the income earned and on the deposit saved to purchase the family home. The fact that house prices rise is more a function of an expanding population. Once again once you start taxing a personal asset you must have a model that rationalizes that personal asset as taxable over above say your Art collection, your wine collection, your Gem collection, your Car collection , your metals collections ect... your ....... what ever collection is an investment ....the moment you tax personal assets you will have side effects to where a person taxed income is spent. Your trying to tax a side effect of another problem when you try to tax a personal dwelling or any personal asset. The increase in price of a family home is not a business asset that generates taxable incomes and the country is not missing out on a tax opportunity as the house its self will generate GDP far in excess of the capital gains taxes in the life cycle of the family home, it maintenance, its insurance, it rates and even its garden. All personal money that has had tax paid on it will at some point in time re enter the monetary system in one way or another, just like the money multiplier. All your really going to do is create more work for accountants and the tax department.