The proposed capital gains tax presented by Labour has achieved two things
(a) A necessary discussion on a subject that had to be aired – whether for or against
(b) Guaranteed that Labour will not win the next election .
The proposal as described has been badly cobbled together and will alienate too many people when the logic is digested.
To tax share transactions is seriously flawed as encouragement should be given to invest and if necessary divest shares as and when required.
Farmers being taxed on their land holdings is also a very bad move. The farming lobby is very powerful and it is well known that it doesn’t take prisoners.
“Grandfathering” property purchases so that the tax does not apply to current or future investments until the law is brought in would create the biggest property boom in history as investors buy up big before the door closes.
And of course rent would sky rocket as post-tax investors would need to cover the 15% proposed tax when doing their sums.
Worse still there is no allowance for inflation, no sliding scale for time held, and worst of all exempting private homes transactions when we all know that the biggest speculators of all are the Mums and Dads who buy and sell their own homes.
Just to add a twist we see that the proposed tax will end up as death duty or an inheritance tax. Passing on a property under a will is to be free of the tax but the inheritor will pay tax if they sell the property later.
All the folk who love the idea of “taxing the rich” always quickly change their minds should it ever apply to them .
I am of the opinion that this notion will sink with all hands because of its seemingly last minute crudeness and rough edges.
The delicious irony is that now National must appose this idea leading up to the election which ensures that the whole subject of Capital Gains Tax will remained buried for years – if not for ever.
By Alex Tarrant
Labour will contest the November 26 election with a 15% capital gains tax on assets other than the family home, a 39% top personal income tax rate for incomes over NZ$150,000 and a tax cuts for the majority of taxpayers.
The task of winning the election will prove to be a hard one, with Labour languishing behind National in the polls – it sat below 30% before this package was announced while Prime Minister John Key continues to trump Labour’s Phil Goff in preferred Prime Minister stakes.
Labour is touting its new policy as a credible alternative to the government’s economic plan, which includes NZ$5 billion-NZ$7 billion in proceeds in the next five years from selling off minority stakes in four state-owned energy companies as part of an attempt to reach a budget surplus in 2014/15 with net government debt remaining below 30% of GDP.
The policy released today was centred around a 15% capital gains tax on all capital assets bar owner-occupied housing from the 2012/13 financial year. The tax would not collect much revenue in the short-term. Only NZ$18 million would be collected in 2012/13, with annual revenues rising to NZ$2.27 billion per year in ten years time, according to research done for the Labour Party by BERL.