Pressure from all sides

Olly Newland’s Column, March 2010

NZ Prime Minister John Key made a fundamental blunder when he recently delivered to Parliament his views — the government’s views — of the proposals from the Tax Working Group.

Quite rightly he booted out the looney leftist ideas of land tax and capital gains tax (typical notions that arise from those whose lives are filled with envy whenever they see people other than themselves doing well).

However he caved in on one recommendation and gave a clear signal that the treatment of depreciation on investment property would be attacked in the Ministers of Finance’s Budget due out in May.

What the new measures would be was not made clear. No details were given … so the public has been left guessing about the imminent new measures.

Neither, it seems, has anyone considered what the flow-on effects may be — and what unintended consequences may eventuate.

Even more disappointingly, by innuendo the Prime Minister appeared to go along with the suggestion that property investors act as some kind of free-loading extortionists ripping of the system while swimming up to their armpits in ill-gotten gains.

It appears that he chose to be ‘the populist’ — swayed by the ignorant masses who bay for blood, revel in public hangings, while cutting everyone down to size at the first opportunity.

The government as a whole has stumbled badly this time, which is hard to understand given that the Prime Minister and the Minister of Finance, Bill English, both have a good background in finance. Surely their collective wisdom would have taught them one thing:

Uncertainty creates unease and unease creates distortions.

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