Under Labour does it mean The FIF tax will be dumped?
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Under Labour does it mean The FIF tax will be dumped?
I think Goff may be a little lactose intolerant. Why keep GST on that nutritional staple, the bottle of milk. Doesn't he want the poor to stop drinking Coke? While we are at it why not take GST of porridge - nothing like a plate of hot gruel to start the day for the underprivileged.
I'l now be interested in how landlords react. We are desperately short of housing stock and we need private individuals to invest in that market since government only holds around 15% of the total stock. If we see landlords retreat govt will need to spend more on housing which will see the CGT head off to more housing purchases by government. Kinda defeats their purpose since they see investment in housing as unproductive.
Landlords won't care. Nobody will because Labour will not see the treasury benches while Goff is at the helm and the new broom will rework some of this stuff. But that's two elections away. They haven't got a Goff replacement yet unless Clayton Cosgrove has a fling. Hughes has gone. Shane Jones stuffed his chances. Cunliffe would not appeal to the masses. David Parker just aint got it. National are pretty safe for long enough.
So you buy 6789 shares of XYZ on a particular date, reinvest in their DRP and acquire another 73 shares on another date at a different price, then subscribe to a rights issue on another date at a different price, some time later you sell 357 shares (at a loss), buy back another 900 shares at another date, then another company takes it over using a mixture of script and cash payment.
Now multiply that by however many shares in your portfolio. Is there an easy way around this or do we have to have to spend all day in front of a spreadsheet?
Perhaps a Financial Transaction Tax would be a better option than the Labour proposal http://www.makefinancework.org/home-...r-a-financial/
Because among this sad Labour lot I doubt that there is one of them who has any commercial experience, or any they can remember. They simply do not know how the world works. You are right abour Roger Douglas. He rejected CGT because as he put it 'it stops things happening' and his no exemption GST should never be tampered with. It works, and it's simple and leaves little room for dodgy stuff.
Think of all the extra people that will be needed in the IRD. Everyone will have to file tax returns again to ensure they only get the first $5,000 tax free. Up goes the state servants numbers again.
Actually I can live with the CGT but I can't agree with the GST being wiped off fruit and vegetables, and the increase in the top tax rate is just a typical Labour "anti success" tax. The first $5,000 tax free is simply a vote bribe. All political and not fiscal.
No most likely people will only need a PTS, this involves minimal human intervention if requested online.
CGT is really a tax on inflation !!!!
Purchase Price 500,000
Average Inflation 3%
CGT Cap Gain P/Cent
Year Inflation Cap Gain 15% After Tax Loss
1 515,000 15,000 2,250 12,750 0.44%
2 530,450 30,450 4,568 25,883 0.86%
3 546,364 46,364 6,955 39,409 1.27%
4 562,754 62,754 9,413 53,341 1.67%
5 579,637 79,637 11,946 67,691 2.06%
6 597,026 97,026 14,554 82,472 2.44%
7 614,937 114,937 17,241 97,696 2.80%
8 633,385 133,385 20,008 113,377 3.16%
9 652,387 152,387 22,858 129,529 3.50%
10 671,958 171,958 25,794 146,164 3.84%
11 692,117 192,117 28,818 163,299 4.16%
12 712,880 212,880 31,932 180,948 4.48%
13 734,267 234,267 35,140 199,127 4.79%
14 756,295 256,295 38,444 217,851 5.08%
15 778,984 278,984 41,848 237,136 5.37%
16 802,353 302,353 45,353 257,000 5.65%
17 826,424 326,424 48,964 277,460 5.92%
18 851,217 351,217 52,682 298,534 6.19%
19 876,753 376,753 56,513 320,240 6.45%
20 903,056 403,056 60,458 342,597 6.69%
Cpoied from a spread sheet, Hope it comes out right
Cunliffe tried to explain that the 15% they went with instead of tax payers marginal rate was in part 'an allowance for inflation'
If they get it in then watch the rate increase a year or down the track. The more they get the more they will waste.
That depends on whether the tax is on the nominal gain, as Goff's scheme intends, or the real gain, as is in many countries. Nominal gain is esay to impose and collect, but quite unfair, whereas the real gain leads to huge costs, both for the victim and the IRD.
Belg..... I dont think so.
Fungus....... Yes heg...zak...ally.....
Q. Are we going to see a CGT on Gold ???
What a can of bloody worms that will open !!!
e.g. some people have been accum'ing for years,
how are they going to prove their purchase prices.
and so on !!
BB
P.S. black markets ???
Enforcement in this country is a nightmare - fraud is simple. UK and most places have field teams in place to counter fraud, particularly among beneficiaries. These people turn up in a van and observe. They turn up unannounced on work sites etc. The policy in NZ is that if benefit fraud is reported and as a probation officer, I was bound to report cases over the years, the standard reply was "Oh well we'll get them in" The fraudster only had to go into the office and deny the allegations and that was the end of it. One "boarder" was quite proud of the fact that he had a separate room fully set up as his room which he never used. He paid a minimal board so not to interfere with his partners DPB while he worked full time in a good job. Any capital gains tax will only go to benefits administered from an office and it is cheaper to pay fraudster rather than employ more staff. I know of others on ACC for years who work just about full time in the cash economy.
The same can be said for immigration. The only reason takeaways are as cheap as they are is due to the illegal migrants working out the back or staff who are paid well under statutory minimums. IRD misses out on loads of tax due to the cash nature of these businesses.
In many cases the employees are legally allowed to work but require the employment as a condition of their pending application for permanent residency. Often their employers take advantage of this. I came across an employer just last week who told two (legal) chinese workers they would now be paid 35 hours for their 45 hour work week because business was bad. As both had pending PR applications, they were too scared to rock the boat and risk losing employment so accepted the pay cut. Two workers who already had residency did not get the pay cut. The employer, also a Chinese national resident in NZ driving expensive cars and owning a nice home, belongs to a family whose net worth is in excess of US$100m. Not the kindest advertisment for capitalism (although I suspect a fair representation of chinese capitalism) and not the sort of concept the endears them to a non capital gains environment. Also (now) not my client.
Almost immediately across the road, a Korean restaurant owner has played similar games with two Korean staff, while Kiwi staff and Korean staff with PR status avoided this treatment.
...and I feel I'm fast running out of establishments where I feel morally comfortable just buying a coffee...
Obviously wealth taxes such as a capital gains tax, death duties or inheritance tax still unpopular reading the comments at the end of the article. The funny thing is most of the people who come up with the "wealth creator", "politics of envy" diatribe aren't even in the ten percent. If you want smaller govt and lower taxes then go to a country that has these things. Last time I looked Somalia didn't have much central govt interference and I imagine tax rates are pretty low.
http://www.stuff.co.nz/business/opin...max-rashbrooke
Although that said no idea who Rashbrooke is but certainly am open to his suggestions. Better ask John Key though, he thinks raising a regressive tax like GST so we can make a progressive income tax regime less progressive is a way to make NZ better. Also Mr Rashbrooke doesn't seem to remember honest John has already explained that a capital gains tax is just to difficult to implement. I can only imagine Honest John thinks the top ten percent are doing it tough and wants to help out he is such a nice guy. Did you see him having a beer with the all blacks, great stuff John look forward to the flag vote as I appreciate what a big difference this will make to the welfare of NZers.
Only one problem with Rashbrook. Inequality in NZ is not rising so the whole argument falls flat at the start. It's been pretty much flatlining since the early 90s http://www.stats.govt.nz/browse_for_...nequality.aspx
Aaron, you sound a bit like Ron Mark. Anyone that doesn't agree with you or didn't arrive in a waka should leave the country !
You misunderstand me about the Somalia quote. Just saying that if you don't like govt and tax have a look at a country that is probably doing without either and see if it is a better place to bring up your kids. Also with the threat of a flight of capital Somalia is probably a country where you could invest and build whereas a more developed country like NZ you might just be bidding up asset prices rather than adding any real value.
Your proposition that the income equality survey somehow shows NZ being a fairer place> I haven't spent the time to question it but I would note it is an "income inequality" survey. Once you hit $70k income you might as well have the money taxed in the family trust or leave it in the company if you are reinvesting it. I would note for many years farmers have been mortgaged to the hilt taking big risks(or so it seemed until recently when central banks main goal is to protect banks and borrowers) buying another farm instead of paying more tax. The reasons for this are two fold you get capital gain from the land and if you pay enough interest to the bank your income will be reduced enough so that you can get family assistance or maybe your kids can qualify for student allowance. If anything the "income" survey like our tax system ignores wealth and capital gains.
I read in the Herald Saturday that a some of the wealthiest people in NZ ONLY HAVE AN INCOME OF $70,000. This would tend to show your argument inequality isn't rising because of an income equality survey is not correct. Income will become even more equal as everyone who is able will cap their income at $70k. Totally ignores wealth though as we ignore wealth taxes and death and inheritance taxes.
Just to ram a point home there iceman.
http://www.nbr.co.nz/opinion/who-are...y-surprise-you
Tax is the price you pay for civilization, but there is also no requirement to structure your affairs so that you pay the most tax possible.
As your income rises, there is a tendency for your wealth to rise also. Once your income/wealth combination reaches or passes a certain point, it becomes an option to structure your affairs so that you minimize your tax obligations.
If, for example, the top tax rate kicks in at $70,000pa income, I would expect there to be a lot of people who can control their taxable income who turn out to have an income of $65-69,999pa.
Personally, as an honest man, I always try to pay the right amount of tax.
Tax is the price you pay for civilization, but there is also no requirement to structure your affairs so that you pay the most tax possible.
As your income rises, there is a tendency for your wealth to rise also. Once your income/wealth combination reaches or passes a certain point, it becomes an option to structure your affairs so that you minimize your tax obligations.
If, for example, the top tax rate kicks in at $70,000pa income, I would expect there to be a lot of people who can control their taxable income who turn out to have an income of $65-69,999pa.
Personally, as an honest man, I always try to pay the right amount of tax.
You misunderstand me GTM 3442 all I am saying is that an income equality survey isn't especially helpful in establishing the need/benefit of a capital gains tax and says absolutely nothing about the distribution of wealth in NZ. I have no problem people capping their income, the company still pays tax at 28% or the Trust at 33%.
Deciding how much tax to raise, and what form of economic activity to tax are both political decisions.
An income (in)equality survey is one tool for the people making those decisions - if they decide to use it
But once those decisions are made, patterns of economic activity will change to take account of the cost of the (new) tax(es). The history of taxation is liberally bestrewn with unintended and unforseen consequences.
As an aside, companies have more scope than many (most?) individuals to control their taxable income.
I like this guy's view on capital gains tax. Maybe I should switch to BNZ.
https://www.stuff.co.nz/business/mon...ital-gains-tax
No point in bringing in a capital gains tax at what might be the height of the "everything bubble" though. Although everything is probably fairly valued in today's interest rate environment. As I have said before if we get to negative interest rates there is no limit to asset prices anymore. Why with all the talk of populism, increasing wealth inequality etc are people not discussing the whole monetary system and whether 2% rising prices is the perfect solution to all our problems.
Back in May he was talking about joined up solutions. "…. but point is we have a housing affordability crisis so debate on baby boomers vs gen Y doesn't help," Healy wrote on Twitter. "We need joined-up solutions from council, govt, private sector and NFP's”
No mention of CGT then.
I would have said global central bank policy(low interest rates & easy money & inflation to clear debt) and immigration were the main causes at a guess. Banks seem to be getting a bit tougher re lending.
The expansion of the Chinese banking system from what I read is quite spectacular maybe some of this funny money is buying Auckland property.
Not sure I get your point but agree that the boomers vs gen x,y,z,etc shouldn't be a focus on the housing affordability debate. Solutions joined up or disjointed are required. More houses built deals with supply, restrictions on foreign ownership could reduce demand. Cross the board capital gain tax reduces the tax advantages. This also comes back to the central bank policy as well. Policy is for 2% inflation so rents are rising while debt reduction gets 2% easier each year. I guess everyone has cottoned onto this and therefore buying houses even at elevated levels should pay off long term provided central banks(and the financial system) have their backs.
Lots and lots of lovely opinions, all good stuff.
But a CGT changes the basis of taxation. And that deserves a thorough airing, certainly more than "Do we exclude the family home?"
At present, taxation is generally transaction-based. I buy a cellphone, there's GST on the value of the transaction. I have a job, and earn $10,000 a month, There's PAYE on the value of the payment.
Money has changed hands through an easily-identifiable transaction
However CGT may be triggered by a transaction, but the amount of tax payable is not based on the value of the transaction, but on a separate, derived value.
Now, what is going to be the first thing that occurs to the fertile mind? Why it's something like "CGT? Right then, let's not have a transaction that triggers a CGT. Now how can we do that".
I will sell you this house for what I paid for it, thank you GTM, you are very generous so I will gift you $x :)
Good plan - though your gifting is limited to $6,000 per annum per gifter if you are close to needing residential care.
If not, you will need a house to move into and boy have I got a deal for you. As part of my house sale I am willing to part with my priceless bathroom mirror. While I say priceless I would be prepared to let you have it for $50,000. (Learnt that one off Labours art auctions!)
There's got to be a limit. Collectables, wine collections, stamp collections, art, vintage cars, antiques - and there's still that definition game which will plague cgt on real estate. It's a major problem, e'g' does a coin collector/dealer pay income tax on profits - or CGT on gains. (Credits on losses?) or should capital gains simply be treated as income with no special tax rate? There's an endless list where collecting tax would reult in a loss to the taxman. Besides, such things are close to impossible to trace.
NZ's system of intention is not perfect, but overall it's certainly better than any half-baked CGT plan. But if we introduce CGT at all it will be half-baked at best and do little more than appease the envious. To introduce a proper and effective CGT would be political hara-kiri.
Agreed - at some point the cost of collection will outweigh tax gained. But with IRD big expensive new IT system the range can be expanded
It will depend on the definitions. But it will be important to over all wealth generating asset classes so people aren't motivated to shift from a CGT class to a none CGT class.
No you wont get a credit for losses - this is about collecting tax off the wealthy, you would not want to disadvantage those that make bad decisions by giving them credits they couldn't use.
A coin collector would pay CGT on any gain as he isn't in the business of trading coins. A coin dealer would pay tax on profits made.
Things are now easier to trace thanks to technology (for example your car - take it for a WOF and the garage knows if it is the registration has been paid). Put something into your asset definition - say "artwork". Its given an asset number registered with IRD. Its scanned on purchase. Scanned on resale. Its accounted for in the annual tax return.
CGT would be guaranteed to make accountants and solicitors wealthier - and isnt that an irony. The clever would remain clever and find ways of avoiding CGT. In the end the risk is cost of implementation greater than tax gained. But that's not the point - we have to get rid of poverty and lessening the gap between the haves and the have nots and if a half baked CGT gives the appearance of achieving that then all is good
If CGT was treated simply as income without a separate tax rate, then it wouldn't make any difference. Both the collector and the dealer would pay tax at their marginal rate. That's an important point in designing a workable CGT, and stops the definition argument in its tracks, provided the collector can deduct his losses as the dealer would; and it's ridiculous to tax gains and not credit losses.
I dont think it likely at all Labour (or anyone) would provide for tax credits on losses. Imagine how we would start accounting for our transactions then! Much simpler to just tax the wealthy on gains made and leave them to wear their own loses. (this approach is consistent with our current PAYE approach - you get taxed solely on income. There are no credits available for costs incurred in making that income)
If that scenario eventuated then everyone would become a "trader" Ie sell family home, make it you are in the business of buying and selling property and hey presto you can claim all sorts of things. So they would have to credit losses or else there is another thriving industry. CGT is a huge mess either way.
No, it would just mean that the proceeds of the sale of some specified types of assets would be taxable on any gain made on cost or book value, after certain allowances.
As to who defines the asset types affected, who defines which allowances, who defines "cost", that's a different story.
Nothing to do with "trading" at all.
Exactly you would be able to claim costs if you are a trader, which normally you would not be able to do. So losses incurred as a trader would be tax deductible. So a capital gains tax yes, but if you have a capital loss you can use that to offset income.
Ie currently as a share investor I do not pay capital gains tax on my "winners", however I cannot offset my "losers" against income. If I was a trader however I can offset losses against winners. But I chose not to under the current scenario because my winners are greater than my losers. (I can also claim expenses currently against my income from dividends etc). However if a capital gains tax on shares were to be introduced, I would become a "share trader" and thus be able to offset "losers" as well against the "winners" and income.
You would be a trader by default anyway.
The main reason that savvy politicians, like John Key, and others avoided capital gains tax is the bottom line - you will get a return from the winners, less all their costs - but you will spend most of it on the losers, who will be experts on how and what to claim. And the cost of multitude of public servants you will need to operate the system will only be offset by the reduction in unemployment ( of public servants). Simple tax systems like GST are far more efficient at taking money from the public to fund the public. Imagine the rise in "cash jobs" if there is capital gains tax. I will have to pay more than two bottles of my Jim Beam to get my driveway restored after a storm. I may have to go to Jack Daniels by four and that costs me $40 to make. It might be cheaper to concrete my driveway but I would have to find a concrete truck driver who will drop his left overs as he passed.
Can someone update Bill English and all the self-centred, selfish retards who voted National at the last elections.
http://www.msn.com/en-nz/money/news/...cid=spartanntp
National will probably propose raising the GST rate again as they seem to prefer regressive taxes to progressive ones.
If I could be bothered updating Bill English I'd be asking him to introduce an Effort Index. That is, an index which shows how much effort people put into their lives and measure their decision making. We could then over lay the Effort Index with the Income Index and get a much clearer picture of Inequality.
Inflammatory comments aside nice to see that some smart people think we should look at a capital gains tax. I know I am a dummy so it is good to have smart people consider the issue.
Gst probably affects those that earn more and have more disproportionately as well. Most lower income people spend the majority of their income on rent, which has no GST component. Those with more disposable income as a % would spend more GST. So GST is a progressive tax in my humble opinion.
I'm going to agree with FP on this one - I dont really see GST as being Regressive. Sure I understand the argument that a regressive tax takes more of a poor persons income that it does a rich person income. And to some extent that can be true - but not in New zealand.
The reasons being is that here the first $14,000 of everyone's income gets taxed at 10.5%. People earning this level pay 15% GST equally. If you are earning $14,000 chances are you will be "poor". Doesn't matter if you are rich or poor you are still paying the same amount of tax out of this income as a rich person.
Income from $14,001 - $48,000 gets taxed at 17.5% and GST stays at 15%. People are now moving out of "poor" to "average" earnings and above the so called "living wage". Again doesn't matter if you are rich or poor or average you are still all paying the same amount of tax.
If you are earning above average wage from $48,000 to $70,000 and no longer poor you will pay 30% of your income in tax. At this point you are no longer paying for the necessities in life like rent or mortgage. you are moving now into more discretionary spending which the poor dont spend. Since they don't spend here their income is no longer disproportionate to their tax. its at this point the average to well off start paying more tax than the poor.
As for those earning over $70,000 they are paying 33% for things the poor will never buy. Paying way more tax than the poor. GST isnt regressive because its not impacting on the poor at this level.
Your example is using income tax. A progressive income tax. No arguments from me in that regard.
Post #72 on this thread if your still unsure.
Blackcap may have a point especially if you add in bank fees and interest on pay day loans. But these specific examples apply in specific cases it doesn't change the fact that GST is regressive. Why have most other countries exempted basic foodstuffs. We will never agree. Re-read post #72 and if you still don't get it too bad.
If you exempt GST on basic foodstuffs the gap between rich and poor remains. Doesnt change the fact that the first $23,000 (from post #72) of income get taxed and spent on basics the same way.
Thats putting aside the inconvenience that while the rich and poor may save a bit on their basic foodstuffs the overall tax take has declined and the cost of managing taxes has gone up (more bean counters to figure out if rice is basic and if so is sushi, or a bowl of rice at the Indian takeaway?
So what do you do. You have to make up the tax shortfall so you could up the rate of GST to 16% which affect the poor and wealthy equally. Or you put up other taxes. Which will either impact on the poor or incentivise the rich to reclassify their income / assets.
I don't disagree. Keep it simple, I was just using the foodstuffs as an example of other countries recognising that GST is a regressive tax and trying to make it less so by exempting basic necessities.
It would seem that legislators around the globe can recognise the regressive nature of GST but posters on this site are unable to. Sometimes when you are self centred it is hard to accept things that don't fit with your beliefs.
Lets look at your numbers.
Say a person earn $48,000 gross with 2 kids. pretty much the average wage and not in poverty. If they spend $23,000 on necessities that's $66 a week goes to GST. Take the gross $923 a week, less tax plus working for families this person ends up with $849 in the hand. Less than they earned
Say a person earns $23,000 gross and has 2 kids. And If they spend $23,000 on necessities that's $66 a week goes to GST. That's a gross of $364 a week less tax plus working for families this person ends up with $667 in the hand. More than they earned.
So while they both paid the same GST the poor person actually ends up better off. Thus GST is a smaller portion of income for the poor than it is for the average.
It's actually worse than that. Presumably a fair chunk of that $23,000 will go on rent or mortgage interest - that portion is exempt from GST. Whereas diligent hard-workers like myself, who don't bother with renting or having a mortgage, pay GST on every dollar we spend.
You really make things complicated Minimoke. Now we are discussing working for families. (I would note GST on $23,000 is $3,000.00 or $57.69 per week but that is being pedantic.)
Without going over the figures in any great detail can I assume that you and Blackcap would like me to factor in the housing situation, children, consumption level and marginal income tax rates of every individual in NZ before I can safely say that GST is a regressive tax. I'll get back to you shortly.....
Having a mortgage free house rising in value each year, it must be infuriating seeing the less well off and young avoiding paying their fair share of GST by spending all their income on rent. Lucky we can still get them when they buy food so they can contribute like you aye FP.
Not at all. It doesn't infuriate me and neither it should. Yes. I'm absolutely sure I pay more GST than said family who earns $23000 and rents. They should contribute just like I do when they spend of course. Just as their weetbix and underwear, their soap and shoe laces cost the same as mine. You must be terribly disappointed the retailers and manufacturers don't give them a discount.
I don't believe I am complicating things. I am more accurately reflecting the story. It is impossible to talk about regressive tax in the context of the rich and poor without accounting for income. Like it or not Working for Families bolsters incomes so it must be taken into account.
WWF is that inconvenient benefit people who spruik poverty consistently do not raise. Do you ever hear the "Living Wage " bleaters mention it. No of course not - because it undermines their position that people don't take much home
after a being exploited by the capitalist employers intent only on exploiting the vulnerable.
And as an aside you wont here the government advocate against Living Wage because it pushes the burdon of income from the tax payer onto the employer.
You are assuming FP's house does rise in value each year - which is not a safe assumption. Regardless, it is only a paper increase. The house isn't a machine that churns out cash that a home owner can spend. The only way to release the cash is to take a mortgage on which you will pay interest as well as return capital.
The great thing about renting is you dont bear the "loss" when the roof over your head depreciates, or needs repairs
Not entirely so, Minimoke. As an eighty-year-old I could pull two or three hundred g's from my property and go cruising or whatever for the next few years without a worry in the world or I could greatly increase my successful investments. I do not have to worry about my offspring as they are already well ahead of me. But age has made me lazy or maybe just contented and I am happy with a couple of visits to the Club each week and a few drinks and a few bets on slow horses. Nobody has to die rich but a hell of a lot do.
I'm not sure how you would do that without a reverse mortgage (or home equity release) loan. (more here: https://www.govt.nz/browse/housing-a...rse-mortgages/) And I'm trying not to complicate things with loans from family repayabel in inheritance or other tools that are availabe