There is a CGT on Property now. Not enforced,,,, to hard to administer !!! etc. etc.
if IRD cant administer what's in exinstance now, how can they cope with the xtra
workload. Not doing their cause any good at all.
BB
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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