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View Poll Results: Should there be a Capital Gains Tax on Property

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  • No

    210 100.00%
  • Yes

    68 56.67%
  • Goff is just an idiot

    2,147,483,658 100.00%
  • Epic fail for Labour

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  1. #1
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    Default Capital Gains Tax

    Probably the wrong forum for this statement.
    I'll vote for the party that promises a cross the board capital gains tax.Tax wealth instead of income.
    No more mucking around with two portfolios no more FIF rules. (these were brought in to capture the capital gains on overseas shares) no more mucking around with depreciation on houses and LTC companies. No more arguements about intention at the time of purchasing a property.
    Bring the income tax rates down at the same time though.

  2. #2
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    Q - tax capital gains on an accural or realised basis.

    The problem with CGT on an accrual basis is there is no cashflow to pay the tax.
    The problem with CGT on a realised basis is there is no tax generation for a number of years.

    Q - Do you include the family home?

    Q - Do you include roll over releif?

    If not, if you sell something, you cant afford to buy the same item back again, influencing decisions.

    I think there was a good paper by the tax working group. See if you can find it. I am not saying you are wrong, just making sure you are fully informed.
    If so, it defers the tax revenue even further
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  3. #3
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    Default

    Quote Originally Posted by CJ View Post
    The problem with CGT on a realised basis is there is no tax generation for a number of years.
    People end up holding on to assets far longer than normal would just to avoid tax. This creates an inefficient allocation of capital and a deadweight loss to the whole economy.

    If you want to get radical on a tax reformation. Lets get rid of all GST, income, and company tax. Put a tax on all land. Land owners pay tax directly and everybody else pays tax indirectly through higher prices.

    It might sound extreme but land taxes are the only tax that do not produce a dead weight loss. Just some food for thought.
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  4. #4
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    Quote Originally Posted by lou View Post
    It might sound extreme but land taxes are the only tax that do not produce a dead weight loss. Just some food for thought.
    How would it be applied? Cant be by area or farms wouldn't be viable so it must be by 'ratable value'. Given that is somewhat arbitary it doesn't seem fair. Plus it creates cashflow issues to those that own land with no income.

    Why not go to a full consumption tax (ie. GST). You need to buy what you need to buy.
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  5. #5
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    Default

    Quote Originally Posted by CJ View Post
    Q - tax capital gains on an accural or realised basis.

    The problem with CGT on an accrual basis is there is no cashflow to pay the tax.
    The problem with CGT on a realised basis is there is no tax generation for a number of years.

    Q - Do you include the family home?

    Q - Do you include roll over releif?

    If not, if you sell something, you cant afford to buy the same item back again, influencing decisions.

    I think there was a good paper by the tax working group. See if you can find it. I am not saying you are wrong, just making sure you are fully informed.
    If so, it defers the tax revenue even further
    You would pay it on a realised basis.
    Family home can be exempt.
    No roll over relief
    Don't sell if you want to buy back straight away.
    Also incurred when making gifts of capital assets on a market value basis seeing as gift duty is about to be scrapped it wouuld be a good replacement.
    Lou points out that people hold onto assets longer. Long term investors can therefore defer their taxes whereas traders/speculators can't.
    We do have a land tax called "rates" farmers end up paying more than their fair share.

    No way should we have just a consumption tax. Taxing consumption isn't a bad idea but GST is a regressive tax so 15% is a much as I would like to see.
    Last edited by Aaron; 11-04-2011 at 09:29 PM.

  6. #6
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    Quote Originally Posted by CJ View Post
    How would it be applied? Cant be by area or farms wouldn't be viable so it must be by 'ratable value'.
    Hypothetically it would be applied based on "ratable value" and zoning. Basically your rates bill on steroids.

    Quote Originally Posted by CJ View Post
    Given that is somewhat arbitary it doesn't seem fair.
    Taxes aren't fair at the moment. We have a progressive tax system where higher income earns pay proportionately more. A land tax would fair in the sense that it is a proportionate tax, however would be less equitable to lower income earners.

    The biggest hurdle or moving to a tax system like this is it will change the land values around the country meaning thousands of people will be either adversely or positively affected for no reason and that would not be fair.

    Quote Originally Posted by CJ View Post
    Plus it creates cashflow issues to those that own land with no income.
    If they own land that produces no income they are either saving on expenditure (ie living in there own home). Saving on expenditure can be thought of income and should be captured by tax net. Making this new system even more efficient.
    Option two they own land with no income. They are not making efficient use of the land. It should be sold so that the most efficient use of the land can be found.


    Quote Originally Posted by CJ View Post
    Why not go to a full consumption tax (ie. GST). You need to buy what you need to buy.
    I don't have anything against GST. I excluded in my first post as I thought idea of one tax was a more utopian view. I would mean we would not need accountants for compliance work.
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  7. #7
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    Quote Originally Posted by Aaron View Post
    We do have a land tax called "rates" farmers end up paying more than their fair share.
    Farmers do not pay there fair share of taxes.
    1. Farmers have loads of deductions, heaps of cracks to slip personal expenditure into the books.
    2. Heaps of potential for income to disappear on to the kitchen table.
    3. Then the fact that a farmer will sit on bugger all "taxable income" for his life time. Using the increase in farm technology/efficiency, that increase the value of his land that is leveraged to the hilt. He then retires to Whangamata on huge capital nest egg tax free.
    4. The return on assets in the farm industry is lower than the cost of debt. This does not make economic sense why would they be doing it. Unless they doing it for capital income or other kickbacks.
    Last edited by lou; 11-04-2011 at 11:38 PM.
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  8. #8
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    Quote Originally Posted by Aaron View Post
    Probably the wrong forum for this statement.
    I'll vote for the party that promises a cross the board capital gains tax.Tax wealth instead of income.
    No more mucking around with two portfolios no more FIF rules. (these were brought in to capture the capital gains on overseas shares) no more mucking around with depreciation on houses and LTC companies. No more arguements about intention at the time of purchasing a property.
    Bring the income tax rates down at the same time though.
    CGT just wont fly in NZ, & we can do better than that.

    If people think CGT will hit the greedy property speculators, these are the one leveraged & making losses, or have offsets to other businesses, so its a "looney left" wet dream to think the rich will start paying up.

    What would be more beneficial is a flat tax of 20%, to start with.

    Drop the company tax rate to 10%, & add in a 10% compulsory super component (thereby matching the 20% flat rate, reducing any need for dodgey accounting)

    Bring in some form of a financial transaction tax, not quite sure how this should be set up though.

    Perhaps bring back in the Estate Duty/Death Tax, you cant avoid a death tax, so why not clip the ticket on the way out?

    If we could somehow outlaw the green party, we could just nationalise a mineral & hydrocarbon company to mine our own resources!

    Imagine that, another Maui to provide us with CHEAP POWER & we the taxpayers would own it!

  9. #9
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    I am with CJ on this one.

    No income tax. Low company tax ( if any ). Retain excise taxes ( fags booze etc )

    GST with no claw back.. Thus relief from never ending paper work..

    What about introducing a Tobin Tax ??

  10. #10
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    Default

    One issue with CGT as a form of revenue is that it tends to dry up just when the economy is at its weakest, thereby dealing a double blow to govt accounts and capacity to stimulate.

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