Capital Gains Tax

[fungus pudding]

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 ??

There is very little paperwork with GST. What have you bought, what have you sold. What is the difference, and what is the GST on that amount? It's minutes rather than hours for any businress operating the right system. By clawback I presume you mean no deduction for input. If so it would not work because gthe tax would become cumulative. Some items would be marked up hundreds of % in tax alone. It can only work if it falls to the end user. It's actually a great system whether you agree with consumption tax or not, probably the best in the world. - let's hope nobody ever alters the basic structure of it e.g. introducing exemptions.

[Lizard]

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.

[Aaron]

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.

The same could be said for GST and income tax. Maybe not losses but much reduced.
Capital gains tax would not be about going after anyone in particular as Shasta suggests above. I just think that an earned dollar of income can sometimes take a lot more effort than a capital gain so why is it that we are happy to tax income but not capital gains.

[Lizard]

The same could be said for GST and income tax. Maybe not losses but much reduced.
Capital gains tax would not be about going after anyone in particular as Shasta suggests above. I just think that an earned dollar of income can sometimes take a lot more effort than a capital gain so why is it that we are happy to tax income but not capital gains.

GST and income tax reduce in a downturn, but maybe 10% would be extreme. Corporate tax can fall more dramatically along with profits. But CGT seems likely to dry up entirely AND erode income tax when losses are used as offset.

In theory, I actually like the fair dividend rate method used in FIF. FIF is only complicated because it doesn't apply across the board and there are the options for using CV.

To use FDR for all assets would just require a quick totting up of assets at the start of the year and then applying a low-level tax based on that amount. Make interest costs and rates tax-deductable... this should pretty much offset all the FDR on most properties. The great thing about FDR is that those who can achieve a better return on assets get rewarded for it and those who want to tie money up in non-returning assets have to pay the cost. There are very few loopholes and minimal administration. Money goes where it works hardest and should increase asset base and therefore tax-take over time. Of course, I know you are all thinking the obvious - the reality is that finding a fair and accurate way to set value across all assets is not simple, let alone getting people to declare all their assets. However, we seem to put up with the rating system and that can be fairly arbitrary in places.

[rpcas]

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.

Sorry, but that is totally incorrect.

The sovereign government that issues its own non convertible currency never has nor doesn't have dollars, and ALWAYS has the ability to spend/stimulate. Government spending is NOT funded by taxation or the issue of securities, and the extent to which the government collects taxes does not in any way limit the governments capacity to spend (despite politicians and commentators telling you otherwise). Think of it this way - how can the NZ government "run out" of dollars, when they create them out of thin air on a spreadsheet?

The only issues with a capital gains tax are there is normally plenty of loopholes, and other taxes are potentially more efficient.

[drew]

Sorry, but that is totally incorrect.

The sovereign government that issues its own non convertible currency never has nor doesn't have dollars, and ALWAYS has the ability to spend/stimulate. Government spending is NOT funded by taxation or the issue of securities, and the extent to which the government collects taxes does not in any way limit the governments capacity to spend (despite politicians and commentators telling you otherwise).

That begs the question then why do we pay taxes. The govt does indeed issue securities to raise funds to spend.

The better way to look at it is any type of spending by the govt is taxation. When the govt borrows to spend its just a delayed form of taxation as the taxpayer not the govt has to repay the debt.

I think what you mean is the govt can print money. But I dont think the RBNZ would be too keen on doing that. The end game of that scenario is inflation which is also a form of taxation, the one you dont get to vote for.

[fungus pudding]

That begs the question then why do we pay taxes.

No it doesn't. It raises the question, but it's a simple, if inaccurate, statement.

[drew]

No it doesn't. It raises the question, but it's a simple, if inaccurate, statement.

Oh im sorry i didnt realise the internet spelling police were patrolling these forums.

In any case it is not an inaccurate statement. The statement by rpcas was a circular argument saying taxes do not matter the proof being it has no impact on govt spending. Which is a bunch of nonsense.

[rpcas]

That begs the question then why do we pay taxes. The govt does indeed issue securities to raise funds to spend.

Why does the government tax?

a) To create demand for New Zealand dollars. Have you ever asked yourself why you accept a paycheck in NZD's, and why shops accept NZD's in exchange for real goods and services? By placing a tax liability on the private sector that is payable in NZD's and nothing else, the private sector instantly demands NZD's. Essentially, a fiat currency is only as good as governments ability to enforce its use (taxes).

b) To regulate aggregate demand (spending power). If consumers have too many net financial assets, aggregate demand may exceed the real productive capacity of the economy, and thus drive up prices (inflation). Taxing drains net financial assets from the private sector (government spending does the reverse - adds net financial assets), and therefore reduces the private sectors spending power.

c) To discourage the use of a certain product/action etc (smoking for example)

Don't get me wrong, taxes are absolutely essential, but just not for the commonly thought reason.

When the govt borrows to spend its just a delayed form of taxation as the taxpayer not the govt has to repay the debt.

No they don't.

I think what you mean is the govt can print money. But I dont think the RBNZ would be too keen on doing that. The end game of that scenario is inflation which is also a form of taxation, the one you dont get to vote for.

A government deficit that is followed by the issue of securities is actually LESS inflationary than a deficit "funded" by "money printing". This is because interest is payable on the securities, which further increases the deficit. If the government choose not to issue Treasury securities (which would most likely be a better alternative to the current risk free welfare that bonds are), then government spending would be less inflationary.

What you don't realize is that government spending occurs the same way (operationally) regardless of whether it's "funded" by taxes, debt or "money printing".

[Aaron]

Tax Justice Aotearoa NZ. Read their ad in the herald this morning and agree with a lot of what they say but the name and colours make them sound like a cross between the Greenies and Maori parties. A lot of "out there" people in that crowd.
Campaign supporters include the Public Health Association, New Zealand Council of Christian Social Services, Council of Trade Unions, Public Service Association, Hui E! Community Aotearoa, Equality Network, Closing the Gap, Poverty Action Waikato, and UCAN (United Community Action Network).