Capital Gains Tax

[CJ]

But capital gained is treated as income and taxed already for many property investors.

but not all. And most pretend they long term holders rather than traders. elimitate the 'intention' test and that wrought goes away.

Also, many assets go up in value over time above the rate of inflation because some poor bugger has invested their time and energy into building them up - something you are unlikely to get a tax credit for.

You are suggested income from labour which was not paid as wages or salary, so no PAYE/tax. increase in wealth from labour should be subject to tax. Currently you can hid as a 'captial gain' and get away with it (hence why builder/ developers/ traders are tainted in respect to land transactions).

[fungus pudding]

Why should increase in wealth from entrepreneurship be subject to tax? Personally, I think that is exactly the wrong thing to tax.

Because like it or not - it is income. The American system allows you to sell and as long as you buy an replacement asset within 12 months there is no CGT to pay. Only when you finally cash out (if ever) do you pay CGT. That's pretty hard to argue with.

[CJ]

Why should increase in wealth from entrepreneurship be subject to tax?

Mark Ellis and Stefan apparently turned a $140k investment into $18m each. Why shouldnt that be taxed?

Would they still have done what they did if they had to pay $2.7m in tax. Off course they would (the remaining $15m would do).

[POSSUM THE CAT]

CJ they only need to use the Australian system very simple

[macduffy]

Increased deposits at a bank does not increase their capability to make loans. The only requirement is the maximum equity to loan ratio.

I wouldn't dismiss the capital requirement issue quite so lightly.

The current trend is to tighten these ratios which could well constrain the ability of some banks to increase their lending. Kiwibank would be in this category, IMO, as NZ Post (the govt) wouldn't welcome - or be able to afford? - the call for increased capital to support increased lending, regardless of how easy or difficult it may be to raise the deposits to fund them. I can see the new Heartland bank having the same problem down the track.

All a bit off the subject of a capital gains tax. For what it's worth, I'd like to see a comprehensive tax along the lines of the Aussie one as soon as possible to take some pressure off a system which relies overly much on taxing income from earned income/company profits.

[fungus pudding]

I wouldn't dismiss the capital requirement issue quite so lightly.

The current trend is to tighten these ratios which could well constrain the ability of some banks to increase their lending. Kiwibank would be in this category, IMO, as NZ Post (the govt) wouldn't welcome - or be able to afford? - the call for increased capital to support increased lending, regardless of how easy or difficult it may be to raise the deposits to fund them. I can see the new Heartland bank having the same problem down the track.

All a bit off the subject of a capital gains tax. For what it's worth, I'd like to see a comprehensive tax along the lines of the Aussie one as soon as possible to take some pressure off a system which relies overly much on taxing income from earned income/company profits.

I'd like to see the Aussie self funded retiree scheme introduced here.

[fungus pudding]

CJ they only need to use the Australian system very simple

It's not tht simple, and it has done more harm than good.

[POSSUM THE CAT]

Fungus Pudding there are and always have been exemptions Read the GST ACT bank fees for one are GST exempt. The reason for very few exemptions has gone with the adoption of computers. That was one of the reasons the increase to 15% was actually possible try working out the 15%GST without A computer for a gst return it is not simple like it is for 10% & 12.5%. It could even be included in the products barcode as to the products GST stutus

[fungus pudding]

Fungus Pudding there are and always have been exemptions Read the GST ACT bank fees for one are GST exempt. The reason for very few exemptions has gone with the adoption of computers. That was one of the reasons the increase to 15% was actually possible try working out the 15%GST without A computer for a gst return it is not simple like it is for 10% & 12.5%. It could even be included in the products barcode as to the products GST stutus

Yes. Financial transactions, res. rents have always been exempt, which was easy ad necessary. physical - a pure service. There are special reasons why finance never attracts consumption tax in any system and it's all about interest rates. I am not aware of any exempt countries. Consider the likes of fruit and vegetables in a mixed business. Do they go out the door as they same in, or in a salad roll? Over the checkout counter, or through the delicatessen as a salad. As it is it is very hard to fiddle. Incidentally, removing GST from perishables as Labour are on about will not reduce the retail price, just as it could not be added when introduced. Nothing responds as rapidly to supply and demand. It is always priced to sell before it has to be thrown out; that's the only criterion. Supermarkets adjust prices daily or even through the day, and the mark-up range can be massive. They won't bother reducing below what they can safely sell out at. And you certainly do not need a computer to calculate GST whatever the percentage. Anyone that can't do it in their heads can do it on a two dollar calcukator. GST content 1s 3/23rds or 13.04%. No more difficult than it was at 12.5% and content was 1/9 or 11.11 % Every review ever done on GST has commended the fact there are no exemptions. That includes various studies done by the Labour party hypocrites.

[Halebop]

I think some form of capital gains tax would be fair - particularly if it also resulted in lower income taxes* (I think a flat tax across any form of income and because I'm an egalitarian prick would even consider taxing the family home too - albeit political ramifications would almost certainly preclude this). John Key has suggested CG taxes are complex which is partly true but so is the tax system in its entirety so suspect he is pandering here. I don't like the wealth tax approach and think cashflow is too important a consideration in the investment value mix so taxes should be incurred at sale time, nothwithstanding the consequences on how this impacts asset sale decisions.

The question of inflation is complex as many people suggest capital gains should be cupped by the rate of inflation (or even the risk free rate of return). But by the same note, income taxes are often allowed to creep up the progressive scale so are not always effectively indexed against inflation. What happens in one should happen in the other.

* Suspect investors have something to gain from lower income taxes anyway as a share of income increases will find their way into company coffers.