Capital Gains Tax

[Bjauck]

It is difficult for FHB to get their deposit together but servicing the mortgage is not that hard and certainly no more difficult than in the past.
This is copied from an article written by Ashley Church on One Roof on 29 August this year:
“There’s the fact that it actually costs less to service a mortgage, today, than it did in the mid-80s when the cost reached an eye-watering 52 percent of average household income – the highest level it has reached in the modern era. Today it sits at around 37 percent of the average household income despite the fact that median house prices have increased dramatically, which means that there is still significant capacity to service additional house price growth within the average household budget.”

True, although raising the deposit is expensive, It is getting more affordable to service a mortgage especially with interest rates dropping like a stone. However job security for younger people especially is less certain as the Covid protections are lifted? I guess in its own way the government is shifting wealth from (older) deposit-holders to (younger) borrowers and (wealthier and older) real estate owners.

[fungus pudding]

True, although raising the deposit is expensive, It is getting more affordable to service a mortgage especially with interest rates dropping like a stone. However job security for younger people especially is less certain as the Covid protections are lifted? I guess in its own way the government is shifting wealth from (older) deposit-holders to (younger) borrowers and (wealthier and older) real estate owners.

It's the falling interest rates that push up real estate prices. Far better to buy while interest rates are sky-high.

[nztx]

Is the Green's "Wealth Tax" announced by Shaw not just another swipe at a variant of this sort of taxing ?

Probably equally unworkable as well ..

[fungus pudding]

Is the Green's "Wealth Tax" announced by Shaw not just another swipe at a variant of this sort of taxing ?

Probably equally unworkable as well ..

Yes it is another swipe at a tax, but even more unworkable. Envisage an army of govt. inspectors, accompanied by art appraisers, antique valuers, real estate valuers, investment consultants and a car dealer arriving on your doorstep once a year to complete the annual valuation.

[winner69]

Poll choice - Goff is just an idiot

Suppose nearly 10 years on that’s still a good choice

[Bjauck]

Yes it is another swipe at a tax, but even more unworkable. Envisage an army of govt. inspectors, accompanied by art appraisers, antique valuers, real estate valuers, investment consultants and a car dealer arriving on your doorstep once a year to complete the annual valuation.

Taxed on your income from personal effort....and all you want to do is try to feed your family and get some shelter.Yet the government grabs a chunk before you see it! Who would come up with such a scheme? After all the basic costs of food, shelter and clothing are necessary for my being able to present myself to earn the wage. Why be taxed on what it costs me to be able to work in the first place?

Yet the wealthy person can accumulate art and sell it for thousands more and all tax free...what a crazy world eh?

Would there be a threshold? Wouldnt art be valued for insurance and buildings only need to be valued every now and again (as with rates valuations) unless objected too?

It would be better to have a cgt than a wealth tax I agree, but look at the block from vested interests in that front too.

[BlackPeter]

Yes it is another swipe at a tax, but even more unworkable. Envisage an army of govt. inspectors, accompanied by art appraisers, antique valuers, real estate valuers, investment consultants and a car dealer arriving on your doorstep once a year to complete the annual valuation.

Actually - its not that difficult. Anything below 50k is not considered, and most of the bigger ticket items are valued anyway.

Real estate: For anything property related we have a GV, no additional work / valuation required.

Cars: If I believe TRA, than ways above 95% of all cars must be worth less than 50K ... i.e. no valuation required. I am sure the reminder (creme of the creme) is insured, i.e. just take the insurance value. No additional work at all.

Antiques / Art ... again - it would be quite easy to just take the agreed insurance value. I doubt there is much stuff above 50k around which is not insured. No additional work required.

Companies ... might be an issues, but than - why not go for the NTA in the balance sheet they need to file anyway. No additional work required.

While more taxes are clearly never popular - and the geese who might get plugged are already intensely hissing .... the country clearly needs a wider tax base to pay for superannuation and health for an aging population, for improved infrastructure and for educating the generation (our grandchildren) who needs to pay anyway the lions share of our super, health and the accumulated Covid cost.

The Rich are getting richer in NZ as well as everywhere, while the poor are getting poorer. A wealth tax would hit the people who benefited most from the recent crisis. I think this sounds fair enough.

[fungus pudding]

Actually - its not that difficult. Anything below 50k is not considered, and most of the bigger ticket items are valued anyway.

Real estate: For anything property related we have a GV, no additional work / valuation required.

Cars: If I believe TRA, than ways above 95% of all cars must be worth less than 50K ... i.e. no valuation required. I am sure the reminder (creme of the creme) is insured, i.e. just take the insurance value. No additional work at all.

Antiques / Art ... again - it would be quite easy to just take the agreed insurance value. I doubt there is much stuff above 50k around which is not insured. No additional work required.

Companies ... might be an issues, but than - why not go for the NTA in the balance sheet they need to file anyway. No additional work required.

While more taxes are clearly never popular - and the geese who might get plugged are already intensely hissing .... the country clearly needs a wider tax base to pay for superannuation and health for an aging population, for improved infrastructure and for educating the generation (our grandchildren) who needs to pay anyway the lions share of our super, health and the accumulated Covid cost.

The Rich are getting richer in NZ as well as everywhere, while the poor are getting poorer. A wealth tax would hit the people who benefited most from the recent crisis. I think this sounds fair enough.

I don't. The big problem is those who are asset rich - cash poor, which describes a huge percentage of retirees in our bigger cities. I know it can be deferred -- which makes it simply a return to the death taxes we used to have and dumped in the early 90s. The thing that follows would obviously be a return to gift duties, or it won't work. Both death duties and gift duties were horrible taxes. I'm sure you recall the dodgy nonsense that went with those taxes. No doubt you also recall the legitimate gifting programs used to avoid death duties. They would re-emerge on day one.
As far as limits on asset values go (individual items at 50k and the proposed total of 1 million), the levels applied on introduction of a wealth tax can be altered at the drop of a hat. Naturally they will be kept low to introduce such a scheme - but a future govt. only requires the stroke of a pen to change it.
Not many countries have such with wealth taxes and the associated gift and death duties, mainly because they are an administrative nightmare.

[Bjauck]

…Both death duties and gift duties were horrible taxes.

…and GST and income taxes are worse than both of them.

[fungus pudding]

…and GST and income taxes are worse than both of them.

Couldn't agree less. We have to have some sort of tax or taxes. NZ GST system is extremely effective and easy to administer. Income tax is a necessary evil, and although we all have different views on the rates and progressions, it's relatively simple to apply and administer.