Capital Gains Tax

[SBQ]

Windfall tax anyone?
"NZME is now in the process of returning $15m in cash to shareholders through share buy-backs and special dividends. It is not the only one. Fletcher Building received $68m in wage subsidy cash during 2020 and has refused to repay it, despite an increasingly robust profit and balance sheet. It paid $140m of cash dividends to shareholders in April this year after reporting solid profit growth and a strong outlook because of a boom in house building and building materials sales. NZME and Fletcher Building are just two among many large and small New Zealand companies that have refused to repay the cash, despite reporting profit growth and higher cash reserves."
https://www.interest.co.nz/public-po...y+26+July+2022

You know when I first came to NZ 20+ years ago I thought; small country = easier to implement BETTER policies than the larger countries ; more remote from other major trading nations = less negative influence, etc.

The gov't handout of $$ directly to companies was never a good thing. They don't do it that way in Canada where the subsidy payments are only given to the individual. When I see the NZ subsidy payment system where the EMPLOYER is filing the application for their EMPLOYEEs.... I knew this would be nothing but a freebee handout to the benefit of the corporations. In America, individuals there received a cheque (even more decentralised compared to Canada where the individual's tax return is tied to the subsidy payment; which on most part is received directly into their bank account). US has a similar model tied to the individual's tax return. If they earn more than $90K (if I recall correctly that figure), then they receive no Coivid cheque payment. Why did our NZ gov't not have the smarts or knowledge to see that companies in NZ would take advantage of the situation? All this trying to do things different because we are NZ only hurts us more. Can't reinvent the wheel enough times to make a statement.

[SBQ]

Oh I should add, one of the wishes I look for in the NZ gov't is to truly implement a capital gains tax. We need to align our taxation that is similar to Australia, Canada, US, etc. Throw out FIF and start taxing assets AT TIME of disposal. The more closely we tax in the same way as in other western nations, the less distortions and (evasion?) will happen.

[Aaron]

I am confused the Sapere report on taxes and the wealthy concluded

households earning more than $500,000 a year would have an effective tax rate of 29% to 31%, if they were not receiving NZ Super. An older retired couple living in their own home with the same level of economic income had an effective tax rate of 6%..

Not sure what the last sentence means, but do they mean the wealthy claw back their tax in old age through national superannuation?

https://www.stuff.co.nz/business/300...-really-paying

The IRD and David Parker have concluded

high wealth families pay a median effective tax rate of just 8.9%, as they earn significant income from untaxed capital gains.

Bit of a gap between 29% and 9%.

OliverShaw principal Robin Oliver, former deputy commissioner of policy at Inland Revenue, said the [sapere] report was commissioned out of concerns about the methodology of the Government’s work, which he said could give a misleading picture of the tax system.

Treasury also came up with 12%. I assume the difference between Sapere and IRD is ignoring capital gains.

Sapere also notes.

People earning between $70,000 and $180,000, 18.8% of all taxpayers, paid 42% of all tax. The 2.4% of people earning more than $180,000 a year paid 26.6% of all tax.

So the wealthy can always threaten to leave NZ, hopefully they do not have too much in real estate as this is not that portable. Most manufacturing has already left.

Scary that so few people pay so much of the tax. 50% probably pay nothing after you take into account health, education, roads etc.

Also scary that so few people hold so much of the wealth and income in NZ and this has been a trend that has got a lot worse under Labour.

Maybe we should take the word "fair" out of the debate and focus on what might work best. Personally I do not think ignoring capital gains is right hence starting this thread in 2011. 12 years and another report and still no closer to a capital gains tax.

I did not read Michael Cullens report on capital gains tax but understand it included few concessions such as lower tax rates for capital gains. Start with something simple and palatable to the boomers and crank it up as time goes on.

GST has increased 50% since it came in, in 1986 and that is a regressive tax.

[Panda-NZ-]

GST has increased 50% since it came in, in 1986 and that is a regressive tax.

In exchange for other tax cuts (with less going to the poor as usual).

NZ could do a tax free threshold in exchange for a 15% CGT. Have an accounting firm sign off on the fiscal neutrality of the plan.

[iceman]

In exchange for other tax cuts (with less going to the poor as usual).

NZ could do a tax free threshold in exchange for a 15% CGT. Have an accounting firm sign off on the fiscal neutrality of the plan.

You could just do it by scrapping WFF at the same time. No need to have 2 tax systems doing effectively the same as WFF effectively creates a tax fee threshold for working families, albeit a very inefficient way of doing so.

[fungus pudding]

You could just do it by scrapping WWF at the same time. No need to have 2 tax systems doing effectively the same as WWF effectively creates a tax fee threshold for working families, albeit a very inefficient way of doing so.

World wide fund! Where does animal welfare come into it?

[BlackPeter]

World wide fund! Where does animal welfare come into it?

I was wondering that as well, but he probably wanted to write WFF - Working for families ;

[iceman]

World wide fund! Where does animal welfare come into it?

They’re actually called World Wildlife Fund !

[SBQ]

@Aaron: The problem is income is not defined to include capital gains. I've been pounding the table that there's a huge difference on where capital gains are derived from, by NZ resident. The biggest out-liar is the ownership of multiple houses, while those in Kiwi Saver that choose to make an ownership in overseas shares, are paying tax on the capital gains under FIF, every year (but conveniently no credit on CG LOSS on years like last year). Why does the working class and those on lower incomes, are only left with a tax paying scheme called Kiwi Saver (which also is hit with management fees), while those that could leverage in buying another house or rental property (because they have excess incomes and the bank will allow them to), gets away with tax free capital gains if such houses are held for more than 10 years?

The tables need to be turned around and if I have not mentioned many times before, IRD needs a hard look at what Canada has done. Justin Trudeau has done a lot more for the working class in this area than any previous NZ PM has done. I'll repeat, the disadvantaged (those on disabilities mental and physical) get the better tax advantage, likewise with those wanting to save for education when the child is born, or a TFSA for ALL residents over age 18 ; ALL of these plans with the incentive to save and invest as it grows 100% tax free. At any moment the wealthy choose to buy houses as rental income, then the full force of taxation will apply to them. There is no differentiation on capital gains if derived from houses or from the stock market. But in NZ we seem to have a very very strong preference of leaving out houses as part of the taxable take. If there are so many that are leaving NZ for Australia, I can completely understand why because to me it seems the working class, teachers, nurses, etc are getting a bad deal by living in NZ (as the wealthy that participate in owning more and more houses, distort the housing prices in NZ).

There is so much wrong in NZ that politicians here don't want to address. Last week the JW knocked on my door and I gave them an earful in regards that the people in NZ have better things to be concerned about than some faith based religion they're spread about.

[Panda-NZ-]

I wish hipkins would grow a spine.

Luxon gave a very poor response (like he often does when he doesn't get the interview questions in advance)... Almost angry that the wealthy are being made to pay even that

The better response would have been his usual trite "give the peasants an education so they can be one of them" (..or go to Australia on the NZ taxpayer*) but he doesn't have the political skills necessary.