A couple of things came up in discussions I had this weekend about Labour’s economic plan that I thought were worth a reminder.
First, among developed countries we stand with only Switzerland and Turkey in not having a capital gains tax. That’s it. Australia’s got one, so has Canada, Norway, Germany, you name it. A lot of people don’t realise that this is not some radical tax dreamed up on the left of politics in New Zealand, it is part of taxation regimes around the world, because it is fair and reasonable.
The other question is around exemptions. As far as I know (and David C will correct me if I am wrong) that Japan is the only developed country who include the family home in the CGT. Exemptions are part of the CGT picture around the world. Tax accountants look at every tax and try to find ways through them. But that is not a reason to avoid putting them in place. We believe that CGT, along with the other initiatives Clare highlighted earlier today are the basis of a plan to bring some fairness and long term sustainable growth into our economy.
One final thought. Labour was rightly asked for detailed policy on the economy. We have provided that. What is National’s policy? Serious question. Can we expect something different? Or Is it just a continuation of the drifting and short term thinking of the last three years? It would be good to know. As the ad says, now’s good.
That’s great!
!
The problem with excluding the family home is that it puts a greater tax burden on those who rent, and these are often the people who are the worst off.
If you want to make things fairer probably best to apply the CGT to all forms of accommodation. In an earlier thread I understood you had modeled the welfare effects of the tax package. When will that be released?
BTW with Housing NZ pay CGT?
BS Grant. Singapore and Hong Kong (a SAR yet regarded as a jurisdiction) don’t have CGT. And guess what? Many other countries that have claim to have CGT have so many loopholes that they keep lawyers and offshore planners in gold designing around them.
All income should be taxed – why should capital gains be any different? Well done Labour.
Is the purpose of CGT purely about redistributing wealth?
What is so unfair about the current tax system and why was CGT not introduced earlier if it so unfair?
Why do you not agree that the CGT is death duty by stealth as several example have shown so far?
indiana, if the CGT was death duty by stealth it would include the family home when it is sold upon the death of the surviving parent – but the family home is exempt from CGT. So are you referring to the various trust accounts used by those arranging their affairs to hide their assets … (just makes you weep for the suffering that a 15% CGT off the asset sale proceeds will do to the beneficiaries, or wonder for what advantage the family home was kept in a trust).
@Grant.
you should never use the words ‘fair’ or ‘fairness’ where you are proposing one section of society pay more tax than another.
there is nothing fair about it. fairness would making equal contributions or paying for what you use.
We all know we’re a long way from that, but let’s not call it something it ain’t.
That is fine Grant and I support a CGT, but why did Labour not introdcue one in 9 years in Government?
Paul labour was a minority government for all the 9 years. (Just like national now)
It baffles me that you cant see the obvious.
Plus another reason was they were running surpluses.
@ Cactus, what garbage. Every tax system has ‘loopholes’. Every tax system has ‘lawyers and planners designing around them’. Typical ACT tactics, compare the real world to some mythical ideal in order to tear it down.
Paul, in the years 1999-2002 it was not part of the Labour manifesto and after that point, even if it had become the policy they would have required United and NZFirst to agree.
So old logger is claiming some new golden rule where that no one can be asked to pay more tax out of their income – I somehow doubt that he posts elsewhere that no one can have their entitlement cut.
For flat rate tax and user pays have their equivalent in universal provision and minimum income. The system we have of progressive tax and support and subsidy based on need is the mixed model between these two extremes.
Those proposing to cut down one only one side of the forest are the extremists.
The principle that all income is treated equally whether derived from labour, profit or capital gain is a fair. Only those preserving a privilege can find fault with that.
If you put CGT on everything you may get my vote, family home + gambling + art + small trades people = no exceptions = easy peasy … I say may cos I also want to know where it’s spent and where are the switches… ps ditch that no GST on veges & fruit nonsense….kfc sales will remain the same