Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 


Taxes and Votes


Taxes and Votes

9 JUL 2014

Jamie Whyte

On TV1’s Q&A programme, David Cunliffe boasted that his proposed new capital gains tax would collect an extra $5 billion a year. That is the biggest tax hike in the history of New Zealand. Which is saying something.

It is a dreadful boast. Taxes are always paid by people, whatever the taxes are levied on. Income taxes, corporate taxes, property taxes, GST: they are all the same in this respect. They are all paid by people.

Nor are the people who bear the cost necessarily the people who write the cheques to the government. For example, if a capital gains tax means that landlords get a lower return on the capital appreciation of their properties, it will increase the rents they charge their tenants. Or landlords may sell their properties to owner-occupants. The supply of rental properties will then fall and, again, tenants will end up paying more.

Where the cost of a capital gains tax will fall is a complex matter and extraordinarily difficult to predict. All Cunliffe knows is that the $5 billion will somehow be extracted from the people of New Zealand so that it can be spent in ways that he figures will buy him the most votes.

At least, that is what Cunliffe thinks he knows. In fact, he has almost certainly over-estimated the amount he will be able to squeeze out of tenants, consumers and entrepreneurs because taxes can be avoided.

When it comes to income tax, people can divert their activities from highly taxed activities, such as working in productive jobs, to low taxed activities, such as playing golf. When it comes to a capital gains tax, they can divert their investments from rental properties to bigger homes for themselves (which will not incur capital gains tax at sale). They can invest overseas rather than in New Zealand. They can delay selling assets to avoid realising a gain and paying the tax. And they can spend money on accountants and tax lawyers to devise all sorts of other ingenious schemes

Such avoidance activities will reduce the loot Cunliffe can get his hands on. That’s good. But they will also reduce the growth of the New Zealand economy. Resources will not flow to their most valuable uses. They will instead flow to the uses that are farthest from Cunliffe’s grasp.

A capital gains tax is a very bad idea.

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Spy Update: Appointment Of GCSB Acting Director

GCSB Chief Legal Advisor Lisa Fong will become the Acting Director of the Government Communications Security Bureau (GCSB) from 15 February 2016, Minister Responsible for the GCSB Christopher Finlayson announced today. More>>

Protests Close Roads: TPP Signed In Auckland

“TPP was signed by Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Viet Nam.” More>>

ALSO:

Emails Behind 'Diplomatic Immunity' Case: Whitehead Report Released

“As previously indicated the conclusions reached by Mr Whitehead’s investigation are not unexpected but they are very disappointing,” Mr Mccully says. “At the heart of the matter is a single email, along with procedural shortcomings, which gave Malaysian officials the impression it would be acceptable for Mr Rizalman to return to Malaysia." More>>

ALSO:

Gordon Campbell: On The Treaty/TPP Overlap, And Iowa

The fears about the ISDS provisions in the Trans Pacific Partnership deal are well-founded. The reality is that there is a sharp uptick in the occurrence of ISDS litigation in developed countries, and even the right wing likes of The Economist have been souring on the process for some time. More>>

ALSO:

Christchurch Red Zone Offers: Fresh High Court Proceedings

Grant Cameron, Solicitor for the Quake Outcasts said “the action seeks judicial review of the Crown’s recent decision to make a fresh offer to purchase properties from uninsured property owners in red zones. More>>

ALSO:

PM's Post-Cabinet Press Conference: Waitangi And TPP

Prime Minister John Key on Tuesday said his office has received an invitation for him to visit the Lower Marae on Waitangi Day, but was waiting for a meeting of the Te Tii Marae Trustees. More>>

ALSO:

Flagged: 'Wrong Colour' Bridge Flag To Change

NZ First: Only 13 days after National trumpeted its legally questionable flag on Auckland Harbour Bridge, it is now coming down because it is the wrong colour... “Mr Key’s latest flag fiasco is another waste of taxpayers' money. Given it is coming down, down is exactly the location where it should remain. More>>

ALSO:

School's In: Children Head Back To School

“Across the whole of this year we expect 61,820 five year olds will begin their primary schooling for the first time,” says the Ministry of Education head of sector enablement and support Katrina Casey. More>>

ALSO:

Dog & Lemon: FBI Disagrees With NZ Government Over Police Chases

Multiple studies, quoted by the FBI, show that once suspects realise they're no longer being chased; they tend to slow down to normal driving speeds and therefore become far less of a risk. The FBI report also categorically rejected the argument that abandoning police chases meant ‘giving in’ to offenders. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Politics
Search Scoop  
 
 
Powered by Vodafone
NZ independent news