Free Press
Free Press
Stating Our
Values
Serial migrator Oliver Hartwich of the
New Zealand Initiative has lived in Germany, England,
Australia and New Zealand. He observes that all countries
put migrants through the wringer with endless forms before
they can become residents and citizens, but New Zealand
omits one that Australia requires – Hartwich is
hardly a fan of bureaucracy, but points out that we don’t
require new immigrants to sign a Values
Statement.
The Australian Values
Statement
You can read the form that Australian
immigrants are required to sign here. Other than omitting Freedom
of Speech, it is pretty good, requiring new citizens to sign
up to: respect for the freedom and dignity of the
individual; freedom of religion; commitment to the rule of
law; Parliamentary democracy; equality of men and women
[and] equality of opportunity for individuals, regardless of
their race, religion or ethnic background.” New Zealand
is lucky to have inherited liberal traditions and we should
be more up front about stating them.
A Capital
Gains Tax by Stealth
ACT campaigned heavily
against a capital gains tax last year (and every other year
in memory). We oppose it because it is an envy tax. On the
doorstep, Epsom voters told David Seymour they wanted
nothing to do with such a new tax.
An Envy Fuelled
Tax
The value of capital is that it produces a
stream of revenue, which is taxed. If your capital asset
grows, chances are your revenue will increase and you’ll
pay more tax. For example, as rents rise, so does the income
tax landlords must pay on their revenue. A capital gains tax
means you pay twice for investing wisely, once on the
revenue then again on the capital. It is double taxation on
those who save and invest, as such it is an envy
tax.
Acorn Taxes
Former ACT Leader
Richard Prebble points out that taxes are like acorns –
they grow. GST was introduced at 10 per cent, it has been
raised twice to the present 15. Income tax was introduced
in 1891 as a 5 per cent tax on those who earned over $60,000
in today’s dollars. Somebody earning only one dollar is
now taxed at 10.5 per cent and the top rate is 33 per
cent.
National Plants an Acorn
The
Nats also campaigned against a capital gains tax but are now
colonising Labour’s policy manifesto like Staphylococci on
fresh agar. By introducing a ‘bright-line’ test, they
will ensure any house resale within two years of purchase is
automatically taxable for capital gain. History suggests
National’s capital gains tax on housing taking root and
expanding.
Won’t Work
As the Law
Commission and nearly every major law and accounting firm
has told the Finance and Expenditure Committee, the bright
line test won’t solve the problem it is supposed to solve
– property speculation. It is expected to bring in only
$5m per year (top real estate agents earn more on
commission). Serious speculators, on the other hand, will
simply avoid the bright line test by holding properties for
more than two years.
How it Will
Grow
We know National’s CGT will not supress
house prices. Just ask people in London, Sydney, Vancouver
and Los Angeles. A future government will react by saying
National were too lenient in 2015, and extend the bright
line test to include anybody reselling within five years,
then ten, until there is an effective CGT on all properties
except the main family home. It may not stop
there.
The Real Losers
The tax will be
paid by those who have no options (e.g. someone who gets
sick and must make a mortgagee sale on their investment
property within two years of buying it). Presently they
could argue with the IRD that they had not bought with the
intention of profiting, under the bright line test they have
no such defence. People in dire straits will be hit with
nasty tax bills.
ACT’s Problem
ACT
must support the bright line test through Parliament. It is
a budget measure and ACT is committed to backing Bill
English on Budget Measures. Nonetheless planting the CGT
acorn is a monumental policy blunder that will grow into a
blight on New Zealand’s otherwise world class tax policy
landscape.
The Right thing to Do
The
Government should delay the bright line test until the
effects of property disclosure are seen. There is already
an intention test on property investment. If you invest in
property with the intention of profiting from capital gains
you must pay on those gains. Submitters to the committee
point out that the Government’s disclosure laws will
assist in making the intention test more stringent, and will
likely be more effective at cooling property speculation
than the bright line test.
We Live in the Greatest
Country on Earth
As an aside, the Select
Committee submissions show how lucky we are in New Zealand.
In some countries accountants and lawyers are hardly upset
that convoluted tax laws fatten their fees. We are lucky to
live in a country where such professions turn out in numbers
with substantial submissions to the Select Committee and
criticise poor legislation.
Saved by the
Peak
John Key pulled off a political
masterstroke by adopting the Greens’ bill to include Red
Peak in the flag referendum. He simultaneously injected
some enthusiasm into the process and made Labour look very
silly. A furious Grant Robertson stormed out of select
committee when the MPs got the news on their
phones.
A Bit Green
The biggest loser
is the Greens’ new co-leader James Shaw, although it will
be a while before this dawns on him. On Tuesday the Greens
and Labour presented a coordinated strategy at question time
(together they made the Prime Minister answer the same
question six times). It was a lame strategy but the message
was this: we can cooperate and we are a credible alternative
government. On Wednesday Shaw showed Labour he’ll sell
them down the river without a moments’
notice.
The Green God Complex
ACT has
good relations with all parties except New Zealand First,
which is more of a cult. However Bill English pointed out
that the Greens were rude and ungrateful to deal with over
the flag. Free Press showed two weeks ago that the
Greens do not have two science-trained MPs to rub together
(arguably they have none). They are the most authoritarian
party, akin to religious zealots who feel their higher
purpose excuses them from using manners etc.
Real
Greenery
For every prediction of doom and gloom
(running out of food, running out of oil, overpopulation),
technological advances have made more efficient use of
available resources (the green revolution in crop farming,
more efficient vehicles, contraception). The Greens are
waging an obsessive war on the car, but articles like this show that you
needn’t be a science fiction freak to see how electric and
driverless vehicles will make people more mobile than ever.
Of course, the Greens would only complain that better
transport will lead to more sprawl (and they’re absolutely
right).
ENDS