All posts tagged CGT

More, lower taxes?

The biggest problems with taxes:

  • rate too high
  • too many rates
  • too many  exemptions
  • too complex

More tax types
I think we need a range of taxes, if you narrow it to too few it allows to much advantage to some and disadvantage to others.

Keep it simple
Simple, universal, minimal or no exemptions. Flat rates.

Keep it Low
The lower each tax rate, the less likely people will try and avoid that tax.

GST, PAYE, CGT,  company tax, land tax and transaction tax, fuel tax, and alcohol and tobacco excise tax – reach as wide as possible, as low as possible (except for tobacco and maybe alcohol), and as low administration as possible.

I’m just plucking numbers out of the air, but starting with GST as it is here’s a stab:

  • GST 15% on everything
  • PAYE first 15k tax free, 15% thereafter
  • Company tax 15% on everything
  • CGT 15% on everything
  • Land tax 1% per year on everything perhaps with a tax free threshold
  • Transaction tax 0.1% on everything
  • Fuel tax to cover wider costs
  • Alcohol, tobacco and gambling at levels to discourage overuse

They would need balancing and adjusting to ensure sufficient revenue.

In addition the whole benefit system should be simplified, and a priority should be put on controlling government spending and encouraging business development, employment and productivity.


Simple, comprehensive, low.

by Pete George on July 19, 2011  •  Permalink
Posted in Politics
Tagged , , , , ,

Posted by Pete George on July 19, 2011

http://yournz.org/2011/07/19/more-lower-taxes/

Goff’s betrayal, Mallard’s propaganda

Labour messages don’t line up.

Phil Goff, Labour Party Leader

I want Labour to connect with people, to engage with people and communities throughout the country to help us develop policies that reflect the needs and aspirations of all New Zealanders.

Trevor Mallard, Labour MP Hutt South

The key point for us is not to be dragged down into the detail on the CGT. The pub­lic don’t care and we get boring.

Goff claims connection and communication, Mallard leads a PR campaign that seems aimed at keeping people in the dark. We could just as easily read Mallard as saying “we don’t care about informing the public of the detail”.

  • The detail was not made available to the public. I looked for detail and it wasn’t available on the Labour website.
  • Labour would not “engage” with me, I posted a comment on their website and it was ignored (or censored).
  • I have raised points about CGT policy on blogs and have been actively attacked and discussion has been discouraged.

Who runs Labour? Is this why Goff can appear so uncomfortable when speaking – his honesty and wish to connect is being overridden by the party?

CGT deserves a decent debate.

It appears that Labour is cynically  using CGT as a tool to try and get elected and don’t want the merits of CGT debated. They want to control the messsage, and shout down any attempts at discussion.

Labour still don’t understand why the public have become so pissed off with politicians.

Goff says what he thinks the public want to hear (maybe he believes it).

Mallard keeps playing the old game of propaganda and manipulation and hiding details from the public.

I want honesty and real engagement with the public on policies. I think we deserve better – if Goff really is a leader he should live up to his word. Otherwise his face will keep betraying him.

 

by Pete George on July 17, 2011  •  Permalink
Posted in Politics
Tagged , , , ,

Posted by Pete George on July 17, 2011

http://yournz.org/2011/07/17/goffs-betrayal-mallards-propaganda/

Something “LABOUR’S FAIRER TAX SYSTEM EXPLAINED…” doesn’t explain

Are Labour’s CGT medium term risks understated? They are at least sketchy.

Labour has today revealed a bold plan to stop our valuable assets being flogged off overseas, give hard-working Kiwis a tax break, pay off the country’s ballooning debt and grow our economy.

The document mentions paying off debt a number of times. Labour acknowledge that ther proposal will require more borrowing in the short term (but they don’t mention this in the document).

Q&A 5. How much revenue is CGT forecast to raise?
Our policy has been fully costed by independent experts BERL. They estimate it will raise $78 million in the first year, rising to $2.27 billion in year 10. Over 15 years, it will raise about $26 billion in total. The amount raised will fluctuate depending on economic cycle.

It’s obvious that $78m in the first year won’t cover all the tax cuts (PAYE and GST), and CGT won’t cover them for a few years (they don’t say for how long). They say that the tax rate increase to 39% will approximately cover taking GST off fruit and veg. Before they increase tax take they will need to get more CGT that they have given up in no tax on the first $5k.

The estimated cost of the free-zone of $5,000 at full implementation is around $1.3 billion a year. Labour will pay for this with the CGT and by clamping down on tax avoidance.

On their figures, after ten years of CGT they will only be getting $1b in extra tax revenue (CBT less first $5k free). It could take five years or more (from 2014) before they increase their tax take.

How much extra borrowing will be required to fund their tax cuts? Labour have been scathing of National borrowing to pay for tax cuts.

If everything doesn’t go according to plan?

What if, in the first five or ten years, before the revenue from the CGT has grown enough to cover tax cuts, we have another recession? That could severely impact on CGT projections, meaning even more borrowing on top of the additioanl Labour borrowing.

It’s a high risk in the medium term.

Source: Fairer Tax Explained (large DOC download)

by Pete George on July 15, 2011  •  Permalink
Posted in Politics
Tagged , , , ,

Posted by Pete George on July 15, 2011

http://yournz.org/2011/07/15/something-labour%e2%80%99s-fairer-tax-system-explained%e2%80%a6-doesnt-explain/

Wrong way and right way to do CGT

I’m not against some form of capital gains tax in addition to what we already have.

I’m against a terrible way of implementing tax policy.

Wrong way to do CGT

  1. Realise you have sod all chance of winning the next election
  2. See an opposing party policy you think you can target
  3. Decide that a different sort of tax can compete with an entirely different policy
  4. Choose a type of tax cover we don’t alread have
  5. Structure the tax to appease as many potential voters as possible
  6. Pre-announce an outline of the tax
  7. Add a bunch of exemptions to the tax to appease more potential voters
  8. Stick it to voters you don’t think will vote for you anyway
  9. Try and distract and mislead by trying to frame the election decision as a choice between this one policy and one policy of the main opposition
  10. Try to frame your policy as “fair for everyone”
  11. Try to frame opposing policy as the sky is falling
  12. Promise to actually get experts to give advice on tax after you are elected

Right way to do CGT

  1. Review current levels of taxation and expenditure
  2. Review current taxes for efficiency and cover (expert preferred)
  3. Propose a tax policy that best suits the needs of the country and people
  4. After you get elected put forward a bill for your policy
  5. Set up a working group to decide the best balance of taxation incorporating your new proposal
  6. Debate the tax changes in parliament
  7. Get public and expert submissions on the proposal
  8. Debate the final recommendations
  9. Final vote in parliament with no party whipping
by Pete George on July 15, 2011  •  Permalink
Posted in Politics
Tagged ,

Posted by Pete George on July 15, 2011

http://yournz.org/2011/07/15/wrong-way-and-right-way-to-do-cgt/

Labour’s tax changes wouldn’t affect me – or would they?

I’d initially thought the Labour proposals wouldn’t affect me much. I don’t have investment  property. But then I started thinking.

PAYE

I don’t earn $150k so presumably I’ll benefit from the first $5k not being taxed. I don’t actually need another tax cut! The household I’m in has a comfortable income. I think I pay a fair share of tax now, especially considering the current economic situation.

Shares

I have some shares so presumably would need to value them on  “valuation day”, and pay CGT on any gain from then. That is unfair for me, I’ve invested in a  Dunedin company, Blis, that has lost value as it tries to establish international markets. So if on v-day it’s still valued low and then gets rewards for it’s investment in technology patenting and market development I’ll be penalised.

GST

I don’t think GST off fruit and veges will affect my grocery bills much, produce tends to be priced for market and seasonal reasons and is often rounded. How long have bananas been selling at $2.99? Will that change?

But – I work in software with many businesses. Changing from 12.5% to 15% last year wasn’t as simple as changing a number in the software. It cost the company I work for to provide transition help, and it cost companies I support in time and hassle. That was for a minor simple change.

Selective GST rates adds complexity and administration time and costs.

“Farms” or lifestyle blocks

I own 2.5 hectares, a so called lifestyle block. I’ve planted fruit trees and berries and trees for firewood to be more self sufficient. I have two hens and ten sheep. Most of the land is rated as rural.

Will this mean I’ll be liable for CGT if I sell it? Will I have to value the house and the “farm” land separately on v-day?

Expert Group

Maybe I’ll have to ask the expert group that Labour would set up. I hope they’re more expert than the people who thought up all this jumble of extra tax complexity.

What if the expert group tells Labour they need to change PAYE rates thresholds to cover shortfalls?
What if the expert group tells Labour they need to drop the myriad of exemptions and include my family home in CGT?

I won’t know what the end effect will be on me unless Labour win the election – and it’s coalition agreements allow it go ahead with this – and their final plan is decided on.

I want simplicity and certainty in tax. I wouldn’t mind a simple clear comprehensive CGT.

But I’m worried about the Labour tax package. Too selective, too complex and too uncertain.

 

by Pete George on July 15, 2011  •  Permalink
Posted in Politics
Tagged , , ,

Posted by Pete George on July 15, 2011

http://yournz.org/2011/07/15/labours-tax-changes-wouldnt-affect-me-or-would-they/

Greens play rich versus poor

Russell Norman is promoting a Capital Gains Tax in part by playing the rich versus poor card.

Capital gains tax would hit rich, not poor  (ODT)
Rich people benefit from not having to pay a capital gains tax, Green co-leader Russel Norman says.

Class politics like rich versus poor is dirty politics, and it often ignores complexities.

I think we should have a good look at the merits and drawbacks of a Capital Gains Tax, but rationally and not emotionally.

Dr Norman said the research highlighted those on lower incomes earned money from wages which were fully taxed while the largest proportion of capital gains was earned by those at the upper end of the income spectrum and this income was untaxed.

This ignores a number of things, including:

  • People on relatively low incomes also benefit from untaxed capital gains
  • Most people on high incomes pay much more tax than those on lower incomes already
  • Capital gains are often used to finance retirement, including health care and care of the elderly, which reduces costs to the state
  • “Rich” people benefiting from capital gains often use that money for a wider circle of people who aren’t “rich”, for example for children’s education, parent’s care

It’s far from being a simple rich versus poor argument. Argue for CGT on it’s merits, not by promoting rich envy.

Ironically Green voters tend to be reasonably well off people rather than poor people.

by Pete George on July 9, 2011  •  Permalink
Posted in Politics
Tagged , , , , ,

Posted by Pete George on July 9, 2011

http://yournz.org/2011/07/09/greens-play-rich-versus-poor/

Follow

Get every new post delivered to your Inbox.

Join 74 other followers