Improving tax compliance on capital gains

In the past Labour MPs have repeatedly claimed and implied that property speculators don’t have to pay tax on capital gains. A year ago then leader David Cunliffe and finance spokesperson David Parker both pushed this fallacy. From Cunliffe and Parker repeat claims on property speculation:

David Cunliffe in a speech to Young Labour:

We have too many children who are getting sick because they live in cold, damp, cramped houses with black mould growing up the walls. Sometimes owned by speculators who just push the rent up while getting rich on tax-free capital gains.

David Parker on The Nation:

“You need to tax the speculators….capital gains tax”
“Loan to valuation ratios would not be needed if they were taxing speculators and building affordable homes.”
“National Party, despite the fact that we had 40 percent house inflation, they’re not doing anything about it. Not taxing speculators…”

Presuming they must have known that IRD does pursue compliance on taxing the capital gains of speculators this looked dishonest.

It’s good to see that Andrew Little seems to be either more informed or more honest. He recently suggesting that the Reserve Bank target speculators as reported in Focus on spec buyers: Little

 Mr Little said the Government must take action on property speculators who were damaging the housing market.

Mr Little is known to not favour the introduction of a capital gains tax, something Labour had campaigned on in the last two elections and lost.

Mr Little said there were several options the Government could take to prevent property speculators building up large housing portfolios and pushing up house prices.

First home buyers, or those who wanted a rental property for retirement, were being shut out of the market by lending restrictions that should be targeted at property speculators who sometimes owned 10 to 20 houses and sat on them, he said.

”The solution needs to focus on Auckland. There is no point in a family trying to buy a house in Wanganui, where prices are dropping, being subject to lending restrictions designed to lower house price inflation.”

Another solution could be those buying multiple properties needing a higher level of equity for subsequent purchases, he said.

But the most important action was to build more houses to increase supply.

He’s on the same page as National in seeing the need to increase the supply of houses. And I’d expect him to agree with Bill English in his approach in IRD to clamp down on speculators.

Finance Minister Bill English yesterday rejected calls by the Reserve Bank to remove tax incentives for investment housing, which the bank has blamed for rising house prices in Auckland. But he said there was an ongoing discussion about whether the Inland Revenue Department could be doing more to enforce existing rules on property trading.

Mr English said there was already a tax in place for people who bought property with the aim of reselling it.

And with real estate agents and buyers reporting high levels of trading activity in Auckland, “there is a question of whether that should give rise to further enforcement activity”.

Speculators are already taxed, when the IRD can determine that they have been speculating.

At present, speculators have to declare that they are buying a house with the intention of reselling it. They are then taxed on the sale.

The IRD scrutinises property transaction records to make sure people are complying with this rule. In particular, it looks at how quickly a house is sold and the number of houses a person is selling.

Figures released by the IRD showed that $52.4 million was collected in 2013/2014 from speculators or traders – either from one-off speculative transactions or patterns of dealing. This figure is expected to increase in 2014/15. The IRD has already collected $63.2 million.

So IRD are addressing speculation and their tax take is increasing.

Any potential changes to the IRD’s resources would be announced as part of the Budget on May 15.

That suggests that the rules are seen as sufficient but that more resources may be provided to improve compliance with tax on capital gains when speculating.

A Little lineup leaking

Andrew Little will announce Labour’s new line up this morning, but some key details seem to have been leaked. Is this the infamous Labour caucus sieve still at work, or are snippets deliberately being drip fed by Little?

Patrick Gower has tweeted that “word from inside Labour” is that Annette King will be Little’s deputy, Grant Robertson will get the Finance role and David Cunliffe won’t be on the front bench.

David Parker has already said he doesn’t want either the deputy nor finance roles and there was speculation he may quit Parliament after seeming to be hit hard by his leadership bid failure.

But the Herald ‘understands’ that Parker has been brought back “into the fold”.

Mr Little also said he had brought David Parker back into the fold after speculation last week that he could leave Parliament. After coming third in the leadership contest, Mr Parker said he did not want to retain the finance or deputy positions, which prompted questions about whether he would remain as an MP at all.

Mr Little said he had “a very good discussion” with Mr Parker and he was confident that the role he had been given would “meet his expectations”.

King as deputy would be good, she is one of Labour’s most respected old school MPs and has been acting as leader during the leadership contest. She was deputy leader under Phil Goff’s leadership from 2008 until she resigned after Labour’s defeat in 2011.

She would also help Little bridge the caucus divides.

Robertson in Finance is interesting. It is one of the most demanding and important roles. It is also a nod towards bridging divides, but keeping Robertson as busy as possible may also be a crafty move. Helen Clark did similar with Michael Cullen after beating him in a leadership contest.

Little said he would review his MPs’ portfolios after a year, and that he wanted his MPs to have at least two years’ experience in their roles before the general election.

“We’ve got three years … and we want the best going into 2017.

“So I’ve made the judgment that I’ve got a year to try some people out, to try some new things, try some new combinations and see how those work.”

“I think you’ll see that this reshuffle is about bringing the caucus together as a team.”

“Bringing the caucus together as a team” will be one of Little’s biggest challenges and a key responsibility of deputy King.

And if these details are unauthorised leaks and the leaking continues then the King should start beheading any offenders.

Gower: Cunliffe not on Labour’s front bench

Maybe Labour’s leaks haven’t been plugged yet.

 · 

Word from inside Labour that David Cunliffe has been ABCed. Not on Front Bench.

Or perhaps it’s a managed leak to get this news out prior to the main announcement tomorrow, to dilute the potential negative coverage.

UPDATE: more from  ·

Word from inside Labour is that Annette King is deputy and Grant Robertson has finance.

Word from inside Labour is that Little is his own man, kept Cunliffe back, wasn’t pressured by ABCs.

Stepping up in the Labour boat

Andrew Little – obviously he has to step up big time. He’s put himself forward as leader, he has been chosen, and he has a massive job to do.

Labour caucus – while Little has to work on uniting his Caucus all the MPs need to unite behind Little and contribute to recovering and rebuilding.

Past leaders – Phil Goff, David Shearer and David Cunliffe have all had a go and failed. It is their duty to help Little succeed.

Grant Robertson – he ran a very close race and will be bitterly disappointed. He needs to take some time to get over it, then do his utmost to help Little and Labour succeed. He isn’t leading the party but he can and should take a significant role in leading the Caucus support of Little.

David Parker – has indicated he doesn’t want to be deputy and doesn’t want to be Minister of Finance. He may be disappointed and he may be hurting, but this is very disappointing. Parker thought he was good enough and committed enough to be Labour leader, so he must be big enough and committed enough to be a strong senior member of Little’s caucus. He go in on the Labour list for another three year stint, like all the other MPs he owes it to Labour to do his utmost repair the damage and rebuild.

Nanaia Mahuta – has been criticised for being low profile and insignificant in her EIGHTEEN YEARS as an MP for Labour. She felt she could take on the huge challenge of being party leader. She must step up and repay her party.

Andrew Little has taken on a huge challenge. His success will be partly up to him, and it will just as much be up to all other 31 Labour MPs in Parliament, as well as the Labour Party.

If they all don’t out in the effort and work together they will live down to National’s expectations (this was a multi-party dig but it could be applied to Labour’s past performance on their own):

LabourRowboatOr this will be the Labour boat:

LabourRowboatEmpty

Why was Cunliffe/Thorne meeting not reported?

Leading into the election campaign in late July Labour leader David Cunliffe met publicly with ex-All Black and ex-National MP Grahame Thorne and was presented with a bottle of wine by Thorne.

This happened in public in Queenstown, and Thorne posted about this in Facebook along with a photo.

Cunliffe ThorneHowever this meeting was not reported by mainstream media at all, despite Cunliffe associated with bottles of wine being prominent in news coverage at the same time – see Cunliffe talks about the Labour list and that bottle of wine.

That was about a different bottle of wine.

But following that issue this meeting raised eyebrows in social media because of the wine connection. And, for example, why would Cunliffe and Labour’s Otago candidate Liz Craig be meeting with an ex-National MP who is now promoting red?

Was Thorne endorsing Cunliffe? Media don’t appear to have asked this question.

By the look of the photo Cunliffe was quite open about it. Thorne was open about it, self publicising in social media.

So why did establishment media suppress this news?

Nearly four months later Stuff does mention a meeting.

then Labour leader David Cunliffe was castigated for briefly meeting with him.

Who castigated Cunliffe? I don’t recall Stuff reporting it, but they are obviously aware of the meeting taking place.

That sort of meeting with the leader of the opposition just before an election would normally be widely reported. Why wasn’t it?

What makes a New Zealander “prominent”?

References are often made to “prominent New Zealander”.

John Key is one of the more prominent New Zealanders.

What about ex-MPs? Take Rodney Hide for example, he was prominent in ACT circles, he was prominent in the Epsom electorate, and he was prominent enough in Parliament for a while. But most of the million voters who haven’t voted probably don’t regard him as prominent and many probably haven’t heard of him. He writes a weekly column for NZ Herald but the sports pages are probably more prominent for most readers.

Phillip Smith is one of the most prominent sex offenders at the moment. A month ago most people hadn’t heard of him, now many regard him as a scumbag, but only because his fleeing the country and his offences from the nineties have been publicised, he didn’t get name suppression as some offenders do.

Richie McCaw is one of the most prominent New Zealand sports people, but there are many people who aren’t interested in sport or in rugby so may know little or nothing about him.

What about ex All Blacks? Grahame Thorne was an All Black in the late sixties but many New Zealanders were born after that. He was also in Parliament in the nineties and was noted as an All Black who became an MP, but it’s hard to judge how prominent he is now.

Prominence is often due to what media cover and what they ignore. Thorne, an ex National MP, had a meeting prior to the election with then opposition leader David Cunliffe and the Labour candidate for Otago in Queenstown – see Cunliffe and a gift of wine – but it went virtually unreported, even though it could be justifiably be judged as of public interest.

The joke going around Labour

Tracey Watkins writes at Stuff – Labour misses points-scoring chances – where she mentions a joke in Labour circles.

There’s a joke doing the rounds in the Labour Party as it prepares to name a new leader next week.

If it was up to the fans, Buck Shelford would still be captaining the All Blacks, the joke goes.

Not all MPs will find that funny.

Mickey Savage and Norm Kirk can’t be brought back. There has been ongoing suggestions to bring back Helen but she seems to be committed to United Nations having left behind Divided Labour.

But the joke touches on something that is quite serious.

Labour’s leadership primary is hugely popular with its grassroots – demonstrated by the 3000-strong turnout at meet-the-candidate meetings across the country.

But it has not done the Labour caucus or the next Labour leader any favours. It was the grassroots who imposed their “Buck Shelford” on the caucus last time round over the MPs vehemently-held belief that David Cunliffe was unelectable.

We will find out what leader the grassroots and the union affiliates impose on caucus this time.

This is a major challenge for the leadership contenders – to appeal enough to the vocal activists in the party, to the remaining diehard members, to the unions and to caucus enough to be chosen, but then to become attractive to a much wider constituency, to become electable.

Cunliffe won because he spoke the language of the activists and in the process committed Labour to a course that had no allure to the swathes of middle New Zealand the party wants to woo.

One of Cunliffe’s major failings was that he spoke the language of each audience he was facing, and that language kept changing as much as his audiences.

His lack of consistency and widely perceived lack of authenticity was a major handicap.

Twelve months later, here we go again, though with one important difference: there is no Cunliffe in the mix.

It will be important that Labour’s new leader can widen their appeal without being a traffic light chameleon, expanding on their in-house campaign principles without flashing too much of a different colour each time the traffic changes.

Labour’s lack of rebuilding over the past six years has been a sad political joke.

The party needs to choose a new leader who can seriously attack their problems while being seen to have an ordinary person sense of humour.

Can a shitty Shearer stay?

David Shearer obviously still feels very hard done by and blames David Cunliffe for his difficulties as leader and his subsequent demise.

Is there room for both of them in the Labour caucus? Shearer says Cunliffe should resign.

After Shearer announced he wouldn’t contest the Labour leadership – I don’t think he was ever a serious contender considering his negative attitude to the job – he seemed to take every media opportunity he could get to lash out at Cunliffe and Labour.

I think this was ill-considered and destabilising at a time that Labour has to start to look like it can work together positively.

Shearer lobbed a hand grenade riddled with year old ill feeling into the leadership debate. He put personal bitterness before his party.

Most of Shearer’s lashing out has been directed at David Cunliffe – ironically at the same time that Cunliffe withdrew from the leadership contest. Old scores being unsettled.

Stuff reported David Shearer comes out swinging:

Earlier today, Shearer launched a bitter broadside at Cunliffe, his supporters, Labour’s brand and union influence in the leadership contest.

Shearer said that when he was leader, Cunliffe and his colleagues “undermined and white-anted me”.

Confusingly Shearer said he thought Cunliffe should have stayed in the leadership contest but now he has pulled out he should quit Parliament.

Talking to reporters before Labour’s caucus meeting – and after ruling out of another tilt at the top job – Shearer said it would have been better if Cunliffe had stood for leader, rather than pull out yesterday.

That would have presented a cleaner break and enabled everyone to get behind the new leader.

Now Cunliffe should quit Parliament, Shearer said.

Cunliffe’s response sounded far more reasonable.

But Cunliffe said he “rejected and refuted” the claims.

“It is simply untrue. There is no substance or truth in the allegation I white-anted him,” he said.

“I had no knowledge at all of the moves to replace him. … It was not done by my friends.”

Cunliffe said he wished Shearer well for his future and hoped all his colleagues would respect each other and put the best interests of the party first.

Right now Shearer is nowhere near respect and the party’s best interests.

Can Shearer and Cunliffe co-exist in the same caucus, with one and possibly both harbouring resentment at being ousted from leadership?

Cunliffe is currently the one making the right noises but can he be trusted? He hasn’t had much support from the Labour caucus and will have less now.

If Cunliffe remains in Parliament will Shearer quit?

This doesn’t bode well for Labour and will present major ongoing challenges for their soon to be chosen new leader.

Cunliffe’s belated withdrawal

David Cunliffe has belatedly withdrawn from Labour’s leadership contest, over three weeks after a demoralising election defeat. This enables a more forward focussed contest and probably saves Cunliffe from significant embarrassment.

Choosing to endorse Andrew Little’s bid to lead Labour looks like a parting shot at Grant Robertson and ensures Cunliffe won’t be an unbiased bystander.

It has been reported that Cunliffe made the decision to withdraw last week so it’s curious why he waited until yesterday to make his announcement. He made himself off limits to media over the weekend due to “a family illness” – again showing his unsuitability to lead the party let alone the country.

He has been hiding away for most of the three weeks since the election with various reasons being given. It looks like bereavement leave. Most people who have career setbacks don’t have this sort of luxury, they have to continue earning their wage or resign.

Electorate associate and some time lawyer Greg Presland posted Some thoughts on David Cunliffe’s withdrawal:

And to David Cunliffe can I suggest a short holiday to get yourself ready for the next three years.

After spending a week after the election “soul searching” Cunliffe took a few days off “for a long planned holiday” and seems to have been largely out of circulation for two weeks since. Another holiday now? He has to get over it.

It’s often been said that if you fall off a horse you should get straight back and ride again. Cunliffe is no jockey.

Presland also made an interesting comment in his Standard post:

And you only need to read the overwhelming majority of comments on this blog to see what progressives think about him.

I think he is wrong claiming an “overwhelming majority of comments” supportive of Cunliffe, there have been very mixed feelings expressed. What Presland may be expressing is his own perspective as and integral part of the Standard machine and that those most involved in the running of The Standard have been overwhelming supportive of Cunliffe. That’s been evident going way back to how they tried to drive the so-called Cunliffe coup attempt.

There was a sign of a significant Standard shift in the weekend when they promoted and ran a Q & A for Andrew Little, who happens to now be endorsed by Cunliffe. The Q & A seemed oddly timed, until things became clear yesterday. Presland seems to be in synch with Cunliffe:

And who should the new leader be?  Someone who oversees rejuvenation in the party and ensures that caucus discipline is maintained.  And who is true to the principles of the party.  And who has the support of a majority of members.  Cunliffe has endorsed Andrew Little whose prospects now must be very good.  Andrew has been careful to hold himself apart from the factions and is someone who clearly will work to unite the party and I cannot emphasise how critical this is.

If Little fails to win the leadership what then from Cunliffe and The Standard?

(And while ‘The Standard’ appears to have swung from Cunliffe to Little it’s clear amongst the comments that Little isn’t a universally or anywhere overwhelmingly supported leadership candidate).

If Cunliffe finally finishes licking his wounds he could play a significant part in rebuilding Labour, if he visibly supports and works with the new leader and the revamped caucus.

There will be keen watchers amongst the media and opponents looking for any signs of dissent or disloyalty in Labour ranks, especially from Cunliffe, and if any is perceived it will be highlighted and amplified.

This could depend on what responsibilities Cunliffe is given by the new leader. He is potentially one of Labour’s most potent MPs but his attitude and application have to measure up. His endorsement of Little has a hint of utu.

He – and a number of other Labour MPS – have to put animosities behind them and work for the good of the Labour Party, and earn the generous wages and benefits bestowed on them by the taxpayers.

They have to do more than earn that. Unlike their wages credibility and respect aren’t  provided in their job packages and they will have to work very hard to build them back to the required level for elected representatives.

Unfortunately this will probably mostly be on hold while the Labour leadership is decided.

It may be six months into Labour’s third term in opposition before we finally start to see if Cunliffe has gotten over his double loss plus the dashing of a burning ambition to be Prime Minister, and before we see if Labour is on the mend with the combined efforts of all it’s diminishing group of MPs.

Presland said of Cunliffe’s decision:

Clearly he is prepared to put party interests ahead of his own.

That hasn’t been clear at all in the past and especially over the last three and a half weeks.

Labour desperately needs all it’s MPs to put party interests ahead of their own – including and especially all it’s ex-leaders who now include Phil Goff, David Shearer and David Cunliffe (and possibly David Parker will be added to that list).

Cunliffe has belatedly withdrawn from Labour’s leadership.

Can Labour very belatedly begin their repair and rebuild after their defeat in 2008? It will be 2015 before their next leader can crank up their caucus and begin to seriously try.

A Little chance of bridging the divides

One of Labour’s biggest problems is disunity, and in particular a growing gap between the activist/union leaning left of the party versus the centre-left. At times it looks like a gulf, especially tight now.

David Cunliffe tried to shift to the left and he partly succeeded, he got majority union (affiliate) support in last year’s leadership contest and he still has the support of the labour left leaning Standard blog. But Cunliffe also tried to lean back to the centre at times and with his authenticity problems, the dire election result and his poor handling of the aftermath he is going to have trouble getting the leadership back.

The other confirmed contender Grant Robertson may be able to work across the divide in caucus but there’s substantial doubt he could do it across the party. He doesn’t seem popular in Auckland, and he would have to win over the union left and that would be very difficult. The left of the party are far more entrenched in their views than the more impressionable centre.

Labour’s best chance of bridging the divide is someone who already has some union support but who is able to reach across to the center.

Andrew Little is an obvious option here. He has a union background but seems pragmatic and conciliatory enough to connect with employers and with Labour’s centre left and just as importantly, the swing voters in the centre that Labour has to win win back if they want to regain major party status.

On bridging the divide Little said yesterday:

I think the issue is crucial which is why my main contribution to Labour’s IR policy this year was to back off major change to the present framework pending an audit of the labour market. We need to get a decent picture of how people are engaged for work and exactly what is happening work wise before we think about how we might improve job security and lift wages more fairly. It means engaging with employers too since they have more influence over more workers than ever before.

He says he wouldn’t have delayed the scrapping of the 90 day trial law “because it would have been accompanied by clarification of probationary law” but would have “wanted a more moderate pace on minimum wage increase”.

Stuff reports that Andrew Little considers Labour leadership bid.

Little faced the prospect of losing his place as an MP as Parliament waited for special votes to be counted.

Shortly after the result was confirmed, Little said that he would now mull whether to throw his hat in the ring.

“It’s not something I’ve considered, because  I’ve been waiting to see whether I would be confirmed in Parliament, it’s something that I may well now consider, but I will also be considering how realistic my prospects are, and that’s where it’s at,” Little said.

Little has little to lose by joining the leadership contest, and potentially a lot to gain. He is only an outside chance but if he can promote himself as union sympathetic but pragmatic and conciliatory towards the centre he would improve his credentials in the desperately needed Labour rebuild.

And there’s a small chance the leadership contest could swing his way as an alternative to the failed Cunliffe and a potentially to unpalatable Grant Robertson.

Little is one Labour MP who looks like he has learnt from initial mistakes and has grown into his job as an MP.

Labour would also benefit if Little joined the contest. His presence would diffuse the tension that’s obvious between Cunliffe and Robertson. He could highlight the need to join the factions in a common purpose.

There seems little downside as long as Little is prepared to expose himself to a higher level of scrutiny and inevitable attack.

Another prospect for bridging the divide is Louisa Wall. She would would add an up and coming Maori presence and reward South Auckland support for Labour, she has a good tertiary qualifications plus a high profile sporting background, and she proved her political worth working successfully cross party to be a driving force behind the passing of the Marriage (Definition of Marriage) Amendment Bill last year.
Both Little and Wall are relative rookies in politics but Labour desperately needs new blood to rebuild – with strong support from the old hands.

David Parker is one of Labour’s best bets for a steadying hand at deputy level and with Little as leader and Wall high on the bench pecking order Labour might finally start to look like a party intent on putting failures and animosities behind them with the  capability to build a party that can seriously contest the next two elections.

Two of the worst outcomes of Labour’s leadership contest:

  • Cunliffe to get back in despite a major loss of confidence from the Labour caucus and the electorate.
  • Robertson to win and appear to favour cronies over rebuild capability.

If Robertson wins the leadership contest then Parker, Little and Wall should be a prominent part of his rebuild plans.

If someone like Little sneaks through and he gets the caucus support that should be a given then Labour will lack in experience but will gain substantially in future prospects.

If Labour comes out of the leadership contest with their divides entrenched they may struggle to survive as a major party.

Whoever can step up and look most capable of bridging Labour’s divides will be their best chance of recovery.

Labour really needs to look like a virtually new party that can bridge it’s own divides, widen it’s appeal from the union and activist left across to the centre, and then they might get into a position where they can pose a serious threat to National – and present a credible next government to the voters.

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