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.

 

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  1. News & Views – Friday 15 July 2011 | Your Dunedin

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