TOP tax policy

Gareth Morgan has unveiled The Opportunities Party (TOP) tax policy.

Morgan obviously wants to present himself and his party as serious and competent on major policies but a new small party is extremely unlikely to succeed in introducing major tax reform.

Small partner parties in coalition arrangements have to date been allowed small policy gains, but TOP doesn’t even want to be in a coalition, they say they want to operate from the cross benches.

TOP does not seek to be the government, we seek to substantially influence the policies the government of the day implements.

Our electoral ambition is to have a sufficiently significant share of seats to get our policy priorities implemented. We envisage a cross-bench position as the most effective means to that end.

TOP takes a long term, evidence based view. Our policies aim to make most New Zealanders better off in the long term.

Our country needs to make hard choices, but in the short term people are afraid of change. The current bunch of politicians are mostly focussed on the short term goal of getting re-elected, so they avoid the tough decisions. Half the time they propose policies that won’t even achieve what they say they will.

Opposition parties propose policies that rarely get anywhere. They hope to get into Government so they can implement then.

A new party on the cross benches is likely to struggle to be listened to on major policies.

The Opportunities Party tax reform page is quite vague and waffly unless you are prepared to drill down into it. It’s introduction:

The current tax regime favours owners of capital and unjustly burdens wage earners. This is not only inequitable, it results in poor utilisation of capital and lower than necessary income and employment.

Nowhere is this more obvious than in the property sector, where speculators and home-owners benefit while those that are renting are punished. It is unfair, pushes up house prices and drives even greater inequality. Ultimately, it is in everyone’s interest that we address the loophole in the tax regime.

So TOP is looking at capital gains tax on property.

Our proposed reform will not collect even one additional dollar in tax – we want to change what is taxed, not the amount of tax collected. Any increase in revenue will be used to reduce income tax rates.

This is confusing. I presume they meant that if tax revenue increases they will then reduce rates so it doesn’t increase any more. Will they give back any additional tax dollars?

Under the reform we propose, around 80% of the public will be better off, the 20% that aren’t can well “afford” it.

Trying to appeal to the majority.

The current system encourages borrowing and speculating on land values. This comes at the expense of investment in our productive businesses, which are held back by a lack of investment.

In the middle of the waffle is probably the key point:

All productive assets – and that includes the house that provides you with your accommodation each year – are or can produce income each and every year. All income should be taxed, whether it is in cash or in kind. By only taxing the cash income from assets, Establishment parties have hurt many people, and in effect given a handout to property owners.

A capital gains tax on all property, including the family home. This would be simpler than CGTs with exclusions, but it would annoy a LOT of voters.

Not only will plugging this leak in the tax regime make tax fairer and boost economic growth it will over time improve housing affordability, by erasing the reason for property speculation.

There is not one single reason for property speculation. Various types of capital gains taxes are used around the world and they don’t stop property inflation.

Plugging the hole in our tax regime will be done gradually to ensure house prices remain stable while incomes grow.

A blanket CGT with gradually increasing rates?

We acknowledge this is a cultural change and some people will struggle to separate their own self-interest from the matter of what’s fair and reasonable.

In other words, many voters will hate it. Not just property owners – if the cost of property ownership goes up then the cost of renting will have to also go up. And if rental property ownership as an investment is discouraged through tax then there will be less rental properties available, pushing up rents even more.

However we believe that a well-informed public is astutely rational.

I doubt they will be well informed by this.

While the property-owning group is a big one, the implications of an ever-rising property to income ratio is that future generations will struggle to rent let alone own, businesses will be starved of the investment capital they need to grow and create jobs, our reliance on foreign debt will keep rising and inequality will get worse.

If anyone has read this far and feels well informed and is supportive of this tax reform please say so.

National has resisted comprehensive capital gains tax, and Labour has also backed off them. A small new party is unlikely to change their minds.

And if you want to be better informed you can download the full policy document (PDF).

45 Comments

  1. Blazer

     /  December 8, 2016

    Sliced and diced Henry this morning.Won’t find favour with the greedy.

    • Won’t find favour with most voters – why do you think Little backed off a less drastic version?

      • PDB

         /  December 8, 2016

        No wonder you are in favour Blazer considering this would more than likely over time lower house prices and you have publically stated you agree that would cause your mortgage to drop – happy days! Well done you!

        • Blazer

           /  December 8, 2016

          I am convinced you are a complete moron,as I said no such thing.You know it,I kn ow it,but you take the Natz approach,keep saying it ,regardless.

  2. PDB

     /  December 8, 2016

    It won’t find favour with anybody with any sort of economic sense……….

    *Fails the main tax ‘sniff test’ in that a new tax should be simple – this isn’t. Requires everybody to file a tax return and balance sheet detailing all assets being taxed. Listening to Gareth it would also have all sorts of exemptions and differences depending upon your circumstances (retired homeowner, asset rich/income poor people etc). For 80% of people (supposedly) you would have to muck around regaining your money through an income tax rebate – just ugly.
    *Deciding on what a house, expensive car for instance is worth at any point of time is like throwing a dart at the dartboard – open to major conjecture. The cost of enforcing the tax would be huge for both the taxpayer and the govt. Lawyers and accountants would be the ultimate benefactors of such a tax.
    *Appears to have no mechanism of paying back money when your assets actually devalue? A tax like this can’t be a one-way street, tax deductions for losses can’t just be ignored.
    *Discourages savings and effectively taxes money that has already been well taxed. Raises the cost of renting considerably.

    A land tax is possible but trying to tax all ‘assets’ like houses, expensive cars, paintings etc etc is just fantasyland stuff that would only find favour in the envious ones.

  3. Jeeves

     /  December 8, 2016

    The tax break I want is a simple one- as an employee – allow me to offset the costs I incur in earning a wage against my taxes, just like a contractor or a business.
    Cost of my car, my petrol, my clothes….
    its simple, its fair, and it would make a difference to every wage earner.

    I’ll be happy to pay tax on the increasing value of my house as long as I can offset the costs of it’s maintenance- and I charge a fair rate for vacuuming and painting and fixing things and providing security etc etc… so if my asset increases by $10k a year, I’ll guess that increase would probably have cost me at least $15 to secure. It’ll be a great opportunity for one of my sons to start a property maintenance company- I’ll be his first customer.

    All I want is the same opportunity to scam the system as businesses and the self employed have enjoyed for decades.

    • Kitty Catkin

       /  December 8, 2016

      Dream on. Paid to vacuum your house ? That’ll be the day. Why not be paid to buy new furniture while you’re at it ? If you think that you can spend $15 and get back $10,000, you really are dreaming. I am about to repaint my sittingroom, but that’s my decision, as it was to put mats on the boring carpet. Your idea is neither simple nor fair. It’s greedy.

      Tax write-offs are not a scam as you put it, or the IRD wouldn’t allow it. There are very strict guidelines as to what can or can’t be charged. I was self-employed and so I do know what I’m talking about here.

      • Jeeves

         /  December 9, 2016

        Sorry that should read $ 15 k
        So you know what you are talking about ? But you still make a naive fact ,as you always do,that ‘if it was bad,it wouldn’t be allowed’
        Tell me then how much tax google or bob jones or paul henry paid last year? Answer._._._ sweet fuck all.
        Q ._._.Why not?
        A._._.Because kitty wouldn’t recognise reality if it smelled like fish slappin her in the face.

        • Gezza

           /  December 9, 2016

          That would I think depend on whether it was a kipper & where it came from.

        • Kitty Catkin

           /  December 9, 2016

          I have idea how much tax they paid, and am not really interested.

        • Kitty Catkin

           /  December 9, 2016

          I said ‘or the IRD wouldn’t allow it.’ This is completely different to your misquotation-rather foolish when the original is directly above the misquoted words. .

          I said that I knew about writing things off when one is self-employed, which I do as I have been. Some things can be, others can’t. The IRD know what can and what can’t be, of course. If you want these write-offs, become self-employed or start a business. Until then, stop whinging about not being able to write off the time and cost of cleaning and decorating your house. These things are highly unlikely to be among the things allowable-I didn’t even think of asking IRD and they didn’t volunteer them among the things that they said that I could write off.

          • Kitty Catkin

             /  December 9, 2016

            One has to produce receipts for everything, to prove that the money really was spent on what one says that it was spent on. I am sure that there are those who try to cheat, as there are among all taxpayers. Good luck with trying.

  4. Blazer

     /  December 8, 2016

    Morgan has roughly the same amount of money as Key…he wants a fairer tax system,one the U.K and European countries have.Key and his supporters want to retain the loopholes in buying property,an unproductive utilisation of capital.Self interest will prevail of course until people realise houses are for people to live in.

    • Alan Wilkinson

       /  December 8, 2016

      Explain why the person who saves a dollar should be taxed on it for ever while the person who spends it isn’t.

      • Blazer

         /  December 8, 2016

        The person who saves a dollar is taxed on it.The person who spends a dollar is taxed indirectly.The question should be …why should the person who earns a dollar be taxed,when someone who does nothing to earn a dollar …not be!

        • Alan Wilkinson

           /  December 8, 2016

          The person who spends a dollar is taxed once at 15% GST. The person who saves a dollar will be taxed at about 7% per year by inflation and the Morgan Extortion so after two years all the future tax is one-sided in favour of the spender.

          The person who saved the dollar did to something to earn it and gave up the option to spend it in order to save or invest it.

          Morgan is a moron. End of story.

          • Blazer

             /  December 8, 2016

            I see you can’t grasp the concept that Morgan is advocating.Don’t know whether I can be bothered spoonfeeding you.Morgan is an economist,a wealthy man, and is trying to put forward a concept alien to the greedy…its called …’fairness’!

          • Jeeves

             /  December 8, 2016

            But you can’t ‘save’ money- at least not from inflation, anymore than you can save bread from going mouldy.
            It is not a tax, its a degradation of the past’s value as currency. Its reality value.

            And if you spend on an asset which appreciates, be it a share, a bond, a stock, a mineral- then of course you are taxed on it – every time you try to convert that added value into currency.

            There is a man from Wellington who has bought half a dozen homes in my town, and is deliberately keeping them empty, maybe can’t be bothered with renting – to the poor professional solo mum who has had to move twice because this guy bought both the houses she was renting. Now rentals are going through the roof and she has to move her kids out of town.

            Now I’m not suggesting that the Wellington guy has done anything wrong or unethical , nor the house owners who sold to him – but this poor girl (who’s marriage failed and so has struggles of her own) – her life is getting very close to disaster. Now she has to drive her kids into town to get to school, relies much more on her car to get to work etc etc. She’s paying more now, for less, and further from town. Cool- apparently that’s the free market. And there are many more like her around the country, as cashed up Kiwis buy up rural houses as a future gamble for big returns.

            But something has to change. Greed needs ethics, and I think we are seriously failing our futures with this shit.

          • Alan Wilkinson

             /  December 8, 2016

            Build more cheap houses, Jeeves. Oh, that’s right you can’t. The environmentalists and bureaucrats won’t let you.

            • Blazer

               /  December 8, 2016

              so why haven’t your right wing govts addressed those issues….Al?

            • Alan Wilkinson

               /  December 8, 2016

              Because their left wing opponents and allies won’t let them.

            • Blazer

               /  December 8, 2016

              Haven’t you noticed the Natz passing legislation with their majority in the house for the last 8 years.?

            • Kitty Catkin

               /  December 8, 2016

              I have money in the bank that is earning me interest-it should cover the rates for next year. I could pay the rates out of it, but I think that I’d be a fool to do so when it can earn enough to do it and still be intact.

            • Alan Wilkinson

               /  December 8, 2016

              @B, National doesn’t have a majority in the house as you well know. Why bother talking crap and who are the cretins that uptick your b.s?

            • Gezza

               /  December 8, 2016

              Sometimes I give him an uptick, but I’m not a cretin so I can’t speak for them.

            • Alan Wilkinson

               /  December 8, 2016

              But do you uptick his b.s?

            • Gezza

               /  December 8, 2016

              No.

            • Jeeves

               /  December 9, 2016

              10 years Alan, with the Dream team at the helm, and the future potential of this country has been shrunk to a myopic miniscule._. And as Ms Catton said._. They would destroy the world forever just to have a great time today

            • Blazer

               /  December 9, 2016

              Desperate AL…the NATZ with the support of their a olytes have a majority.What legislation to address the issues you mention has been defeated by opposition numbers.

            • United Future and the Maori Party have opposed legislation or forced changes a number of times, notably RMA reform and the spy bill.

            • Blazer

               /  December 9, 2016

              I thought the spy bill was passed.

            • With changes through the committee/bargaining stages.

              Mr Dunne said on Monday that the changes to the Government Communications Security Bureau bill in return for his support would provide greater transparency and accountability.

              Under the bill, the Government Communications Security Bureau would have clear legal authority to assist police, the Security Intelligence Service and the Defence Force.

              The MP had been holding back his support, but changed his mind after Prime Minister John Key agreed to make what Mr Dunne calls major changes.

              “All in all I think the bill now is a substantial step ahead of what it was. It certainly has seen my major concerns addressed and, on that basis, I’m prepared to support it.”

              http://www.radionz.co.nz/news/political/215131/dunne-gives-crucial-vote-over-spy-bill

            • Blazer

               /  December 9, 2016

              Al is twisting again,he blamed…’ The environmentalists and bureaucrats won’t let you.’…………….not the opposition in Parliament!

            • Alan Wilkinson

               /  December 9, 2016

              @B, the opposition won’t let the government take the power away from the bureaucrats and environmentalists that enable them to block building and impose huge costs on everything that is allowed.

              So tedious to explain the bleeding obvious repeatedly to your mindless trolling.

            • Blazer

               /  December 9, 2016

              I can’t accept the opposition can prevent the govt of the day from enacting legislation,that it has the will to introduce.There are 121 seats,the Nats have 59 and their partners 4 between them.So only 2 votes are needed.

            • Alan Wilkinson

               /  December 9, 2016

              They only have 1 – Seymour – who will support them. Minus the Speaker that is not enough. It’s possible that someone more rational than Nick Smith might have been able to negotiate something useful but proper reform is blocked. The Northland by-election was disastrous for NZ.

  5. Blazer

     /  December 8, 2016

    well Kitty one way or another you are going to find the money to pay the rates,when due,so whats the difference?

    • Kitty Catkin

       /  December 8, 2016

      This difference-that my money will earn enough every year and still be the same as it was when I invested it. If I spent the capital-had the money in account that earned little or no interest-it would go down. Let’s say that there is $1000 in the bank earning $100 year, which is more or less the rates ( don’t I wish) to make a grossly oversimplified example of what I mean. If I spent $100 of it a year, in ten years there’d be hardly anything left, if anything at all. If I use the interest, in 10 years time, my $1000 is still there.

      • Jeeves

         /  December 9, 2016

        Yeah, and it’ll be worth fuck all. You can treat yourself to a Vienetta and a packet of Opal Fruits.

        • Kitty Catkin

           /  December 9, 2016

          Not unless the price of those becomes greatly inflated-you don’t know what I have in the bank, and I have no intention of telling you. I said that my example was grossly oversimplified-this was for ease of calculation using round figures. But I can’t see an icecream and a packet of sweets costing the same as the rates even in 10 years. That would mean that 10 years ago the rates cost what the sweets and icecream do now, I suppose. Yeah, right.

          If you don’t understand how interest and compounding interest work, too bad. Spend every cent if you like, and then wonder why there’s nothing left..

  6. Kitty Catkin

     /  December 8, 2016

    ‘Seize The Opportunity Party has a nice ring to it when it’s an acronym.