TOP tax policy

The Gareth Morgan Opportunities Party is promoting tax reform as one of their policies. They say it will be a fairer tax system – but the 20% of tax payers who will pay more may not agree.


The Opportunities Party tax reform

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.

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.

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.

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.

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.

At TOP, we acknowledge that all productive assets generate income (either in cash or kind) and by deeming that they produce
a minimum level of assessable income, such capital will be deployed in the most efficient manner. This is critical for maximising jobs and incomes. Those that already declare at least that level of income will be unaffected. Those that don’t, will pay more.

Plugging the hole in our tax regime will be done gradually to ensure house prices remain stable while incomes grow. 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.  However we believe that a well-informed public is astutely rational. 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.

That is unacceptable to fair and rational-minded New Zealanders. Given only 20% of New Zealanders would bear the burden of this change – and we are the most able to afford it – it’s a small cost to improve the lives of many.

Full policy document

Five Reasons the Elderly Should Not Fear TOP’s Tax Reform Package

 

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40 Comments

  1. David

     /  March 19, 2017

    hard to know where to start with Morgans lunatic ideas

    Reply
    • Blazer

       /  March 19, 2017

      might I suggest starting with why exactly they are …lunatic.

      Reply
      • PDB

         /  March 19, 2017

        How about the fact that under this TOP policy;

        *The family home is seen as an ‘income generating asset’ when for most people they are a financial drain in terms of mortgage interest payments, rates, maintenance etc. To say a person should pay tax because they don’t pay rent is wrong as mortgage payments are the equivalent of paying rent.
        *There is no means of getting a deduction if your assets devalue, a fundamental requirement for a tax like this if it is to be ‘fair’.
        *Many of his ‘income generating assets’ may never generate ‘income’ (cash or kind) – that nice painting in your house may go out of fashion, your new car generally just devalues as soon as it leaves the showroom etc. Again no means of getting a tax deduction/ refund on tax already paid if this occurs.
        *The logistics and cost of everybody having to submit a tax return every year with up-to-date values of all your assets (which is going to be incredibly contentious in itself) is simply not plausible.
        *The govt costs and bureaucracy required to run such a wide-ranging tax scheme based on valuations (guesstimates) of numerous ‘assets’ would be so huge as to make it not worthwhile. A good tax is a simple tax.
        *In effect in order to tax some super-rich, asset-rich people you will be taxing many ordinary hard-working people for being financially responsible good savers that put aside money to purchase things like a family home. It’s like blowing up the whole house to kill a few ants. We should be rewarding those people (that aren’t particularly rich) for being financially prudent, not punishing them in favour of some people who waste their money and live for today. You are taxing money that has already been well taxed.

        If you really want to tax the people with assets more there are far easier and cost effective ways to do so, especially if he is correct (doubtful) in that it will only cost 20% of the population more in tax.

        Reply
        • Kitty Catkin

           /  March 19, 2017

          Bugger that, Gareth.

          I own my house mortgage-free, and like most people we were paying far less in mortgage at the end than we would have been in rent-but not at the beginning of our owning a house (I am using owning in the usual sense of buying with a mortgage)

          My house is worth more than we paid for it, but it’s a paper rise as I would be paying the same amount for another one like it. It’s only an asset earner if I sold it and bought a much cheaper one in somewhere like Tokoroa.

          He’s mad. It’s not ‘generating’ income unless someone’s living somewhere else for much less than they’re renting the house out for-and most of us aren’t. Yes, I am better off than someone paying market rent on my income, that can’t be denied. But houses can go either way. Would we be paid out if we bought houses that plummeted in value-as has happened ?

          He’s playing with words.

          I like the painting analogy. I own a tiny Caryl Burrows original-it cost $80. Should I be taxed if it was now worth 100x what I paid for it ? (don’t I wish) What if it’s now.worth $8 or nothing ? Could I CLAIM if it went up to being worth $8000, before it dropped to being worth $8 and I didn’t have the sense to sell it then ?

          Reply
          • Blazer

             /  March 19, 2017

            you can only ascertain ‘worth’ on what someone is prepared to pay for something.

            Reply
            • PDB

               /  March 19, 2017

              Exactly, a huge hole in Gareth’s plan then don’t you think when everybody has to ascertain what the exact ‘worth’ is of all their assets on an annual basis in order to comply with his proposed assets tax……..

            • Kitty Catkin

               /  March 19, 2017

              Exactly. But if a house is worth $1,000,000 on paper but prices have dropped, then it becomes complicated. Of course, if my house was worth $1,000,000 (laughs loudly) and this scheme came in, I would be trying to prove that it was only worth half that to the IRD and that at $1,000,000 it was a bargain to potential buyers 😀

              What a mess it would all be.

            • Blazer

               /  March 19, 2017

              as far as property goes the reliance would be on accepted GV.I presume.

            • PDB

               /  March 19, 2017

              TOP website: For households the main asset is the house – we have market values, RVs and insured values. So long as councils get their act together then RVs will become more tractable and so between the 3 alternatives you can triangulate to get a value. Or you could just opt for the RV which I’m sure will have overs and unders over time compared to realised sales figures.

    • Alan Wilkinson

       /  March 19, 2017

      Yes, easier to know where to stop – at the beginning.

      Reply
  2. Blazer

     /  March 19, 2017

    such common sense is a rarity these days.Goes without saying that the parasites of society,will hate it,because its fair and reasonable,and you do not get wealthy by being….fair and reasonable.

    ‘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.’

    Reply
    • Alan Wilkinson

       /  March 19, 2017

      He lies because he has to fund his UBI which will require more tax – and will certainly grow as people take advantage of it.

      Reply
  3. David

     /  March 19, 2017

    How about taxing a pensioner who may be just getting by on the value of their home that they bought 60 odd years ago while lowering the tax on an overseas $1000 an hour consultant brought in on a short term contract who is being put up at a 5 star hotel.

    Reply
    • Blazer

       /  March 19, 2017

      if the 60 y.o pensioner is living in his home ,and is not making income off it,that is dealt with.Your other theoretical scenario depends on where the consultants taxable earnings are liable.The born to rule are very creative ,we already know this.They created tax havens to avoid tax.Ordinary taxpayers do not use them,not hard to understand at all the m.o.

      Reply
      • David

         /  March 19, 2017

        Morgan is proposing an imputed income tax. That specifically will tax a pensioner living in his own home on the bases that renting that house to someone else could produce income. The tax due will be based on that imputed income.

        Reply
        • Kitty Catkin

           /  March 19, 2017

          I could rent my house out and produce income, but I am not a pensioner.

          How does GM suggest that anyone who does this lives themselves ? Under a bridge or tarpaulin ?

          Reply
          • Blazer

             /  March 19, 2017

            you would be surprised how many people have multiple properties.

            Reply
            • Kitty Catkin

               /  March 19, 2017

              No, I wouldn’t. But this is people like me who own one-their own.

            • Blazer

               /  March 19, 2017

              a house,that is the home people live in should be sancrosanct.Unfortunately the greedy will find ways round that too.Rubber Billy the present P.M wasn’t sure,where he ..lived!

  4. David

     /  March 19, 2017

    “All income should be taxed, whether it is in cash or in kind. ”

    This is a cracker, giving wives a tax bill for all the income they get ‘in kind’ from their husbands….or vice versa. I can see that storming it at the voting booth.

    Reply
    • Blazer.

       /  March 19, 2017

      that addresses barter,and black market activity to a degree does it not?

      Reply
      • David

         /  March 19, 2017

        Well it would have to be declared to be taxed hence it wont be barter or black market any more. So no.

        Reply
        • Blazer.

           /  March 19, 2017

          so how would you describe this ‘in kind’ between husbands and wives that will be …declared?

          Reply
          • David

             /  March 19, 2017

            There will have to be more tax inspectors I imagine.

            Reply
            • Blazer

               /  March 19, 2017

              will they be dressed as trees or lamp posts?

            • Nelly Smickers

               /  March 19, 2017

              i guess we could rule out……*Catwomen*

    • PDB

       /  March 19, 2017

      Accountants & lawyers will be licking their lips if this ever came to pass. The debate on what asset was producing ‘income in kind’ (and what the cost benefit is) and what an asset’s value is at any point in time would not just take up all their time but the govt would need a fair few thousand people at their end to implement, oversee and enforce just this one tax.

      Reply
  5. PDB

     /  March 19, 2017

    Here’s what I wrote here back in December on this very subject;

    *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.

    Reply
    • Kitty Catkin

       /  March 19, 2017

      I have known old people who have sold the house and rented on the proceeds-even if the money didn’t cover the rent, they would not be paying rates & house insurance (or maintenance) so it worked quite well.

      Pants, I don’t see how it would raise rents, but will take your word for it. Other proposals that don’t seem as if they would are shown to be certain to do so. This one is grossly unfair !

      Reply
      • PDB

         /  March 19, 2017

        If landlords are forced to pay extra tax by the govt on their houses do you not think they will just put that cost onto their tenants?

        Reply
        • Kitty Catkin

           /  March 19, 2017

          I wasn’t doubting that it would increase rents in some way-just that I didn’t see how it would happen, which is what GM may be hoping for. As I have come across schemes before where it wasn’t obvious to ME how rents would rise but was when someone who knew about this sort of thing explained it, I was quite willing to believe that it would in this case. He may hope that enough people won’t notice this drawback or see that rents would rise.

          Reply
          • PDB

             /  March 19, 2017

            To be fair it’s one drawback of many drawbacks……….mind you this policy is from a guy that praises the North Korean economy as something to aspire to……

            Reply
            • Kitty Catkin

               /  March 19, 2017

              Ha ha, I thought that you said that he praises……

            • Kitty Catkin

               /  March 19, 2017

              What a beast it would be to administer, seriously.

              I suppose that people like me would be taxed on the difference between the cost of our rates, insurance and mortgage and what we’d be paying in rent for a similar place.

              Imagine how many people IRD would need. Everyone-well, almost everyone-would need to go in there to work it out.

            • Blazer

               /  March 19, 2017

              citation needed,I think you are making things ..up.

          • Nelly Smickers

             /  March 19, 2017

            Again ❓ ❗ 😄

            Reply
  6. Nelly Smickers

     /  March 19, 2017

    Thru his long association with *Forest & Bird*, Wayne has actually spoken with Gareth Morgan on a number of occasions…..Wayne reckins that come *23rd September*, for Gareth it will be a case of *hare today – gone tomorrow*

    https://pbs.twimg.com/media/C4LHz_XVcAAhZdN.jpg.

    Reply
    • PDB

       /  March 19, 2017

      I’m hoping Gareth does very well at the election……………4.9% of the nationwide vote would do nicely.

      Reply
      • Nelly Smickers

         /  March 19, 2017

        *DREAM ON*…..take a look at the pic:!: As Wayne’s mother sez, he’s got the kind of face *that only a mother could love* 😄

        Reply
  7. At the very least, TOP’s tax policy demonstrates the complex lengths our society might need to go to in order to address the simplest issue … The wealthy paying their fair share of tax.

    That’s what this is ultimately all about. Currently, the wealthier you become the less liable you are for your fair share, despite being more able to afford it …

    Morgan’s already calculated years ago that a flat 25% rate could easily pay for our current system if, for instance, someone earning $1 million per year paid tax on their actual earnings rather than only $70,000 …

    Reply

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