Labour’s Clayton’s Capital Gains Tax policy

Labour have a Clayton’s Capital Gains Tax policy – the CGT policy you have when you don’t want one before an election.

And Jacinda Ardern can claim clarity and transparency all she likes, but that won’t make her sound clear and transparent.

Labour needs a way of funding additional spending signalled in their policies (and that’s before policy demands and costs from NZ First and Greens are taken into account).

For the last election they proposed a Capital Gains Tax. When he took over the leadership after the election Andrew Little ruled a CGT out, saying it was unpopular (that’s debatable, Labour leaders had been unpopular).

This campaign new leader Jacinda Ardern won’t rule out a CGT, saying one would be considered if their proposed Tax Working Group recommended one

“I think we’ve given a huge amount of clarity and transparency over this. We’ve made it very clear we’re not campaigning on a Capital Gains Tax, and we do not believe on Capital Gains tax or  anything similar applying to a family home.

“But at the same time we’ve also acknowledged that we don’t think there’s fairness in our taxation system. We’ve proposed a review which we hope to hold in government, which we will hold in government.

“I’m not pre-empting what that review will find, in the same way that the Government when they campaigned in 2008 did not pre-empt the work that their 2010 taxation report would find.

“But I am maintaining our right and ability to act on it’s findings and do the right thing when we’re in  government.”

So if Labour lead the next Government and appoint a taxation review group that recommends a Capital Gains Tax then they may act on that.

“We’re yet to know what that will be though.”

Not exactly clarity for now.

“I’ve been very, very transparent on this. We do not think that assets are treated fairly, relative to other forms of taxation in New Zealand. The fact that someone can go out and work a 40-hour week and pay tax on that, someone can own multiple homes, flick them off for capital gain and is often not treated in that same fair manner, is something that needs to be addressed.

“Most countries have. New Zealand sits on its own in that regard. But I’m not going to pre-determine what that working group will find, and how it suggests we resolve that.

She clearly supports a CGT. And makes it fairly clear what she wants the working group to recommend and not recommend.

Question “What if the working group finds that the capital gains tax should apply to the family home, haven’t you just pre-determined that?”

Ardern: “Oh we’ve set out some expectations, and any government would say that there are particular values and things that it holds important and dear, so it’s good that we be clear with that group before we go in what our expectations are.”

That’s waffle that can be taken to mean that Labour want a CGT to be recommended by a Tax Working Group, they want family homes exempt, but don’t want to campaign on implementing a CGT this election.

More from interest.co.nz: Labour leader Ardern maintains ‘right and ability’ to introduce Capital Gains Tax if working group suggests it next term; Would exempt ‘family home’

 

recent study by economist Andrew Coleman would indicate that not imposing a CGT on the family home would continue to encourage home-owners to invest in lifting the value of their property by renovating for value uplift and building larger homes, rather than potentially putting that money into other savings schemes that currently face greater tax hits than property.

A CGT exempting family homes is also a tad Claytons – the CGT you have without having a comprehensive CGT.

 

17 Comments

  1. Alloytoo

     /  August 16, 2017

    Taxes are by definition unfair, in NZ we take money from people that have money to pay for goods and services that everyone irrespective of tax paid enjoys. You might call that moral, it’s certainly pragmatic, and it’s currently regarded by those paying as an acceptable price for living in NZ. It should however never ever be described as “FAIR”

    • Kitty Catkin

       /  August 16, 2017

      I disagree; tax money goes towards things like health, education, roads….everyone pays a little and nobody has to pay for everything. The money for hospitals and such things has to come from somewhere.

  2. Blazer

     /  August 16, 2017

    as has been mentioned…National introduced a CGT….just under a different name.

    • Labour has long campaigned on us not having a CGT. I remember in a 2011 campaign meeting in Dunedin when Clare Curran said we had no CGT because I got up and challenged her.

      Our CGT has been strengthened since then. Labour obviously want to take it further, but aren’t prepared to make it comprehensive and include family homes, so it would still cause distortions and fiddles.

  3. PDB

     /  August 16, 2017

    Ardern since becoming leader of Labour has announced a fuel tax (a figure that is to be decided upon after the election), a water tax (a figure that is to be decided upon after the election), and favour a CGT (you guessed it – to be decided upon after the election). Ideas rather than fleshed out policy.

    All taxes, all costing consumers/businesses, all not helping keep the economy growing, all not costed (or in the case of a CGT not even brave enough to make it official policy) so that the public can’t have a serious debate about it.

    Implementing some form of CGT is a worthy economic discussion.

    • Blazer

       /  August 16, 2017

      and National are going to make NZ pest free by??have clean rivers by??….reduce crime by???….they are talking decades.
      Labour -petrol10c a litre,2c for water,CGT….to be decided IF introduced.Whats the brightline rate…btw!

      • Andrew

         /  August 16, 2017

        “Whats the brightline rate…btw”

        The bright-line rate is the persons marginal tax rate. I.e. 33% on any gains.

        “someone can own multiple homes, flick them off for capital gain and is often not treated in that same fair manner”

        The IRD is quite clear on this matter. If you buy with the intention of making a capital gain, or you are, by definition, a property investor, then you pay tax at the marginal rate. Much more than a 15% capital gains tax.

  4. artcroft

     /  August 16, 2017

    What if this tax working group opts to recommend a CGT on the family home? Will Ardern follow through and implement their ideas?

    • Blazer

       /  August 16, 2017

      what if WW3 erupts tomorrow……what if…what…if?

  5. David

     /  August 16, 2017

    We already have a CGT on property and on shares, I pay it. CGT makes no difference to property prices think Sydney, London, Vancouver or New York. Its nothing more than an envy tax popular with people who hate other people who work hard and strive to get ahead.

    • alloytoo

       /  August 16, 2017

      It’s also an administrative nightmare that creates whole industries dedicated to running it.

    • Blazer

       /  August 16, 2017

      its actually a tax on the unproductive leeches of society.

      • PDB

         /  August 16, 2017

        You’d be especially affected by it then?

        • Blazer

           /  August 16, 2017

          not at all.There are posters here that are proud of their speculator status.Are you one?

          • PDB

             /  August 16, 2017

            Nup – only own the one I live in but a CGT is pointless as it does nothing to improve property affordability as shown overseas.

            • Blazer

               /  August 16, 2017

              that is not conclusive evidence.We do not have to ape what happens over seas.Houses are homes for people to live in.Security for families reduces crime,welfare and has so many positive impacts it is vital that the non productive sector is stymied.Btw more power to you.

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