Ardern blames media for lumps in CGT porridge

Jacinda Ardern fronted up on the first Newshub Nation of the year. She was asked about the blast of criticism following the release of the Tax Working Group report. She appears to blame NZ Herald columnists for giving the report negative coverage – but she and her Government seemed woefully unprepared for discussion following it’s release.

Yeah, and the Greens are all on board with the capital gains tax. It’s Winston Peters who could prove the hurdle. And you yourself, pre being elected and pre being in this coalition situation have talked about maintaining a right as a leader to make sure the tax working group reports back and that you’re able to— you can enact whatever it say. And, you know, that’s your right, and so that right might be lessened.

I don’t know how that’s been characterised. Of course, we all campaigned as individual party leaders. And everyone will have seen some of the statements I made as Labour leader.

Yeah.

I’m now the Prime Minister in a coalition government, and I have three parties I need to build consensus with. And, actually, that’s what I just have to do day-to-day. And the tax working group report — it’s no different. But having said that, obviously now we’re in a process of just allowing the public to see and the public to have that debate, and I think we should. You know, one of the things that I do think is unfortunate, though, is that, you know, there is a large group of New Zealanders, particularly young New Zealanders now who actually, if their aspiration has been homeownership has just become harder and harder. There’s a group of New Zealanders who don’t have columns in the Herald, who might not be having a chance to have their say on this. We need this debate in New Zealand, because we’re one of only a handful of countries in the OECD that doesn’t have this form of tax.

Sure.

And so let’s debate it.

And you’re leading it. You’re part of that debate, obviously, and your language is being scrutinised. Earlier this week, you seemed to be softening your language about, you know, having concerns about farmers and small businesses. So does that mean that you’re going towards where Winston Peters might sit?

It was an acknowledgement that in all of the debates we’ve had on capital gains. It often has been quite heavily focused in the commentary around, for instance, investment properties, and less so in the space where the tax working group went, which is broad-based and covering additional sources of income, and so small businesses in particular have been brought into that debate. And message was I hear that there’s a lot of arguments for and against, and I hear that. Because that was a new part of the debate, I didn’t want anyone to think that we weren’t considering all of the issues around that area.

So you say that, you know, you’re not going to reveal your position until you’ve reached consensus with your partners.

Yes.

That’s two months away. Are you concerned that this is creating uncertainty?

No. It’s a debate.

It’s a debate that Ardern and her Government started very poorly on, leaving a huge vacuum for concerns to be raised in. The lack of any clear plan has enabled uncertainty to grow, and her waffly response here is unlikely to help at all.

Capital Gains Tax has been proposed in Labour policy for many years. It helped defeat Labour in 2014. as a result Andrew Little dumped the policy. Ardern raised it again in the 2017 campaign but rapidly backtracked when it was slammed as electorally toxic.

Once in Government Ardern handed the decision making over to ex-Finance Minister Michael Cullen and the working group, but a year later, after CGT was proposed in the report, Ardern seems to still be floundering on how to handle it.

She may well have a problem with Winston Peters. whose support she needs. But she also has a problem with her own handling of tax reform – the right say she’s proposing too much, the left say she isn’t considering enough reform.

Rather than some semblance of getting things just right Ardern looks like she is poking at lumpy CGT porridge with a long toothpick.

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25 Comments

  1. Alan Wilkinson

     /  3rd March 2019

    It’s always puzzled me that people who can’t afford to buy a house think they can afford to pay someone else to buy it for them.

    Reply
    • Blazer

       /  3rd March 2019

      they have no choice.They end up paying for it…they just don’t own..it.

      Reply
      • Pink David

         /  3rd March 2019

        “They end up paying for ”

        No they don’t. Rents are typically significantly below the cost of ownership, and mostly don’t cover the holding costs.

        The property I rent at the moment is on the market for $659,000, the rent I pay is $630/week. You cannot ‘own’ it for $630/week.

        Reply
        • Blazer

           /  3rd March 2019

          pay rent for 30 years…even fixed at $630p.wk…you will easily ‘pay’ for it.

          Reply
          • Alan Wilkinson

             /  3rd March 2019

            Except for interest, inflation, maintenance, rates and insurance.

            Reply
          • Pink David

             /  3rd March 2019

            “pay rent for 30 years…even fixed at $630p.wk…you will easily ‘pay’ for it.”

            lol. Maths not something you can cope with is it.

            Have a go at what the mortgage repayments will be for it. $630/week would just about cover the interest, rates, insurance and maintenance. You would need to fund the capital repayment over and above that.

            Perhaps you should talk to a banker about how it works.

            Reply
            • Blazer

               /  3rd March 2019

              lol….depends on equity doesn’t it!

              How much was the deposit?What was the purchase price?

              Try this $630x52x30=$982,800

            • Pink David

               /  3rd March 2019

              “lol….depends on equity doesn’t it!”

              No, it doesn’t. Equity has a cost, you cannot use it for other things if you use it for a house.

              “Try this $630x52x30=$982,800”

              So? Living somewhere has a cost. This I already know. Your argument was that paying rent paid for the property, this is simply not true.

              Owning the property would still cost around $250,000 over 30 years, without the cost of the equity.

            • Blazer

               /  3rd March 2019

              If it was an affordable property at say $650,000…you put 20% down and financed the balance of $520k…market rent payments over 30 years would see you right no contest.

            • Pink David

               /  3rd March 2019

              That $130,000 has a cost, which you have ignored.

              Repayment mortgage as you describe would be $572/week. Add the costs for insurance, maintenance and rates, and your weekly cost is $725/week. That’s not accounting for the cost of the deposit either.

              Ownership might be the better option, however, your point was that the rent would ‘buy’ the property. This is simply untrue.

            • Blazer

               /  3rd March 2019

              $150 per week for ins/maint/rates,sounds excessive.

              What I said was most definately true.

              The deposit could be equity leverage from another property among other options.
              The reality is over 30 years the C.PI will guarantee the rent will increase. ….I’m sure you understand this.

            • Pink David

               /  3rd March 2019

              “$150 per week for ins/maint/rates,sounds excessive.”

              The vast majority of people greatly underestimate the long term costs of maintenance of a property.

              “What I said was most definately true.”

              It is demonstrably not.

              “The deposit could be equity leverage from another property among other options.”

              Which has a cost.

              “The reality is over 30 years the C.PI will guarantee the rent will increase. ….I’m sure you understand this.”

              This is a good point. Ownership of a property as a hedge against inflation is one of the best reasons to own. That is one of the main reasons most people choose to buy when they can rent at a lower cost.

        • Conspiratoor

           /  3rd March 2019

          Depends Pink. If you flog the old merc off and use the proceeds to put down a 10% deposit on a 30 year mortgage fixed for two years at 4.2% … you could own your very home …in 30 years at a mere $669 pwk. Includes capital repayments btw

          Reply
    • Alan Wilkinson

       /  3rd March 2019

      It’s less surprising that people who “think” like that vote Left and we get stuck with PM whose object in life is to take houses from people who have earned them and give them to those who haven’t.

      This is misrepresented as “tax neutral” by the Lefty liars.

      Reply
      • Blazer

         /  3rd March 2019

        you need to look up the meaning of this word…’earned ‘.

        Reply
        • Alan Wilkinson

           /  3rd March 2019

          Don’t need to. I’ve lived it.

          Reply
          • Kitty Catkin

             /  3rd March 2019

            The renter may well pay for the house in time; that’s their hard luck. If you rent anything long enough, you’ll pay for it. Fair Go considered this unjust at one time and may still.

            Rent will always be at market rates. When we moved back to Wanganui, we rented for a while until we found a house to buy, The mortgage repayments were similar to the rent then, but by the time it was paid off, they were a minuscule amount of income (it was when there was a penalty that made it not worth paying off a mortgage) If that rental house is still one, I bet that the rent’s many times what we were paying. In the unlikely event of the same person owning it decades later, he would be asking market rents.

            My mother didn’t sell the house for what she paid for it !

            Reply
  2. Finbaar Rustle

     /  3rd March 2019

    The right wing say that going from 100% control
    to having 90% of power means
    they are now the oppressed minority.

    Reply
    • Gezza

       /  3rd March 2019

      Well, they haven’t put it that way exactly, but you can certainly be forgive for thinking some of them are effectively saying that. Mainly those with a lot of investment property.

      Reply
      • Gezza

         /  3rd March 2019

        *forgiven

        Reply
      • Alan Wilkinson

         /  3rd March 2019

        If anyone who owns NZ property thinks they have 90% power over it they are as seriously naive as the Left.

        Reply
  3. Alan Wilkinson

     /  3rd March 2019

    The amusing thing about the Left’s envy tax on landlords is that renters will pay it and himeowners won’t.

    So stupid it’s funny.

    Reply
    • Pink David

       /  3rd March 2019

      There is a lot of value in judging the intent from the actual outcome of a policy.

      Labour’s policies will increase rents at a significantly higher rate than would otherwise have happened. This is because this is what Labour wants. If it didn’t, it would enact other policies.

      Reply
      • Alan Wilkinson

         /  3rd March 2019

        I’m unconvinced this govt has that amount of nouse.

        Reply

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