What’s in a name?

“I have a plan so cunning you could pin a tail on it and call it a weasel”

So the hard sell for Capital Gains Tax (CGT) begins. Those pushing it are likely to struggle. Most people in favour of CGT already vote Labour, and if they are using tax to attract voters, it won’t work. Most people are genuinely scared at the prospect of CGT, because it really is mostly a tax on inflation. Very few asset sales will be taxed on an actual increase in value, if adjusted for inflation.

So, to quell those fears, Grant Robertson has a cunning plan. He is going to call CGT by another name. quote.

On Friday the Government confirmed it had received a report from the Tax Working Group which recommends a broad-based capital gains tax, among other possible tax reforms, designed to make the tax system more ‘fair’.

The Green Party openly supports introducing a capital gains tax.
NZ First leader Winston Peters said he sees the argument as one of extending an existing capital gains tax. end quote.

Winston of old would have been shouting from the rooftops against CGT, but now he is trying to be clever, saying effectively we already have it. We don’t. The Bright Line Test is a tax on property speculation, and speculators pay tax on the proceeds of property sales because to them, it is income. Winston is softening everyone up for CGT’s introduction. Make no mistake. quote.

Robertson acknowledged the warning of the Tax Working Group in its interim report that the more exemptions were granted, the case for the argument was undermined. end quote.

What we know so far of the Tax Working Group’s proposals means that New Zealand will have the harshest, most draconian system of CGT in the world. quote.

“I’m a supporter of a tax system that’s fair, balanced and easy”, he said, before adding that the Government had already promised the family home would be exempt for “obvious reasons”. end quote.

I am still trying to figure out why both Robertson and Michael Cullen think a ‘fair’ system of taxation is to tax the same people in every way possible, while giving those at the bottom of the spectrum a really easy ride. Nothing about that seems fair to me. quote.

He is trying to rename the measure “capital income tax”, defending it as the language used by the working group (which he appointed). 

“There are elements of the tax system that aren’t fair and aren’t balanced, and the core of that is income, and if income is income, whatever the source of it, should you then treat it similarly? And that’s really the debate. So if it’s income, why shouldn’t I call it income?”

Stuff end quote.

So we have a prime minister that does not know what GDP is and a finance minister that does not know the difference between capital and income?

Income is money received, especially on a regular basis, for work or through investments.

Capital is wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.

To be correct, a definition of ‘capital income’ would be ‘income derived from investments, such as interest or dividends’. It would not be ‘the increase in the value of an asset since purchase, which is mostly created by the effects of inflation’… which is what CGT really is.

This is nothing more than Cullen and Robertson deliberately trying to muddy the waters. We already have income tax. They are saying that this is just another form of income tax.

Absolute rubbish.

We have been told for years by clowns with vested interests that we should get out of property and put money into productive assets… such as shares in listed companies, managed funds and privately owned businesses. Now, guess what? We are going to be taxed on those as well.

Robertson can call it whatever he likes, but you know the old saying: if it walks like a duck, talks like a duck….

… it is a Capital Gains Tax.