CGT on the family home?

This government is a slow motion trainwreck. In spite of a taxation policy that is being slammed from all directions, Jacinda is now refusing to commit to the recommendation that any revenue collected by CGT should be tax neutral. This comes as no surprise, as a Labour government almost never cuts taxes. True to form, Jacinda is backtracking on this, while forging ahead with her intention to impose the tax anyway. quote.

Prime Minister Jacinda Ardern will not commit to returning revenue raised through a capital gains tax through tax cuts, despite the Government asking for options to do so from the Tax Working Group.

“It was one of the direct requests we made of the Tax Working Group so obviously we were interested in those ideas, but we’ve made no commitments on any elements of the working group’s report,” Ardern said. end quote.

That is doublespeak for “We will collect the revenue and use it for whatever purposes we choose.” If CGT on its own was not political suicide, proposing to keep the money when the TWG recommend returning it is just completely moronic.

Speaking of morons, the Greens own self-appointed taxation expert has admitted that she is open to CGT being applied to the family home. It is quite clear that these guys really want to be a one-term government.

They are not alone. quote.

Meanwhile, Green Party co-leader Marama Davidson has gone further than her party’s policy on a capital gains tax, saying she was open to a debate on whether it should apply to the family home.

“The capital gains tax should be the beginning of a wide range of reforms to transform our tax system. The Greens have long called for a range of reforms, like increasing the tax rate for the richest 1 per cent and putting a tax on polluting big businesses and housing speculators,” Davidson said.
The Taxpayers’ Union said her comments yesterday were an insult to middle New Zealand.

“Ms Davidson either doesn’t understand the proposed tax and hasn’t read Dr Cullen’s report, or she knows that in reality she is attacking middle New Zealanders, hundreds of thousands of whom will be whacked by the tax,” Williams said in a statement.

A newspaper. end quote.

She hasn’t read it, and she wouldn’t understand it even if she had. It will be middle New Zealand that bears the brunt of this tax, not the ‘elite’ as Marama seems to think. Let me demonstrate why.

In New Zealand, the top 1% earn $200,000 or more. This means that 99% of people earn less than $200,000.

In the US, however, the top 1% earns over US$422,000 (NZ$600,000), and in some states, this figure can rise as high as US$700,000 (NZ$1,000,000). In the UK, the top 1% earn over GBP267,000 (NZ$507,000).

As you can see, we do not have a large number of ‘wealthy elite’.

Seeing that I have my statistician’s hat on today (statistics was never my strong point), I have a few other figures you might be interested in.

Remember how Marama went on about people owning “hundreds” of houses, or even 10 houses? I did a bit of research and found that there are approximately 130,000 landlords in New Zealand. (Please note this was a 2015 figure, but it is probably not much different today.) Of those, about 104,000 own one rental property only, and about 23,000 own between 2 and 5 rentals.

Yep. There’s a lot of people who own ‘hundreds of houses’… or even 10 houses… where does Marama get this drivel from?

Now think back to how Simon Bridges said that there are over 400,000 lifestyle blocks (including farms) in New Zealand?

Assuming there to be 2 people (voters) to each lifestyle block and 2 people on average to each ‘landlord’, that is a total of approximately 1,060,000 voters, out of a total of 3.3 million (from the 2013 census, so maybe a bit more by now). Some of those will have previously been Labour voters. Add in those who use their home as an office, or those who have rented out rooms. How many of those, scared off by a tax on their assets, will vote for National, who are promising to repeal the tax?

We don’t know the answer to that, of course, but now that Marama has spoken, how many homeowners will be scared away by the possibility that, if the tax goes through, it might be extended to the family home in the government’s next term?

Marama may have just won the election for National. Did I say something about political suicide? Bring it on.