Lies, damned lies and Capital Gains Tax

On the motorway into Wellington, there is a big sign saying:

We all work hard. Capital Gains Tax is fair.

Or words to that effect.

Of course, this billboard is quite inaccurate. We do not all ‘work hard’. Many people do not work at all, choosing to live off welfare, and spend their lives taking from the government as much as possible.

This government’s main reason for introducing a CGT is because it is ‘fair’, but it is not clear who it is ‘fair’ to. As this is a classic socialist ‘tax and spend’ government, it is expected that capital gains on property, farms, shares and businesses will be taxed, and the money collected widely distributed to those who depend on welfare. In other words, the government intends to take more money, in the form of taxation, from those who work hard and build an asset base, and give it to those who cannot be bothered to do anything for themselves. I am not talking about those who are unable to work. I am talking only about those who choose a benefit lifestyle… and there are quite a few of those.

However, even the media are now beginning to question the merits of the government’s ‘fairness’ claims. Troy Bowker states that the claim that CGT is fair is based on flawed data. quote.

The Tax Working Group (TWG) used an unreliable survey by the Department of Statistics as the basis for its argument that the majority of the proposed capital gains tax (CGT) will be paid by the top 20 per cent of households measured by wealth.

Repeatedly, since the final report was published, Sir Michael Cullen has quoted the “statistic” to the media that 82 per cent of the assets that will be subject to CGT are owned by the top 20 per cent of New Zealand households measured by net worth.

He goes on to state (as factual) the second 20 per cent of wealthy households will be responsible for another 11 per cent , then only 4 per cent for “middle” New Zealand.

In reality, this information is based on what most reasonable people would describe as little more than guess work.

It has been used for political purposes to argue that the majority of the public have nothing to worry about, and it will be mostly the “rich” that will pay CGT.

If it is correct (which it isn’t), it’s a very good argument for Labour and the Greens who desperately want to see a comprehensive CGT implemented.

The statistic was derived by manipulating data collected from the July 2015 Household Economic Survey (HES).
It was done by conducting interviews of 8000 households, out of approximately 1.7 million households, in New Zealand. That’s only 0.47 per cent of households ? a ridiculously low sample size.

The other reason it is unreliable is most of the information provided is unverifiable. By the Department of Statistics own admission, it contains data that is so unreliable that they cautioned against its use. end quote.

What is it they say about lies, damned lies and statistics? The government will use unreliable information to create a false impression that most people will not be affected by CGT. This is simply not true. quote.

There are 50 individual categories of data collected in this survey (or data cells). Of the 50 cells, 20 of them are considered by Department of Statistics to have a sampling errors of between 20 per cent and 50 per cent.

Another five are so unreliable the Department of Statistics has blanked them out as it would be irresponsible to even publish them.

To put this another way, 50 per cent of the survey results are considered unreliable by the Department of Statistics who published them.

It beggars belief that Treasury decided to use this information in its report to the TWG.

Did the TWG specifically request Treasury to dig up statistics to support the political argument that only the top households would pay CGT? Did the TWG know the data they were using was largely unreliable? Treasury obviously had concerns about using it and told the TWG in its report. So why did the TWG use that data?
The reality is, we don’t have enough reliable information to draw any conclusions at all about which households will pay the most from the proposed CGT.

We do know, however, that there are hundreds of thousands of farmers, business owners, lifestyle block owners, bach owners and sharemarket investors who will pay a lot more tax if Labour are successful in implementing CGT.

There are an awful lot of hardworking ordinary Kiwis who don’t consider themselves wealthy who will pay CGT if Labour are successful in convincing Winston Peters to support it.

Labour need to come clean and be honest about the many hundreds of thousands of middle income Kiwis who will pay CGT. They also need to answer some serious questions about how, and why, the HES was used to support the main argument on fairness by the TWG. End quote.

A Newspaper. end quote.

Everyone who owns any asset at all (except an art collection, like Michael Cullen) will be affected by the tax. Kiwisaver accounts will be affected, which will mean that the vast majority of working people will be caught in the CGT net. The government is trying to falsify its way into telling everyone that CGT is fair, and the billboards on the motorway are just another form of brainwashing. CGT is not fair. It punishes people for working hard and building an asset base.

That is all there is to it.

Everything else is lies, damned lies and statistics.