Slack on tax

There is nothing like a 4-day weekend. Some people will have visited friends and family, or gone away on sporting events. Me? I spent my Easter weekend gib-stopping.

No, I am not looking for praise, because I know many of you will have been doing similar things. We are living by the capitalist code that we have observed all our lives… if we spend at least some of our leisure time on improving assets, eventually, we will be better off financially.

In our case, we are building a property that we intend to rent out (either to a local, or on AirBnB) and, whilst a building firm is doing most of the work, we are saving money where we can by doing some of the finishing ourselves.

And yes… the property would have been caught by CGT, so we may feel as if we have dodged a bullet, but it was never going to affect us, as we do not intend to sell. It is the kids that would have been worse off because of the tax.

What we do intend to do though is to get a good return on it, and by keeping the building costs down as much as possible, that return gets better. The maths is fairly straightforward.

I know I am not telling any of you anything that you don’t already know, but many people clearly do not understand the fundamentals of investment. David Slack is one of those. quote.

Good old New Zealand. Name another nation on the planet as bold as ours. Name another as innovative as ours. Name another that cares as much about fairness. 

We put most of our capital into buying and selling houses and pretending they’re worth stupid money. We call that investment.?

No we haven’t thought about diversifying.? What we say here is: if you want to get ahead, put your money in houses. Borrow whatever you have to, pay whatever you have to, and then wait. What do you mean unsustainable? end quote.

David Slack misses one very inconvenient truth. We have a housing shortage. We need houses for people to buy, and we need houses for people to rent. If the government is being pilloried for its failure to meet its Kiwibuild promises, why does Slack think that no one should be investing in housing? It sounds like a very good investment to me… much better than 3% before tax with term deposits. quote.

Will things ever change? Will we ever try, say, using a capital gains tax to encourage people to invest in more productive ways? Will we ever accept that this “property ladder” myth has for decades held us back from greater prosperity? end quote.

Another inconvenient truth ignored. The proposed CGT was going to tax ALL assets. Businesses, which you could be forgiven for thinking of as productive assets, would be subject to the tax. Shares in listed companies too. Even Kiwisaver accounts. It was not a Capital Gains on Property Only Tax. It was a tax on all capital gains, from just about all sources. quote.

If we want our kids to have a decent chance, if we want our economy to flourish, we owe it to ourselves to to put an end to the property myopia. A capital gains tax on every single property could have been the lever to do that. end quote.

So Slack wanted CGT on all property, not just investment property. How does taxing people’s homes improve anything? It is madness.

Then Slack slipped from his world of fantasy to one of absolute lunacy. quote.

The new Attenborough series on Netflix about the state of the planet has distressing scenes of walruses falling to their death. The point is to show what climate change has done as these animals jostle for dwindling space and fall from dangerous places. 

Stuff. end quote.

So CGT in New Zealand was going to save the walruses, was it? In fact, it would have saved the world. What has Winston done, by denying the planet this last gasp at survival? I hope he is ashamed of himself.

Somehow, I doubt it.

Well, I’d better get back to the plaster bucket. Can’t say it is much fun on a lovely sunny afternoon, but this is an example of the type of delayed gratification that CGT was all about taxing. We’ll get the rewards for our efforts later, but right now, it is just hard work.

Someone will benefit from all our efforts by having a home to live in, in a town where rental properties are scarce. We will benefit by getting a return on our investment. It sounds like a win-win situation to me. Why does Slack disagree?

What is it they say? The harder I work, the luckier I get? Yep… something like that.