You would think, after two decades of marriage and many failed handyman assignments, she’d have accepted the limitations of the man she walked down the aisle towards. Acceptance is the key to happiness, according to Epictetus.
Alternatively, eternal optimism in a marriage might be positive but, when it comes to public policy, realism is preferred. Or at least, preparation.
The current leader of the opposition, Chris Hipkins, stumbled into a policy release on the party’s capital gains tax. The term policy is generous. This was a marketing plan sketched on the back of a napkin that had been used to wipe the lipstick off a chardonnay glass after drinks at a Fabian Society soiree on Courtney Place.
I digress. The policy amounts to a few pages in a glossy press-release with less substance than a frozen coke. The details are sketchy. If you own property in July 2017, and sell it after that date, you pay 28% of any increase in value; with no allowance for inflation. Family homes are exempt.
The current leader of the opposition, Chris Hipkins, stumbled into a policy release on the party’s capital gains tax. The term policy is generous. This was a marketing plan sketched on the back of a napkin that had been used to wipe the lipstick off a chardonnay glass after drinks at a Fabian Society soiree on Courtney Place.
I digress. The policy amounts to a few pages in a glossy press-release with less substance than a frozen coke. The details are sketchy. If you own property in July 2017, and sell it after that date, you pay 28% of any increase in value; with no allowance for inflation. Family homes are exempt.
Chris Hipkins stumbled into a policy release on the party’s capital gains tax and the term policy is generous, says Damien Grant. Photo: ROBERT KITCHIN / THE POST
Let me provide some context; the Australian Tax Office guide to their Capital Gains Tax is 339 pages. The commentaries and court judgements run to hundreds more.
Now. The Australian capital tax is broad; covering all assets, including shares, and is incorporated into their income tax regime. It is going to be more complex than that proposed by Labour, but questions remain.
In Australia, if you sell a capital asset at a loss, you can deduct this from your income, including your salary. If you earn 100,000 a year, but you sell shares at a loss of 80,000, your taxable income is only 20,000. Australia allows a fifty percent deduction on the capital gain or loss after one year, partly as a means of compensating for inflation.
Hipkins’ plan excludes these enhancements. Possibly. The detail needs to be worked out.
Like the Australian tax, Labour will allow you to add to the purchase price any capital improvements. But that forces me to ask; is replacing a kitchen a capital enhancement, or just replacement? Let’s ask the Supreme Court; is a 2028 Fisher and Paykel dishwasher a replacement for the 1980s Westinghouse or a capital upgrade that they can add to the initial price? What about landscaping?
Is a fancy letter box that costs two thousand capital or an expense. Tax lawyers and accountants will be kept busy.
Across the ditch other problems prevail. Inflation has meant that properties purchased before the policy came into effect are not being sold because almost all of the price is considered a capital gain. This will be worse on the Hipkins plan because there is no indexation.
The questions become more complex that the internal politics of Te Pati Māori and for which the taxpaying citizenry will require the services of competent accounting professionals.
This is wonderful news for the beleaguered league of chartered accountants. They have been struggling for relevance since Xero made them surplus to requirements. It does not come as a shock to learn that the institute supports Labour’s proposal.
Let me provide some context; the Australian Tax Office guide to their Capital Gains Tax is 339 pages. The commentaries and court judgements run to hundreds more.
Now. The Australian capital tax is broad; covering all assets, including shares, and is incorporated into their income tax regime. It is going to be more complex than that proposed by Labour, but questions remain.
In Australia, if you sell a capital asset at a loss, you can deduct this from your income, including your salary. If you earn 100,000 a year, but you sell shares at a loss of 80,000, your taxable income is only 20,000. Australia allows a fifty percent deduction on the capital gain or loss after one year, partly as a means of compensating for inflation.
Hipkins’ plan excludes these enhancements. Possibly. The detail needs to be worked out.
Like the Australian tax, Labour will allow you to add to the purchase price any capital improvements. But that forces me to ask; is replacing a kitchen a capital enhancement, or just replacement? Let’s ask the Supreme Court; is a 2028 Fisher and Paykel dishwasher a replacement for the 1980s Westinghouse or a capital upgrade that they can add to the initial price? What about landscaping?
Is a fancy letter box that costs two thousand capital or an expense. Tax lawyers and accountants will be kept busy.
Across the ditch other problems prevail. Inflation has meant that properties purchased before the policy came into effect are not being sold because almost all of the price is considered a capital gain. This will be worse on the Hipkins plan because there is no indexation.
The questions become more complex that the internal politics of Te Pati Māori and for which the taxpaying citizenry will require the services of competent accounting professionals.
This is wonderful news for the beleaguered league of chartered accountants. They have been struggling for relevance since Xero made them surplus to requirements. It does not come as a shock to learn that the institute supports Labour’s proposal.
Labour leader Chris Hipkins. Photo: ROBERT KITCHIN / THE POST
Hopefully no one there reads this column, as I am a very reluctant member of this organisation and, heaven forbid, I don’t want to bring the profession into disrepute.
The have done that themselves by meddling in politics.
To quote the Institute: “…capital gains taxes do not generate significant revenue in the short or even medium terms. Long term however they typically provide a steady revenue stream…Using them to cover a specific policy expense is unusual.”
Labour wants to use the money from this tax to subsidise visits to see the doctor; which makes no sense as the cost of this policy will hit in year one but, as the Institute explains, income from a capital gains tax will take many years to build up.
There is a cash shortfall on Labour’s own analysis in the early years which, like everything else in this policy, the resolution is left to the imagination. Sydney Sweeney’s dresses are more transparent.
Chris Hipkins is asking us to reinstate him to Premier House. For us to believe that he has learnt from his catastrophic reforms of the education sector that thrashed more than a dozen polytechnics, the fall in literacy and numeracy during his five years as education minister and his gross mishandling of the covid vaccine roll out.
This policy announcement, like the ones before it, are not the product of serious consideration......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
Hopefully no one there reads this column, as I am a very reluctant member of this organisation and, heaven forbid, I don’t want to bring the profession into disrepute.
The have done that themselves by meddling in politics.
To quote the Institute: “…capital gains taxes do not generate significant revenue in the short or even medium terms. Long term however they typically provide a steady revenue stream…Using them to cover a specific policy expense is unusual.”
Labour wants to use the money from this tax to subsidise visits to see the doctor; which makes no sense as the cost of this policy will hit in year one but, as the Institute explains, income from a capital gains tax will take many years to build up.
There is a cash shortfall on Labour’s own analysis in the early years which, like everything else in this policy, the resolution is left to the imagination. Sydney Sweeney’s dresses are more transparent.
Chris Hipkins is asking us to reinstate him to Premier House. For us to believe that he has learnt from his catastrophic reforms of the education sector that thrashed more than a dozen polytechnics, the fall in literacy and numeracy during his five years as education minister and his gross mishandling of the covid vaccine roll out.
This policy announcement, like the ones before it, are not the product of serious consideration......The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
6 comments:
'July 2017'? Nearly had a heart attack when I read that yesterday. 'July 2027' maybe?
The frozen coke analogy is just, *chef’s kiss*.
Poorly contemplated, timed, directed, and relayed, but then what would you expect from such a bunch of proven incompetents? But then again, Labour just loves more bureaucracy and all those added minions to run this scheme will add to the GDP stats - just not the 'productivity' as most of us consider it.
Don't be suckered by the Labour -National two party duopoly capital gains tax debate. The capital taxes proposed by Labour are a waste of space - raising 0.1% of GDP - with private & public implementation costs far larger. But the strategy embraced by both Labour and National is to drum up a debate on this issue not for economic, but for political, purposes. Like the idea of capital taxes, vote Labour. Don't like the idea, vote National.
That way the two major parties figure they can carve up the public vote 50-50 between themselves in a desperate attempt to maintain their duopoly power. But they're cynically taking New Zealanders for morons. Neither has a plan to solve the long-term fiscal blow-out, reduce the cost of living, and sort out the Treaty. Instead they've thrown an inconsequential 0.1% of GDP story about nothing into the media arena to get everyone talking about exactly that - nothing. Yes, just like comedy, its a show about nothing. Don't fall for it. Don't vote National or Labour.
Chippy and his ilk can take their capital gains tax and shove it.
Always preaching there's plenty to go around, then wanting to swipe everything you have worked for except your job.
Bloody socialists.
Robert is right on the number do not vote N or L ..vote Act or NZF
David W
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