Today Labour leaked part of their upcoming tax policy to TVNZ political editor Guyon Espiner – they plan to introduce a Capital Gains Tax on secondary/investment properties. The long-standing conventional wisdom is that this is ‘political suicide’.
It’s hard to find any statistics on how many people own investment properties. Poking around the 2006 census data suggests it’s about 200,000 people – so ~10% of the average election turnout; WAY less than, say, KiwiSaver investors. And I’m going to guess that they’re going to skew towards the right in terms of voting patterns. So the notion that this is ‘political suicide’ is, I suspect, a piece of Conventional Wisdom propagated by political pundits and economic commentators who own multiple investment properties. We’ll be hearing a lot from this small but influential group over the next few days, I’ll wager – and we’re going to hear some hilarious, hysterical outrage from our bloated property investment sector who feel they’re entitled to operate as an untaxed parasite draining the vitality of the productive economy.
Thus far National have based their election campaign on austerity: public service cuts, welfare cuts, privatisation. That’s because the public realises that we’ve had a recession, massive earthquake and the collapse of the finance companies, and we need to pay for those things, and National understands we understand that. Labour’s leadership has been stuck re-fighting the 2008 election, offering various unappealing, awesomely irrelevant election bribes: GST off fruit, a Minister of Children, tax free thresholds to be introduced sometime in their second or third term.
Now it looks like they finally get it. National wants to finance the rebuilding of Christchurch via asset sales; Labour via a tax on property speculation. This isn’t a hard argument to make: I think the public understands that the property bubble was a Bad Thing; that it was caused by a loophole in the tax laws, so people poured money into that sector and it harmed the wider economy, and that Australia has an almost identical tax policy and it rather demonstrably has not crippled their economy or had any of the dire effects that critics are going to be pulling out of their asses over the next few days and weeks.
This is some solid stuff from Labour, no two ways about it. Unfortunately the groups you’ve mentioned are very good at marketing their self-interest as crucial to the overall economy, but hopefully this era of economic austerity will lead people to realise that investment properties are not key to crawling out of the recession. Then again, Australian companies were able to convince the Australian public that a tax on their profits would shatter the economy into a thousand pieces, so… not super hopeful.
Comment by Hugh — July 5, 2011 @ 7:33 pm
Australia has had a fabulous housing bubble too, despite the presence of a capital gains tax on investment properties. Also, the most reckless increase in capital investment seems to be in farm land. Any word of including farms in a capital gains tax?
Comment by Deborah — July 5, 2011 @ 7:42 pm
Brilliant! About bloody time someone had the balls to do this. Let’s hope they also have the balls to stick with it when the going gets tough and they are attacked by the hysterical (multiple property-owning) mob.
Comment by webweaver — July 5, 2011 @ 7:44 pm
You can afford to make stupid policy promises when the chances of being elected are 2/5′s of fuck all.
Comment by abel the amish — July 5, 2011 @ 7:45 pm
Is it a matter of “finally getting it”? Timing of policy is important. The election is close; the RWC is going to shut politics down soon. An earlier announcement’s impact would have dissipated by now and leaving it until after the RWC would be too late. Maybe Labour have been smarted than you give them credit for. Not only do I hope this leak proves to be true, I hope that there’ll be a lovely dripfeed from here on in of solid things that go squarely against National’s agenda.
Comment by Stephen Judd — July 5, 2011 @ 7:49 pm
It’s true. Labour’s comms director isn’t going to accidentally leak an inaccurate flagship policy to her former colleague.
Comment by danylmc — July 5, 2011 @ 7:58 pm
Webweaver wrote: “Brilliant! About bloody time someone had the balls to do this. Let’s hope they also have the balls to stick with it when the going gets tough and they are attacked by the hysterical (multiple property-owning) mob.”
actually, It’s been Green Party policy for years. And yes, we do get accused of being ‘economically ‘illiterate’ by some property investors who contact us to complain.
Caroline Glass
Convenor
Green Party Policy Network
Comment by Caroline Glass — July 5, 2011 @ 8:22 pm
If this turns out to be part of a coherent plan, I might end up voting Labour for the first time in nine years. Will have to see the numbers first, though.
TVNZ report sez “Tax experts believe such a tax could raise up to $4.5 billion” (per what? The figure is too big to be annual) and “Guyon Espiner says he understands the capital gains tax rate would be set at about 15%”.
Comment by bradluen — July 5, 2011 @ 8:26 pm
I think it’s a ‘policy’ of more sizzle than sausage. Professional ‘property speculators’ are caught under several existing sections of the ITA. Those that aren’t will also find similar setups to avoid a comprehensive CGT.
A CGT on investment property is a tired childish idea.
Disclaimer: I’m aware this post was probably more about how Labour needs to sell the policy, than the policy itself, but I couldn’t help myself. Also, I own exactly $0.00 of real property (and hold no interests in a body that does)
Comment by grizzlygumption — July 5, 2011 @ 8:28 pm
The interesting thing is that a CGT is perhaps the first economic initiative they have put up that would hurt the property assets of various Labour MPs. The public could be generous about this initiative and its certainly about the first policy I can live with.
Having said that I’m not that sure it will do what its supposed to do.. after all, most of the countries that have a CGT are no better off than we are as a result of the property bubble bursting. In fact, what is bedeviling most OECD countries is Govt overspending.. they have run out of other people’s money. Budgetary control is still the priority of most people, whether their own situation or Govt, and Labour can easily lose an argument that it only wants to increase Govt income to engage on another round of social spending.
Also, I wouldn’t bet that owning a second property or more was exclusively a National supporters’ playground.. there’s no law that says Labour supporters couldn’t be in on a second property.
JC
Comment by JC — July 5, 2011 @ 8:29 pm
I know nothing very much about this topic, so obviously I am very well placed to comment on it. In fact, I expect to have a regular slot in a major daily newspaper to do so at length …
Is the “political suicide” meme based not only on assumptions as to how it will impact investment property owners, but the value of houses generally? So, if demand for investment housing is helping to sustain the prices of all housing, then a fall in demand for rental properties will drag down the price of everyone’s (or, at least, lots of people’s) homes. Thus there’s a lot more than just the 200,000 investment property owners who may feel the sting of this.
(Actually, I suspect this effect will be worse for those in the lower-middle rungs of the property ladder. There won’t be many property investors competing to buy refurbished villas in Mt Eden or Grey Lynn … but 3 bedroom brick-and-tile homes in the Hutt Valley or Mangere? So any fall in values is likely to be at the lowerish ends of the market – which is where Labour’s support allegedly lies. But I guess the benefit is that first home buyers will benefit … but they are young and don’t vote.)
There – I warned you I know nothing about this topic.
Comment by Andrew Geddis — July 5, 2011 @ 8:38 pm
JC, I guess they’re betting on Labour-ish voters being more likely to accept the broader societal benefits which will accrue from the measure as a reasonable tradeoff. Big call, if that’s all it was. But I think Danyl’s reasoning is right: the number of people this will directly effect isn’t too high.
L
Comment by Lew — July 5, 2011 @ 8:43 pm
They can sell this as ‘helping make property affordable to young New Zealanders again’. Also, once you’re on the ladder, prices moves are relative, so a decrease in value doesn’t hurt that much – unless you end up in negative equity . . .
Comment by danylmc — July 5, 2011 @ 8:46 pm
They can sell it all they like however Banks aren’t lending to the bottom end of the market so all in all it’s another Labour fail.
Comment by abel the amish — July 5, 2011 @ 8:52 pm
“Also, once you’re on the ladder, prices moves are relative, so a decrease in value doesn’t hurt that much …”
That’s true in reality world. But in gut-reaction world, hearing that my house I bought for $450,000 has fallen to $420,000 in value feels like I’ve just lost $30,000.
(Please note, I’m just trying to find a possible defence for why a CGT is said to be “political suicide”. As a policy, I quite like it (with the already stated proviso that I know nothing very much about this topic).)
Comment by Andrew Geddis — July 5, 2011 @ 8:57 pm
Hawke and Keating introduced the Australian CGT in 1985 and Labor stayed in power 11 years after that.
Trudeau introduced the Canadian CGT in 1972 and stayed in power seven years after that.
Both the Australian and Canadian plans were more comprehensive (i.e. would directly affect more people) than Labour’s plan sounds like it’ll be.
Comment by bradluen — July 5, 2011 @ 9:05 pm
“from our bloated property investment sector who feel they’re entitled to operate as an untaxed parasite draining the vitality of the productive economy.”
Don Brash? That you Don?
CGT Phil Goff’s suicide note for sure.
The game of politics is hard to play
I’m gonna lose it anyway
The losing card I’ll someday lay
so this is all I have to say.
Comment by Simon — July 5, 2011 @ 9:05 pm
Oh, abel the amish … are you ever right?
“Banks have eased their lending criteria in recent months in an effort to boost lending volume growth from its record lows of around 1.4% a year. Lending was growing at 17% per annum in 2004.
‘We are finding banks are increasingly keen to compete hard to win new business and keep existing customers,’ said Rhonda Maxwell, spokeswoman for mortgage broking group Roost Home Loans.
Banks are offering loan to value ratios of up to 90 and 95% and are discounting establishment and legal fees in competitive situations, Maxwell said.”
http://www.interest.co.nz/property/53933/roost-report-shows-home-loan-affordability-improves-may-best-levels-april-2004-due-lo
Comment by Andrew Geddis — July 5, 2011 @ 9:11 pm
Oh how we chuckled gaily Andrew. That’s a great headline and much like the Real Estate Industry quoting stats to prove why there is “No mysterious spike in mortgagee sales” http://unconditional.co.nz/blog/no-mysterious-spike-in-mortgagee-sales/
Comment by abel the amish — July 5, 2011 @ 9:18 pm
Sorry, Abel. I defer to the greater amount of evidence you brought to this discussion in support of your claim. (insert emoticon to represent sarcastic grimace here)
Comment by Andrew Geddis — July 5, 2011 @ 9:21 pm
Same back at ya Andrew.
Comment by abel the amish — July 5, 2011 @ 9:22 pm
Didn’t property investors only pay $25m in tax last financial year, message to be hammered home there. “They are avoiding paying their fair share like you and I have too”. They can also take a leaf out of Nationals play book and make shit up about how it will start aggressive growth like the tax cuts did…..
Comment by andy (the other one) — July 5, 2011 @ 9:26 pm
I’m struggling with the maths here..
Danyl and the Herald say a CGT would affect 200,000 and the Herald specifically says the tax would bring in $4 billion a year.
But especially under a CGT I cant see more than a 5% turnover of second houses per year, ie 10,000 houses at what.. $250,000?
10,000 X $250,000 X 15% is $375 million.. thats significant but not a gamebreaker and miles away from the Herald’s $4 billion figure; its also just 0.5% of current Govt spending.
It seems to me that a 15% CGT on a house is a huge incentive to holding on to the house as the cost of repairs are way less than that.. and in a tight market there’s little chance of a capital gain offsetting it for many years.. in fact, that might be a blessing as repairs could be better value than a sale. If there are theoretically 200,000 2nd home owners, then there are about the same number of tenants.. what is the effect on them if owners cannot get a decent capital gain? My gut feeling is that the tenants will have to pay more.
JC
Comment by JC — July 5, 2011 @ 9:27 pm
When they say “family home” will be exempted, how will they define what that is? Electoral roll? Or will taxpayers get to nominate their primary residence? If not done with this consideration in mind, they just open up a whole new avenue for evasion. Supportive of the intent, but as always devil is in the detail. Would’ve probably been more supportive of a conditioned land tax.
Comment by policyparrot — July 5, 2011 @ 9:30 pm
JC: Surely your assumption that the 200,000 people only own 1 investment property on average is incorrect?
Comment by wtl — July 5, 2011 @ 9:36 pm
JC, it’s a tax of 15% of the capital gain, not 15% of the sale price
Comment by kahikatea — July 5, 2011 @ 9:37 pm
Doesn’t work that way, sorry abel. You made a claim – “Banks aren’t lending to the bottom end of the market so all in all it’s another Labour fail.” I presented “evidence” that this claim is wrong. You think that evidence is bunk … that’s OK. But you’re still without a skerrick of support for your original claim.
So … unless you just come on dimpost to make things up for the fun of stirring the pot? You wouldn’t do that, would you abel?
Comment by Andrew Geddis — July 5, 2011 @ 9:40 pm
I would also think that the turnover would be greater that selling an investment property every 1 year out of 20 (5%).
Put it another way, I think the your figure of only 10,000 investment property sales per year seems a bit low, but I don’t have any actual figures to back me up.
Comment by wtl — July 5, 2011 @ 9:41 pm
the Herald say….
Stop right there, these are the people that publish the name of the ‘plane isle pee man’, garth george and various other reactionary Hone editorials or press releases from any one that has email. This is a message from Labour, its a left wing dog whistle it will raise the same amount of cash as the amount of cars crushed by Judith Collins. Big fat Zero, any accountant worth the money they are paid will transfer (without gifting duty, post November) into a trust. IRD then needs to prove that each trust owns a single property only, blah blah tax avoidance, keep calm carry on…
Comment by andy (the other one) — July 5, 2011 @ 9:44 pm
Also, you buy second house for $150,000 and sell years later at $200k, you only pay %15 CGT on $50k about $7,500. But all the way through you have deducted the cost of EVERYTHING to do with the property over the years of ownership. Thanks for playing you still win…
Comment by andy (the other one) — July 5, 2011 @ 9:53 pm
Should I be staggered that Labour’s response to an issue is to tax it.
A major sutdy came out a few days ago that said our property boom from 2004-2008 was a result of cheap capital and large immigration numbers. That is usually always the case: More people coming with fewer houses being built because of RMA bottlenecks and urban growth limits. Strangely, a [lack of] capital gains tax didn’t feature as a cause.
Surely you all understand that there are 000′s of accountants hired to get around tax laws; and even if it is difficult, investors will simply hold onto property and thereby deprive househunters the pleasure of buying a house.
And all of this refuses to acknowledge that we have a CGT now – admittedly one that is hard to enforce.
None of this matters anyway because Labour won’t be elected this year. And the complete lack of thinking behind this ensures Labour should stay where they are for at least another 6 years.
Comment by Nick K — July 5, 2011 @ 10:15 pm
“JC, it’s a tax of 15% of the capital gain, not 15% of the sale price”
Ah.. thanks, clearly I need a concrete wall to bang my head against. But this also destroys a CGT as a wonderful fund raiser.
Readjusting my sights ahead of my toes this looks more like an irritant than a game breaker. I can accept it..hell.. it would be worth a 50% tax on the gain if it changed our investment habits, but it means a trivial sacrifice for MPs, Phil and the Greens Super schemes.
JC
Comment by JC — July 5, 2011 @ 10:35 pm
I think Nick K is a National proxy – I am pretty sure his comment is word for word what Key said as he left the house today.
The National attack lines are: hard to administer and just Labour taxing us more. Well the administration doesn’t seem that hard for most countries that have a CGT and they also seem to be making reasonable sums out of it.
What is odd is that Key wants us to ‘catch up with Australia’, this is one clear way that we could. Perhaps catching up with Australia requires us to have a taxation system like Australia. You know, one with a high top tax rate and a Capital Gains Tax. Or, does Key want us to catch up with Australia by not having a single policy that they have?
Comment by Tim — July 5, 2011 @ 10:41 pm
anecdotally, you will find half of all investment properties are owned by people with single investment properties (Mum and Dads), the other half are owned by owners of multiple investment properties. The set of people that own multiple properties will not notice any change of government unless there is a revolution.
Comment by andy (the other one) — July 5, 2011 @ 10:41 pm
Taxing capital gains on property other than owner-occupied is pretty regressive, socially conservative stuff. Everyone (almost) lives in a property, either renting or owning. The costs of providing this accommodation will, except in the very short term, fall on the occupier. So this policy effectively taxes renters vs owners, which doesn’t sound right to me.
It also, via this tax distortion, will encourage home ownership. Are increasing rates of home ownership a good idea? Put it another way – is incentivising lower income people into housing debt a good idea? The Americans would have an opinion on this.
I’m all for a CGT but excluding owner occupied housing is counter-productive.
Comment by Swan — July 5, 2011 @ 11:09 pm
When we emigrated to this fair country in 1999 , we came here having just lost $30k (abt 16k GBP) in negative equity on an outer London apartment we’d be livining in for 7 years, essentially our life savings were gone when I wrote a cheque to the bank to cover the loss. I joined a startup company and went on one of those touchy feeely group hug sessions so beloved on many aspiring companies. On the session we were asked what we wanted in life. A pretty young thing in sales said, and I quote exactly “I want to own nine rental properties before I’m 55″ . I couldn’t decide weather to laugh, cry or feel sick.
Comment by Andy C — July 6, 2011 @ 12:05 am
It’s hard to find any statistics on how many people own investment properties. Poking around the 2006 census data suggests it’s about 200,000 people – so ~10% of the average election turnout;
But how many people intend to own investment property? That might be the relevant number, and I wouldn’t be surprised if it’s much higher than 10% of voters – property being the apparently easiest way to get rich with the least effort (according to the best-selling books and those TV shows).
Comment by gazzaj — July 6, 2011 @ 12:08 am
gazzaj: Well said. Despite the criticism above about the potential issues with the proposed CGT (some of which I don’t think would be that hard to deal with, e.g. surely any obvious loopholes will be closed), a key aspect of this is that it finally shows that Labour is willing to address a key problem with the NZ economy: the huge amount of money invested in unproductive property speculation instead of being invested in growing productive businesses and industries that will benefit NZ as a whole. And they are doing this knowing perfectly that it might cost some votes – at least it shows some ‘vision’ on their part. It might not be a perfect mechanism, but at least it is a start. National, on the other hand, seems utterly uninterested in addressing this issue, even though one might expect them to be more ‘business friendly’ than Labour.
Comment by wtl — July 6, 2011 @ 12:21 am
I wouldn’t mind a capital gains tax, although it would probably impact me.
But if we’re saying we need to be more like Australia, how about that 90 days trial period? Apparently that was the end of life as we know it – fire at will and all that. Still see plenty from the left bleating about it. Bit hard to run both arguments simultaneously isn’t it?
Comment by PaulL — July 6, 2011 @ 1:20 am
Tim: “I think Nick K is a National proxy…”
One of the reasons I quietly enjoy this blog is because it doesn’t feature the frankly delusionally paranoid nuttery that you see on the standard. It appears those days are over.
Pray tell, Tim – why would the national party pay someone to subvert this blog?
Comment by The Baron — July 6, 2011 @ 5:38 am
Poking around, the $4 billionish estimate seems to come from an IRD/Treasury paper assuming the CGT would (i) apply to commercial, industrial, and rural property as well as individual investment property, and (ii) be taxed at income tax-like rates (25-30%).
If it’s just individual investment property at 15%, it’ll be more like $750 million (on a $120b base value). But there are likely all kinds of thresholds and exemptions to be considered.
Comment by bradluen — July 6, 2011 @ 8:23 am
@The Baron – John Pagani ( who should know) reckons that ninth floor staffers routinely AstroTurf the NZ blogs using a variety of logins. If you spend a lot of time online it isn’t that hard to spot suspicious ones – “new” posters who suddenly pop up armed with all the talking points and mysteriously well informed with all sorts of stats…
Comment by Sanctuary — July 6, 2011 @ 8:28 am
I believe Nick is an ACT Party member. He’s been commenting here for a while.
Comment by danylmc — July 6, 2011 @ 8:29 am
Of course, the devil is going to be in the details — you know, exactly what is meant by “family home” (which isn’t quite as clear as you might think in Australia). I’d also be rather interested in seeing how credible the claimed benefits are, because nobody’s ever *cough* massaged those numbers in the history of New Zealand electioneering.
Comment by Craig Ranapia — July 6, 2011 @ 8:44 am
I am unsure of a CGT, mainly because property is the last safe refuge in New Zealand from the thieves and shysters who infest our investment vehicles like finance companies and the sharemarket.
if there isn’t also robust – even draconian – reform of all our finance and regulations regulations at the same time then middle class New Zealanders are just being set up to be punished for making what are in fact perfectly rational investment choices based on their assessment of the available safe options for their money.
I would like to see a lot more work also put into a “Robin Hood” tax, not just to increase revenue but also to see if it isn’t a worthwhile mechanism to help dampen currency speculation in the NZ dollar.
Comment by Sanctuary — July 6, 2011 @ 8:56 am
*”regulations regulations” = sharemarket regulations….
Comment by Sanctuary — July 6, 2011 @ 8:58 am
CGT is more about trying to free up money for other markets ( shares, investments ) that might actually make NZ productive, rather than as another major revenue source for government.
It’s more about placing property investments on a closer taxation footing to other investments to encourage those with spare cash to consider speculating in other markets. One consequence of medium income earners investing in second property to mitigate taxation may be inflated property prices, inhibiting young people from entering the market, as they have other liabilities, such as student loans.
My suspicion is that many property investors will still hold second properties, but with much less churn, and they may begin looking at other investments, Charlies being the current example quoted, rather than one of the failed finance companies. Hopefully some of those with spare cash may even decide to invest in people/businesses with innovative strategic plans, more high risk but potentially more lucrative than property. NZ needs less of the current staid Scottish Presbyterian tangible-asset-with-minimal-tax-exposure approach to personal finance investment.
Comment by Bruce Hamilton — July 6, 2011 @ 9:03 am
“CGT is more about trying to free up money for other markets ( shares, investments ) that might actually make NZ productive, rather than as another major revenue source for government.”
But most rental property in NZ is pretty basic, it is in no way “luxury consumption”. I think providing accomodation is a fairly important part of our economy, even if it isn’t export focussed. On the other hand, owner-occupied housing investment is where you tend to see a lot of investment-for-luxury-comsumption. So shouldn’t this be targetted?
Comment by swan — July 6, 2011 @ 9:12 am
Most of the people I know who of own rental properties own only one, typically a house inherited from a parent. And most of those people would be Labour voters.
Totally unscientific and extrapolated from the circles I movie in I know, but it would be interesting to get a breakdown of how many rental properties the typical landlord owns, and whether that landlord is an investor or just an opportunistic landlord. Labour could well have aimed straight at their foot again with this one.
Comment by annie — July 6, 2011 @ 9:18 am
“Totally unscientific and extrapolated from the circles I movie in I know”
Sounds like a much better sample than DPF’s sample size of *himself*, in which he concludes Nationals depreciation changes have been a raging success and no more work is needed on that front…
Comment by swan — July 6, 2011 @ 9:26 am
I think this is decent, electorally. If it’s explained by comparison with tax on worked income, and if its impact on flattening house prices is explained. Gen Y and X are on the outer, there are plenty who are older and still struggling into house ownership, and the grey vote is mostly beyond buying further investments.
Comment by George D — July 6, 2011 @ 9:33 am
Given the difficulty we seem to have educating the masses about how our electoral system works, why drinking and driving is a really dumb idea etc etc how exactly are we planning on turning these people into smart, savvy investors in shares and start up companies?
Are we going to just cross that bridge when we come to it? Put some snazzy ads on TV with a voice over from Oliver Driver and hope everyone catches on?
With the collapse of some many
Comment by Exclamation Mark — July 6, 2011 @ 9:35 am
Anecdotally, the multiple property owners I know fall into two categories – those who own one additional property, often a holiday home that they also rent out; and estate agents or property speculators who own dozens or hundreds of additional homes, and buy and sell several dozen properties a year.
This isn’t going to have a huge impact on people who own an additional property. They’ll probably sell it when they retire, and 15% of the gains will go to the IRD. But the property speculator who lives down the road from me and makes a very large income on which he pays literally no tax (and openly mocks me as a fool, in a friendly neighbourly kind of way because I work for a salary and pay PAYE) would be hit pretty hard by this. Which is a good thing.
Comment by danylmc — July 6, 2011 @ 9:36 am
I wonder if it is good tactics to leak the policy 10 days ahead, then depart the field with a “wait until the announcement” attitude? This leaves the field open for all the attacking forces to make the play and frame the debate.
Comment by The Double Standard — July 6, 2011 @ 9:37 am
And if you explain to the public and the smart business community that it reduces harmful property speculation and increases capital available for productive investment, well, in theory you have a winner. (As opposed to asset sales, which actually reduce available capital).
Comment by George D — July 6, 2011 @ 9:37 am
I get the impression that there’s so much data out there about CGTs that you can just pick the data that supports your point and not even be wrong.
Comment by Trouble Man — July 6, 2011 @ 9:39 am
I wonder if it is good tactics to leak the policy 10 days ahead, then depart the field with a “wait until the announcement” attitude? This leaves the field open for all the attacking forces to make the play and frame the debate.
I hope they aren’t getting the idea out and then polling on it before they make a decision to go ahead with it.
Comment by danylmc — July 6, 2011 @ 9:42 am
“I hope they aren’t getting the idea out and then polling on it before they make a decision to go ahead with it.”
Had the same thought – you can get away with that when in Govt I guess, but it would be fatal for the Labs.
Comment by The Double Standard — July 6, 2011 @ 9:54 am
I hope they aren’t getting the idea out and then polling on it before they make a decision to go ahead with it.
Ha! I certainly hope not too. I haven’t seen their activist base this happy or excited in years.
Comment by George D — July 6, 2011 @ 9:55 am
and estate agents or property speculators who own dozens or hundreds of additional homes, and buy and sell several dozen properties a year.
Really, Danyl, and there’s so many of these slum landlord they’re magically going to pay for all Labour’s campaign promises? This I have to see…
Comment by Craig Ranapia — July 6, 2011 @ 9:59 am
On the other hand, gauging reactions before you decide how you frame the policy could be a good thing. Labour have to frame this assertively, and front foot it. I think, based on the reactions from those within the Labour Party (and the internal feedback loop this will cause going up to caucus) that they’ll do so.
If they come into it weakly it will underline established perceptions of the Labour Party, and play into the hands of their accusers, who will be attacking them aggressively. Let the other side define the terms of the argument and you’ve already lost. This close to an election, that would be political suicide.
Comment by George D — July 6, 2011 @ 10:00 am
It is hilarious watching and listening to all the naked vested interests coming out and attacking the idea of a CGT – it is also instructive to see revealed in all it’s glory just what an extractive, colonial mentality most New Zealanders still have to the country that is actually their home, not a place they’ve come to rip as much money out of as possible before retiring to a nice middling country pile in Bedfordshire or somewhere.
Actually I think the biggest problem for Labour is going to be selling this to settler middle class Pakeha, who primary life goal is an early retirement at fifty to fifty five and living the dream of the three B’s – boat, bach and BMW – funded by rentier income from several investment properties. Telling people a lazy future funded by extracting rents is no longer the approved method is going to be a hard sell to a group that is very vocal and includes practically the entire media elite.
Comment by Sanctuary — July 6, 2011 @ 10:01 am
And if you explain to the public and the smart business community that it reduces harmful property speculation and increases capital available for productive investment
And roughly nothing to make housing more affordable for real people who are barely servicing the interest on insane mortgages?
Comment by Craig Ranapia — July 6, 2011 @ 10:03 am
In the US they tax advantage the family home (mortgage is tax deductable) and apply capital gains to second and subsequent properties. That drives up home ownership rates, and seems a sort of sensible policy to me. I’d be interested to see that policy from Labour – downside is that it amounts to a tax cut for the wealthy, upside is that it would shift the relativity between landlords and owner occupiers. Might also demonstrate this is about the incentives, not about additional revenue. Perhaps make the first 300K of mortgage tax deductable? That’d be an attractive policy to the centre, rather than the pure new tax policy, which mostly excites the left.
Comment by PaulL — July 6, 2011 @ 10:08 am
And roughly nothing to make housing more affordable for real people who are barely servicing the interest on insane mortgages?
I don’t want to single you out here Craig, because you’re arguing from good faith. But isn’t it strange how taxes have negative, disincentive effects on particular classes of investment, but not on others? The right can’t claim that some taxes do, and other taxes don’t. Either demand is elastic, or it isn’t. Once we’ve agreed that it is, we can argue over just how much.
Comment by George D — July 6, 2011 @ 10:09 am
Sanctuary at 42 – “John Pagani ( who should know) reckons that ninth floor staffers routinely AstroTurf”
John Pagani would be the last person on earth to know what occurs on the 9th floor. Wasn’t he fired from Phil Goff’s office? His blog posts indicate why, if that’s true.
Comment by fortunefavoursthebrave — July 6, 2011 @ 10:27 am
George D.:
That was a serious question, and as I said I’m not retiring to the ideological fainting couch at the mention of a CGT. Honestly, I find it rather hard to muster much sympathy for property speculators, full stop — and I don’t really give a shit whether they’re the rich prick slum landlords our host hangs around with
, or ‘Mum and Dad’ nwitwits who were stupid enough to buy into some bullshit get rich quick seminar.
But why are “family homes” so sacrosanct? I understand the politics, but the policy rationale escapes me. Perhaps I move in less exalted social circles than Danyl, but I don’t know anyone who owns hundreds of rental properties. I do know people who are sleeping in their parents’ guest room because banks are curiously insistent on folks servicing their debts — which they should never have taken on to help inflate residential property bubbles in the first place, but that’s really academic now.
I know it’s never going to happen, but would imposing an CGT across the board do anything to control enormously damaging RPB’s or is there some nuance I’m missing?
Comment by Craig Ranapia — July 6, 2011 @ 10:48 am
Georgie boy said: “I haven’t seen their activist base this happy or excited in years.”
Yes – me for sure, and for that reason alone (let alone any 2011 votes/election stuff) chunky-wedge issue stuff like this is all good…
Also its been pre-polled so hard and long we know its a winner.
Comment by k.jones — July 6, 2011 @ 10:49 am
Does anyone know if what Labour is proposing will bring in more revenue and have a more dampening effect on property values than the already existing speculation tax laws?
random thoughts, as already mentioned Australia’s property boom happened dispite a CGT, property prices in Grey Lynn aren’t being driven up by speculation. Paying CGT means that you’ve already made a profit which leaves the essence of the problem intact – property has been a better bet than other forms of investment.
Comment by NeilM — July 6, 2011 @ 10:59 am
“…But why are “family homes” so sacrosanct? I understand the politics, but the policy rationale escapes me…”
Because the idea is the primary home is actually first and foremost the place you live in (crazy idea I know), and the family home is not primarily an investment, it is the place you rear your children in. Taxing the family home signals that the government only sees home ownership as an investment choice, rather than something people might buy to provide a secure dwelling for child rearing and the like.
Comment by Sanctuary — July 6, 2011 @ 11:05 am
Just guessing, but I imagine farms ar enot ‘investment properties’. Although I’m told a lot of farmers’ model is based on capital gain (which with land price based on production=continuous intensification).
But yeah, quot eon the news had (I think) a property guy claiming Laour ran the risk of alienating its core supporters by taxing investment properties. Presumably with a straight face, which might say something about the state of politics.
Comment by lyndon — July 6, 2011 @ 11:10 am
I’m surprised that the idea of CGT hasn’t been extended to stocks and business sales – I would think a particularly juicy (non labour voting) target would be agribusiness.
Maybe the NZLP just want to dip their toe in the water on this one.
Comment by Gregor W — July 6, 2011 @ 11:11 am
Craig, presumably (and I don’t have specific knowledge here, I’m just working from general principles) because the purpose of a CGT (apart from revenue raising, which is significant but not huge) is to reduce hoarding of property as an asset. While supply may be limited, and there may not be enough ‘family homes’ to adequately supply the market, single property ownership is unlikely to distort supply of ownable homes particularly much. However, you’re right, a tax on all houses would have a significantly more deflationary effect on house prices. Given that most people buy their own homes with capital gains as a secondary consideration, and somewhere to live as the primary one, you effectively target most of the inflationary part of the market, without the huge political cost you’d otherwise wear.
The same reasons why Labour sets a top tax rate of 39%, not 45% or 50%. You find a comfortable spot that delivers the most policy objectives for the best political price/return.
Comment by George D — July 6, 2011 @ 11:31 am
Taxing the family home signals that the government only sees home ownership as an investment choice, rather than something people might buy to provide a secure dwelling for child rearing and the like.
Ahem, the tax would only apply when the home is sold. If you never sell it – for example, because you live in it and then pass it to your children – then there will be no tax. Pretty poor argument, Sanctuary.
Comment by Simon Poole — July 6, 2011 @ 11:32 am
Because the idea is the primary home is actually first and foremost the place you live in (crazy idea I know), and the family home is not primarily an investment, it is the place you rear your children in.
Tom: Honestly, my grandparents were well past child-rearing age when they sold their house and moved into a more manageable unit — not exactly unusual. And while it may have hit my inheritance, I rather doubt it would have reduced them to a life of eating cat food and huddling over a one bar heater if they’d paid a CGT on the very healthy price that house fetched. Or if, after they’d both passed, my grandmother’s estate had been taxed for another generous capital gain when that unit was sold.
You might find this hard to accept coming from a Tory — and devoted fan of Downton Abbey — but I’m not entirely convinced estate protection for the middle-classes should be anyone’s priority for tax relief. Peg that down as reason number infinity minus one why I’d be a shit politician. (YMMV on whether that’s a good or bad thing.)
Comment by Craig Ranapia — July 6, 2011 @ 11:35 am
Because the idea is the primary home is actually first and foremost the place you live in (crazy idea I know), and the family home is not primarily an investment, it is the place you rear your children in. Taxing the family home signals that the government only sees home ownership as an investment choice, rather than something people might buy to provide a secure dwelling for child rearing and the like.
You said that well.
Just guessing, but I imagine farms are not ‘investment properties’. Although I’m told a lot of farmers’ model is based on capital gain (which with land price based on production=continuous intensification).
From what I can tell about Waikato land prices, a speculative bubble has well and truly taken many farmers. Given the incredible debt servicing ratios many have, I wouldn’t be surprised if we saw a bunch of farmers go to the wall in the midst of the highest dairy prices in history.
Of course, a CGT would have helped to prevent such a thing happening in the first place, but nobody likes being wrong, especially when they’re broke and think they own the country.
Comment by George D — July 6, 2011 @ 11:35 am
Ahem, the tax would only apply when the home is sold. If you never sell it – for example, because you live in it and then pass it to your children – then there will be no tax. Pretty poor argument, Sanctuary.
Um, what? You’ll have to explain the logic there Simon.
Comment by George D — July 6, 2011 @ 11:37 am
Craig, the other way of phrasing my statement (tl:dr) is that we don’t live in a socialist country.
Personally, I’d have the Government intervene in the housing market – massively. By building a large supply of quality state-housing, following the Swedish or Singaporean models.
Comment by George D — July 6, 2011 @ 11:40 am
64.”In the US they tax advantage the family home (mortgage is tax deductable) and apply capital gains to second and subsequent properties. That drives up home ownership rates, and seems a sort of sensible policy to me.”
Sort of sensible but also sort of not. Have you heard the news? The US housing market is not doing so well right now.
One of the big differences between the US (where a bubble and collapse led to the GFC) and NZ (where we had a bubble but so far a not too destabilising correction), is that in the US home ownership rates actually increased during the boom, where as in NZ home ownership rates decreased.
Why is home ownership so special again? It is effectively a form of investment where the production (i.e. accomodation) is directly used by the investor. This may or may not be a good model, but I dont see people running around advocating that we should all grow our own food, or produce our own electricity..
Comment by swan — July 6, 2011 @ 11:40 am
I’m surprised that the idea of CGT hasn’t been extended to stocks and business sales
Stock markets are at least as speculative as the housing market, but at least there you have the pretense of funding productive parts of the economy.
Comment by George D — July 6, 2011 @ 11:45 am
It’s funny how this gets framed as “hitting” certain sections or encouraging other investment decisions – how’s about a CGT is a good because it raises revenue our Government (regardless of stripe) needs to pay for all the shit they do?
And it does it in a way that reduces (certainly doesn’t remove) distortions in investment decisions from the IRD tax rate booklet…
Interesting that’s it’s only going to be on property though – I would have thought a CGT on all assets (with exceptions for the primary residence and all the small stuff) like Australia’s made more sense.
Comment by garethw — July 6, 2011 @ 11:49 am
Craig asked why family homes are exempt.
It’s because usually when someone sells a family home they need to buy a new one, which is likely to have gone up in price as much as the one thye sold, so the theory is that in that case you’re not really making any capital gain.
I suggested to the Green Party that this would be better dealt with by charging CGT on the sale, but giving a rebate on the CGT that applied to the sum of money put into the new home (so that you would get all the tax back if you bought a new house that was at east as expensive as the old one)
Comment by kahikatea — July 6, 2011 @ 11:54 am
@ George D
I guess it’s the pretense that is important.
I don’t think you’d have much of an arguement from the bulk of the electorate to finally having a go at the F.I.R.E sector whcich has essentially had a free ride to date.
I’m a bit puzzled that Labour hasn’t plugged the other end of the equation with a financial transaction tax as well.
If the cash spiggot is still (in the short term) pouring across the Tasman as bank profits extracted from inflated mortgages, wouldn’t it make sense to tax those transfers and clip the ticket on corresponding cheap money injected from offshore?
Comment by Gregor W — July 6, 2011 @ 12:00 pm
From the Herald today: “The 2006 census data suggested about 200,000 people owned an investment property.”
Is that a fact, discovered by a blogger, and then regurgitated by a newspaper??? Nice!
Comment by gazzaj — July 6, 2011 @ 12:06 pm
I understand the mooted 15% rate is a compromise alternative to having it at 30% and then making complicated adjustments for inflation , as it seems to be objectionable to tax the inflation part of the gain on property.
I don’t quite understand this though.
Prices and wages go up and have an inflation component, yet all of the extra increase attracts PAYE and GST, what is the difference?
Comment by Michael — July 6, 2011 @ 12:08 pm
@Michael – Australia initially removed the CPI from gains but no longer do. I THINK they have a 50% discount against the gain though before they tax it at income rates (i.e. if you made $100k, they only add $50k to your taxable income) – this is a similar effect to taxing the full gain at half the rate though
Comment by garethw — July 6, 2011 @ 12:12 pm
Also, does anyone know whether this is expected to be tied into any loss ring-fencing proposal to eliminate (or at least reduce) negative gearing?
Comment by Gregor W — July 6, 2011 @ 12:17 pm
The Green Party CGT policy does an CPI adjustment, then taxes the capital gain minus inflation at income tax rates (though you can have the gain spread across several years if that reduces your tax band).
If you have a CGT at a lower rate than income tax, you are still taxing capital gains on investments at a lower rate than the salaries of nurses and fire fighters are taxed. Is that fair?
Comment by kahikatea — July 6, 2011 @ 12:24 pm
@gareth I got that, though wasn’t aware of what is happening in Australia.. What I am asking is, what is the rationale for CGT being adjusted for inflation? Why not have a rate equal to the top personal rate with no adjustment?
I get the objection is that a portion of the gain is imaginary as it is just inflation, my point is that other things increase with inflation as well, and all the increase is taxed..
Comment by Michael — July 6, 2011 @ 12:30 pm
“…I rather doubt it would have reduced them to a life of eating cat food and huddling over a one bar heater if they’d paid a CGT on the very healthy price that house fetched…”
Imagine a law abiding, tax paying couple spending the best twenty-five years of their life working hard and raising a brood of happy, well adjusted children. Now imagine upon the day the last of their fledgling finally leave the nest they discover that over the previous thirty years their home in a raw new development has turned into a house in a very nice part of town indeed, and worth a lot of money. Imagine they cash up the damily, trade down to smaller place, and travel a bit on the capital gain.
Well, I for one do not bedrudge them a cent of that un-taxed money for a job well done.
Comment by Sanctuary — July 6, 2011 @ 12:32 pm
Sorry George, was fighting with a toddler at the time.
Claiming that it unfairly taxes families is a straw-man. A CGT is, by definition, a tax incurred when a house is sold. It in no way impacts the ability of a family to live in their house securely and raise children as Sanctuary alluded.
Craig, in his way, is considerably better with words than I and did a much better job of describing the idea at #75.
I’m not saying that I necessarily agree with a CGT on the family home, but that the argument against it put forward by Sanctuary was poor.
Comment by Simon Poole — July 6, 2011 @ 12:32 pm
Sanctuary: So do we raise the top marginal rate? Specialised doctors can earn a whole lot more than the $70k threshold, and provide a considerable service to the community to do so, not to mention the decade or more of training they went through to be able to do it. Do you begrudge doctors their new, lower marginal tax-rate?
I can’t stand John Key and the bullshit policies (including taxation) that he pushes, but your lines of argument are quite odd at the moment.
Comment by Simon Poole — July 6, 2011 @ 12:44 pm
@Michael – sorry I agree re inflation and wasn’t making the point clearly. Australia don’t take inflation into account with their CGT but do provide an overall 50% discount on the gain for taxable income.
This gets around the other problem raised of taxing low income earners at the same rate as high – everyone pays at their usual income tax rates…
Comment by garethw — July 6, 2011 @ 12:56 pm
“Imagine they cash up the damily, trade down to smaller place, and travel a bit on the capital gain.
Well, I for one do not bedrudge them a cent of that un-taxed money for a job well done.”
But the renter in a lower socio-economic bracket should be burdened with the CGT (because in the end it is renters who will pay)?
I didn’t realise you were in favour of regressive taxes Sanctuary?
Comment by swan — July 6, 2011 @ 1:03 pm
garethw: in Australia it’s taxed on half the capital gain, at your marginal tax rate. So someone on 20% tax pays effectively 10%, someone on 40% tax pays effectively 20%. IIRC, the “half the capital gain” is driven by how long you hold – if you sell within 2 years? then it’s the full amount taxable, hold longer than that only half is taxable. That sort of makes sense to me – it preserves the “progressiveness” in the tax system, and it treats people who are buying and selling frequently different than people who buy and hold. I wouldn’t find a similar model to be overly offensive.
Comment by PaulL — July 6, 2011 @ 1:03 pm
@PaulL Yes exactly and it partly removes the artificial barriers around what behaviour you’re trying to drive through taxation – “make any money on anything? We tax it this way”*
* Significant exemptions and inevitable rorting blithely ignored to suit my point**
** Said exemptions and rorting are, on-the-surface, acceptable to me for the overall benefit.
Comment by garethw — July 6, 2011 @ 1:08 pm
Simon, the gist of my counter-argument is at #73. Sanctuary’s position is actually pretty consistent, and not that unusual. (Granted, it’s odd in New Zealand…)
Comment by George D — July 6, 2011 @ 1:26 pm
The point is the capital gain on the family home is incidental to the job of being good citizens who actually pay PAYE and raising the next generation of taxpayers. To my mind, an incidental un-taxed windfall capital gain when selling the family home once that part of your life is over is a fair enough reward, and an implied part of the Kiwi social contract.
Comment by Sanctuary — July 6, 2011 @ 1:28 pm
Universal super is an explicit part of the Kiwi social contract, Sanc. Unfortunately, the world doesn’t work like that sometimes and there is going to be a time in my life (well before I get to retirement age) where that contract must be broken. Who decides what is sacrosanct and what isn’t these days?
George: I don’t disagree with your argument necessarily. I would argue that, however, a CGT is more likely to increase the incidence of hoarding residential property as the tax is only paid once gains are realised.
Comment by Simon Poole — July 6, 2011 @ 1:43 pm
Simon Poole, the tax is only paid when the property is sold, because the profit is only made when the property is sold. If people avoided selling the property to avoid paying the tax, they would also be avoiding making the profit, and that would be rather missing the point.
Comment by kahikatea — July 6, 2011 @ 1:55 pm
Imagine a criminal, tax evading couple spending the best twenty-five years of their life slacking off and raising a brood of miserable, unstable children. Now imagine upon the day the last of their brats finally flee the nest they discover that over the previous thirty years their home in a raw new development has turned into a house in a very nice part of town indeed, and worth a lot of money. Imagine they cash up the family, trade down to smaller place, and travel a bit on the capital gain.
Well, I for begrudge them every cent of that un-taxed money for the burden they place on society.
tldr version: If you want to financially reward people for good parenting, there are better ways to do it than through capital gains on property.
Comment by Hugh — July 6, 2011 @ 2:15 pm
Yes, that’s me.
Comment by Nick K — July 6, 2011 @ 2:16 pm
Oh, and I never heard Key make those statements as he left the House yesterday, but if he did then maybe it is true that great minds think alike
Comment by Nick K — July 6, 2011 @ 2:17 pm
Are we sure the tax will only be paid upon selling? They could tax unrealised capital gains, although granted this would have some administrative issues. But there is precedent for example in the way international shares are treated – an equivalent rate of return is taxed, as opposed to actual realised profit. Or something like that. Taxing unrealised gains would be less distortionary – i.e. wouldnt stop people from buying and selling on tax grounds.
Comment by swan — July 6, 2011 @ 3:28 pm
@ The Baron. When the place where you worked was routinely bugged by the government for years, when people that you know and worked with were arrested as terrorists on trumped up charges, when your colleagues had their laptops taken away by the police and checked (for no good reason) under the same dodgy anti-terrorism laws, and when you know that spies deliberately joined groups you were involved with under assumed names to report on your actions to the police it’s easy to get paranoid…
Has any of that ever happened to you? Because it all happened to me…is that because I’m on the wrong side and you’re on the right side? Or is because the government routinely spies on environmental groups who present absolutely no realistic threat to the state and, in many cases, openly espouse non violent principles.
Comment by Amy — July 6, 2011 @ 3:28 pm
Crikey, danyl says:
1. Labour wants to finance the rebuilding of Christchurch via a tax on property speculation
2. This isn’t a hard argument to make: I think the public understands that the property bubble was a Bad Thing;
3. That it was caused by a loophole in the tax laws, so people poured money into that sector and
4. It harmed the wider economy
5. And that Australia has an almost identical tax policy
6. And it rather demonstrably has not crippled their economy
7. (n)or had any of the dire effects that critics are going to be pulling out of their asses over the next few days and weeks.
Phew, where to start with this list of ignorance (apologies for any offence, etc)? At the top I guess!
1. We ALREADY tax speculators: if you buy a property with the intention of reselling, you are taxed on the profits, just like an antiques dealer pays tax on their profits. What labour propose to tax is capital gains made by landlords. If you get the terminology wrong, you might get facts wrong. So, CGT will increase the costs of landlords, all other things being equal, there will be some mix of fewer landlords/higher rents. Good move when “working” folk are likely to be renters and Labour voters.
2. Agreed. But can you blame folk for taking the opportunity to improve their prospects? Shitty for wannabe homeowners, but still:
3. It was primarily caused by (a) loose monetary settings: all the loan money available helped bid up prices of property and (b) an appetite for risk that was higher than in years gone by, perhaps folk believed too much that these central bankers and politicians when they said things like “no more boom and bust” (although the boom underway should have told us that maybe we shouldn’t be too sure that bust wouldn’t follow)
4. It diverted money from savings and share investments, but monetary settings disfavoured (did I just coin a usage?) saving in “old fashioned” bank accounts, so this is probably correct. Still, without all the stimulus of loose money and loose-ish fiscal setting (towards the end, anyway), the GDP figures could well have been lower… but maybe more truthy
5. Australia has a policy similar to what is proposed… yet they still had a property bubble
6. Err, our bubble hasn’t “crippled” our economy, but the Australian’s resource boom could be argued to be $6m bionic legs and arms for the cripple that is Australia with its artificially high property prices and expensive motor vehicle industry. And property bubble waiting to burst. You paint Aus as a place that has few problems: they have ugly great holes in their ground vs. our polluted waterways.
7. Yet.
In conclusion, CGT is not a bad idea: it’s just that most every country that has it ALSO HAD A PROPERTY BUBBLE. Does no one remember Ireland or the UK? The UK has had a number of bubbles/burst in recent years. So in conclusion-squared: even if we’d had a CGT, we might well have had a bubble anyway. How to prevent bubbles, then? Avoid hysteria (Brash tried to warn folk when he was gov, from memory) and avoid free money that sloshes about doing dama
PS bring in GCT, see if I care: I already sold my investment property when it became clear I couldn’t stand dealing with tenants.
Comment by Clunking Fist — July 6, 2011 @ 3:36 pm
“So, CGT will increase the costs of landlords, all other things being equal, there will be some mix of fewer landlords/higher rents. Good move when “working” folk are likely to be renters and Labour voters.”
Fewer landlords, yes, and the landlords who do get out of the market will sell their houses. To who? they’ll have to sell them to first-home buyers, and to do that, they’ll have to sell them cheaply enough that first-home buyers will be able to afford them. Giving tenants a change top ebcome first-home buyers is not bad for them, it’s good for them.
Comment by kahikatea — July 6, 2011 @ 3:49 pm
Haha 107 comments on what is essentially an academic argument – Labour ain’t gonna win, and National ain’t gonna introduce it. Someone wake me in 6 years if Labour’s still pushing this.
Comment by gazzaj — July 6, 2011 @ 4:05 pm
actually gazzaj, the whole thread is ‘an academic argument’ because Labour are unlikely to win.
Comment by kahikatea — July 6, 2011 @ 4:45 pm
swan @104 – I believe a CGT on an accrual basis is generally considered to be theoretically excellent but practically impossible and nobody has done it (on a comprehensive scale, outside of minor specific taxes as you mentioned)
Comment by garethw — July 6, 2011 @ 4:55 pm
And the Herald today reports that investors aren’t buying property now because they’re scared of the tax and are off to Australia. Considering any CGT only ever applies to assets acquired after the tax comes into affect I’m not sure that the Property Council is doing a particularly good job of advising their members.
Comment by garethw — July 7, 2011 @ 9:34 am
Kah@107 I don’t think that’s right: that’s my guttalking though. And I don’t think CGT is unfair. It’s just that the sort of stuff that is being said about property bubbles annoys me. And what peolple think about the types of people who own investment properties who are quite different from developers and speculators. Developersand speculators pay 30% tax on their profits, Labour are proposing only 15% for property investors. Deveopers also pay 15% GST.
“111.And the Herald today reports that investors aren’t buying property now because they’re scared of the tax and are off to Australia. ” …which iftrue is pretty dumb: Aus has the CGT AND is at the PEAK of a property bubble.
Comment by Clunking Fist — July 7, 2011 @ 7:41 pm