No CGT but . . .

April 18, 2019

The government is not going to adopt a capital gains tax .

The backdown has cost $2 million and 18 months of uncertainty but Simon Bridges point out there will be more taxes:

“While the Government has backed down on a Capital Gains Tax, there are still a range of taxes on the table. They include a vacant land tax, an agricultural tax and a waste tax.

“Prime Minister Jacinda Ardern says she personally still wants a Capital Gains Tax and that our tax system is unfair. New Zealanders simply can’t trust Labour when it comes to tax. 

“The New Zealand economy has suffered while the Government has had a public discussion about a policy they couldn’t agree on. Put simply, this is political and economic mismanagement. . . 

The government asked a question, the answer to which its three constituent parties couldn’t agree on.

Remember James Shaw saying:

“The last question we should be asking ourselves is, ‘can we be re-elected if we do this?’ The only question we should be asking ourselves is, ‘do we deserve to be re-elected if we don’t?'”

Labour and the Green Party had to swallow a big dead rat, served to them by Winston Peters:

. . .It wasn’t even an hour after the Prime Minister had put the final nail in the coffin that is the capital gains tax (CGT) when RNZ asked Mr Peters whether Labour will be expecting his party’s support on another issue in return for losing this flagship policy. Mr Peters fired back: “May I remind you, the Labour Party is in government because of my party.”

No reading between the lines necessary. . .

New Zealand First is polling under the 5% threshold, it couldn’t afford to alienate the dwindling number of its supporters.

The capital gains tax, if not dead, is buried while Ardern is Prime Minister, but the threat of other niche taxes is still live.

 


CGT will hit everyone

April 4, 2019

The Taxpayer’s Union has launched a campaign to axe the capital gains tax (CGT) :

New Zealand’s tax system is admired around the world for its simplicity, affordability, and fairness. The capital gains tax proposed by Sir Michael Cullen’s Tax Working Group would put all of this at risk.

It is bureaucratic, costly, and would be the harshest in the world. It will curtail entrepreneurship and investment, meaning a reduction in all New Zealanders’ economic prosperity.

The rate is one of the world’s highest, it would be unfairly levied on inflation, it would require costly and fraught asset valuation, and in many cases it would break the Government’s promises by targeting the family home.

New Zealanders deserve better than this unfair tax.

    • It unfairly taxes people with assets for inflation
    • It will unfairly tax 350,000 home owners who live on a lifestyle block even if they only have one home
    • It will unfairly impose billions of dollars of compliance costs on 500,000 small businesses
    • It will unfairly tax farmers who sell a farm in order to buy another farm
    • It will unfairly lead to higher rents for over a million tenants
    • It is an unfair double tax on 500,000 business owners who already pay company tax
    • It will unfairly benefit tax lawyers and accountants who can exploit American-style loopholes
    • It will unfairly advantage foreign owners of New Zealand shares and disadvantage 800,000 New Zealand investing in local companies

Who will be affected by the CGT?:

Anyone who owns a business, including a farm, shares, bach/crib/holiday home, lifestyle block bigger than .45 hectares,  or rental property; anyone who claims expenses for a home office; has intellectual property, anyone who owns a home and moves into a rest home without being able to sell it within a year, or buys another and can’t sell the first within a year, or goes overseas for a while; anyone who buys a section for a new home that isn’t completed within a year;  any homeowner who forms a relationship with another homeowner;  and anyone who has taxable assets and migrates.

A lot of people would be hit by the tax directly but everyone will be hit indirectly when costs go up and the economy slows.

Even Inland Revenue advised against it:

Tax officials advised the Government 15 months ago that our small companies, start-ups and innovators were better off without a Capital Gains Tax, Leader of the Opposition Simon Bridges says.

“Even before Sir Michael Cullen and others were named to the Tax Working Group in December 2017, Inland Revenue officials told the Government that the absence of a Capital Gains Tax in New Zealand was ‘potentially advantageous to start-ups’.

“Not having a Capital Gains Tax is ‘advantageous’ to every Kiwi willing to give it a go by starting a small business and creating jobs. People who take risks with smart ideas and build something bigger than themselves shouldn’t be discouraged.

“Governments should encourage innovators because smart people will take us to a better future. We need people who take risks and stretch themselves because the ones who succeed create more jobs.

“The Government was also told that the lack of a Capital Gains Tax ‘indirectly incentivises’ people to put more of their own money into a venture because they have the chance of a better return when they sell. That could be somebody who wants to stop working, sell the business and retire. . . “

That’s another consequence that would hit a l9ot of people – disincentive to invest and carry out succession as aging farm and other business owners hang on instead of selling.

The economy is slowing.

If it’s going to reverse that the government must take a much more frugal approach to its own spending and axe the CGT.


We have a choice

March 26, 2019

We are one, we are united.

That was the strongest message seen and heard in response to the shootings in the Christchurch mosques and it came with many heartwarming and uplifting displays of support.

But there was another message from some – a diatribe of blame aimed not just at the shooter but more widely at New Zealanders in general.

As Karl du Fresne wrote:

. . .  in the days following the shootings, an alternative narrative emerged.

According to this alternative narrative, we are a hateful nation of racists, white supremacists and Islamophobes.  . . 

It’s a narrative of self-loathing that wants us to think the worst of ourselves. It’s a narrative that shamelessly seeks to politicise the killings and create a moral panic in the hope not only that we’ll tighten the gun ownership laws – no arguments there – but far more ominously, that we might be persuaded to discard such democratic niceties as freedom of speech. . . 

They were only words, and most didn’t get to the mainstream media,  but they weren’t words that sought to heal or help.

They were words that upset and divided.

The speakers were motivated by anger and politics. They made accusations of intolerance in such a way that showed they are intolerant.

They failed to see what they were expressing was not far away from the bigotry that blinded and drove the shooter.

I am not suggesting they were inciting violence.

I am not suggesting that there is none of the racism and xenophobia against which they were railing.

But they were opportunistically using the massacre to advance their own political agenda – one that doesn’t follow the example of the victim’s families who showed immense grace in the face of immeasurably grief.

Given their politics, these angry people might not have listened to Simon Bridges when he said:

. . . we all have a choice following the violence that tore through their community. To choose fear, hate or anger. Or to choose compassion, love and forgiveness.

Martin Luther King put it so well. “Returning hate for hate multiplies hate, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness, only light can do that. Hate cannot drive out hate, only love can do that.” . . 

It doesn’t matter whether blame and hate come from the left or right of the political spectrum, they are still blame and hate which at best solve nothing and at worst create more.

If these people want positive change they must seek to reconcile and repair, leave the darkness, seek the light, lose the hate and work for love.

 


We can be grateful

March 22, 2019

We can be grateful that, by and large, the response to last week’s massacre has been the opposite of what the killer intended – unity instead of division.

We can be grateful that Muslims in Christchurch and the wider New Zealand Muslim community reacted with forgiveness and inclusiveness.

We can be grateful that by and large, the horror of last week’s massacre has been met with compassion here and overseas.

We can be grateful that, by and large, the response from politicians has been appropriate and non-partisan.

Prime Minister Jacinda Ardern invited Opposition leader Simon Bridges to accompany her to Christchurch on her first visit, following the example set by then-PM John Key who invited the then-Labour leader to accompany him to the city after the earthquakes.

Since then the PM has shown compassion, empathy and resolve and the Opposition leader has offered support when it’s been appropriate but otherwise left her to it, as he should.

We can be grateful that the changes to gun laws announced are reasonable.

We can be grateful that today those who choose to can observe a two-minute silence in honour of the 50 people who died.

We can be grateful that this will provide a prompt to the media to reduce the saturation coverage so they don’t cross the line from news to voyeurism.


Rural round-up

March 16, 2019

Scholar keen to bridge urban-rural divide – Sally Rae:

Emma Subtil sees the opportunities in the primary industries as “endless”.

And when she completes her masters degree in agribusiness at Lincoln University, she would love a job that helped improve relationships between people living in urban and rural areas.

`If I could get a job in that, I’d be a happy girl,” she said yesterday.

Miss Subtil (21) was recently awarded a $1500 World Congress Charitable Trust Scholarship through New Zealand Young Farmers. . . 

New mountain bike park for Wanaka:

A new mountain bike adventure park is set to open near Wanaka later this year.

The park – called Bike Glendhu – will eventually encompass 50km of awe-inspiring trails at Glendhu Bay, a 13-minute drive from Wanaka’s CBD. Located on one of New Zealand’s most picturesque farms at Glendhu Station, the eco-conscious park is designed for riders of all ages and intends to be a natural and positive shared space for the Wanaka community.

Local resident and keen rider John Wilson has joined forces with Glendhu Station owners John and Emily McRae to create the park, set to open to the public in spring 2019. . . 

CGT valuations would pile on costs, benefit no-one:

Valuing every single business, farm, rental property or family bach to comply with a Capital Gains Tax regime would impose billions of dollars of costs on New Zealanders while benefiting no-one apart from valuers, Leader of the Opposition Simon Bridges says.

“The Tax Working Group recommends small businesses, rental properties, family baches and farms be subject to a Capital Gains Tax (CGT) on all gains made after April 2021. As a result, eligible assets without an up to date market value would need a new valuation.

“Valuations don’t come cheap, especially for business owners who want a value robust enough to stand up in court if challenged by the IRD. If every small and medium-sized business owner in New Zealand had to pay for a new valuation at say $10,000 apiece, the cost to the wider economy would be about $5 billion. . . 

Homes wanted for wild horses mustered from Kaimanawa Ranges:

Homes are urgently being sought for 70 wild horses that are being mustered out of the Kaimanawa Ranges next month. 

The Department of Conservation said the animals needed to be removed from the the Waiouru Military Training Area in the Central North Island to keep the herd of wild horses there at a sustainable level of 300.

DOC operations manager Dave Lumley said this allowed for the horses in the herd to maintain best condition and also protects the fragile ecosystems, unique to the Moawhango Ecological Zone. . . 

 

‘Quality issues’ affect avocado growers in difficult season – Charlotte Cook:

Avocado growers profits have taken a hit due to quality issues among 2018’s smaller crop.

New Zealand Avocado chief executive Jen Scoular said wet weather, early maturity and growers not always following best practice were contributors to the difficult season.

Ms Scoular said the main avocado harvest ran from July to February but things had wrapped up a couple of weeks early this year with yields down.

Ms Scoular said 65-70 percent of all avocados grown in New Zealand were exported overseas, about 80 percent of which to Australia. . . 

Gold (and green) rush is underway:

The gold (and green) kiwifruit rush is underway.

The 2019 kiwifruit harvest has officially kicked off with the first of an estimated industry-wide 150 million trays picked and packed in Gisborne.

New Zealand Kiwifruit Growers Incorporated (NZKGI) Chief Executive Officer Nikki Johnson says Poverty Bay leads the charge because the crop matures more quickly there than the rest of the country. “Over March, orchards in the Bay of Plenty, Northland, Counties-Manukau, Waikato, Hawke’s Bay, the lower North Island and Tasman will follow suit – it’s going to be a bumper crop.” . . 

2019 Waikato Dairy Industry Award winners announced:

The major winners in the 2019 Waikato Dairy Industry Awards are first-time entrants who have wanted to enter the Awards since reading about the national winners in 2012 whilst still living in Wales.

Marc and Nia Jones were announced winners of the region’s Share Farmer of the Year competition at the Waikato Dairy Industry Awards annual awards dinner held at the Sir Don Rowlands Centre at Karapiro last night. The other big winners were Joe Kehely, who became the 2019 Waikato Dairy Manager of the Year, and Matt Dawson, the 2019 Waikato Dairy Trainee of the Year. . . 

2019 Central Plateau Dairy Industry Award winners announced:

A first-time entrant with a passion for dairy farming, the environment and animals has won the 2019 Central Plateau Share Farmer of the Year.

Tom Bridgens was announced the winner of the region’s Share Farmer of the Year competition at the Central Plateau Dairy Industry Awards annual awards dinner held at the Energy Events Centre in Rotorua last night. The other big winners were Laurence Walden, who was named the 2019 Central Plateau Dairy Manager of the Year, and Harry Phipps, the 2019 Central Plateau Dairy Trainee of the Year.

The 22-year old is Contract Milking 300 cows on Rex and Loris Bates’ Tokoroa 80ha property and won $15,480 in prizes and four merit awards. . . 

2019 Bay of Plenty Dairy Industry Awards winners announced:

The major winners in the 2019 Bay of Plenty Dairy Industry Awards, Matt Barr & Genna Maxwell believe one of the strengths of their business lies in being fourth-generation custodians of a family legacy, with opportunities for diversification.

The couple were announced winners of the region’s Share Farmer of the Year competition at the Bay of Plenty Dairy Industry Awards annual awards dinner held at the TECT The Action Centre Pongakawa last night. The other big winners were Janamjot Singh Ghuman, who was named the 2019 Bay of Plenty Dairy Manager of the Year, and Alex Sainty, the 2019 Bay of Plenty Dairy Trainee of the Year.

Matt and Genna, are Lease Farmers for Viv Barr, on her 110ha, 410-cow Awakeri property. “Viv is an actively supportive land owner,” they say. . . 

2019 Auckland/Hauraki Dairy Industry Awards winners announced:

The 2019 Auckland/Hauraki Dairy Industry Awards Share Farmer of the Year winners have found success through effective team work, increasing their skills and knowledge, and challenging themselves.

Ethan and Sarah Koch were named the 2019 Auckland/Hauraki Share Farmers of the Year at the region’s annual awards dinner held at the Karaka Pavilion last night and won $12,900 in prizes and five merit awards. The other major winners were the 2019 Auckland/Hauraki Dairy Manager of the Year Kyle Brennan, and the 2019 Auckland/Hauraki Dairy Trainee of the Year, Rebecca Casidy.

Ethan and Sarah (both aged 28), have backgrounds in building and teaching, and were runners-up in the same category in 2018. . . 


More than a CGT

February 22, 2019

The proposed capital gains tax (CGT) has got most of the attention, but worryingly there’s more, including the proposal of a water tax that would affect everyone:

IrrigationNZ says a proposed nationwide water tax would affect all Kiwis, and there needs to be more discussion about how this would impact households, farmers and businesses.

“The Tax Working Party has recommended the government consider introducing a water tax on all types of water use including hydro-generation, household use and commercial water use,” says Nicky Hyslop, IrrigationNZ Chair.

“This would result in higher power and food prices for households and businesses and higher rates bills to pay for the irrigation of parks and reserves as well as direct water tax on household and business water use.”

An increase in the cost of production inevitably leads to an increase in the cost of what’s produced.

The working party is proposing that the water tax could be used to fund the restoration of waterways.

“While we all want to see cleaner rivers, often the solutions to improving rivers require people to change their existing practices both on farm and to prevent urban wastewater discharges into rivers. Just allocating money will not be the most effective solution,” says Mrs Hyslop.

This was proposed before the last election and was rightly criticised for taxing the good to clean up after the bad.

“We need to think about whether a water tax is equitable as water use varies hugely across regions based on rainfall. For example a Christchurch resident uses an average of 146,700 litres of water per year, while the average for a New Zealander is 82,800. Someone living in Christchurch would pay nearly twice as much in a water tax as someone living elsewhere and would also pay more in rates because in a dryer climate the Council will use more water to irrigate their local parks. Is taxing dryer regions such as Canterbury, Otago, Hawke’s Bay and Marlborough more heavily with a water tax a fair way to fund river restoration nationwide?”

Mrs Hyslop says there are similar equity issues for farmers and growers.

“Some regions receive a significant amount of rainfall and farmers don’t need to use irrigation. Central Otago receives less than half the rainfall of Auckland, so farmers and growers rely on irrigation to grow stonefruit, wine and for pastoral farming to provide feed for animals. Only 7% of farmers use irrigation nationwide – why are those farmers being targeted to pay a tax which 93% of farmers won’t pay when there are many regions which have very poor waterways but little use of irrigation?”

Generally waterways with more irrigation are cleaner than those with less or none.

Mrs Hyslop says that a water tax on hydro-electric power generation would also add to power bills for households and businesses and this tax doesn’t make sense at a time when the government wants to encourage the use of renewable energy to meet climate change targets.

The poor already struggle to pay their power bills, why make it worse for no environmental gain?

“Currently a number of regions are suffering from very dry conditions and we need to be developing more water storage as climate change is predicted to bring more frequent droughts in the future,” she adds.

“We disagree with the suggestion in the report that introducing a water tax will encourage greater investment in water storage. If you look at the most recently approved water storage project – the Waimea Dam – a price increase for the dam construction nearly resulted in it not being built. Introducing a new tax on water use will add to be long-term costs of this and similar projects and make them less viable and less likely to be built. We really need more investment in these projects to ensure we have enough water to supply our growing population and get through more frequent future droughts.”

“We also have concerns that farmers and growers in many regions may face significant water tax costs in excess of $10,000 a year which will make it more difficult to fund the environmental improvements we all want to see to improve waterways,” she says.

“The report discusses how a water tax will encourage more efficient water use. There are already a number of existing incentives that encourage efficient water use including electricity costs and regulatory nutrient limit rules which require farmers to only use water when needed. The biggest improvements in water use efficiency come from modernising irrigation systems.Farmers and irrigation schemes have already invested $1.7 billion to modernise their systems since 2011, resulting in significant improvements in water efficiency. Introducing a major new tax will reduce farmers ability to replace an older irrigation system with a more water efficient model.” 

The capital gains and water taxes aren’t the only monsters unleashed by the TWG .

The Tax Working Group has gone much further than a Capital Gains Tax with a raft of new taxes targeting hard-working New Zealanders, National Leader Simon Bridges says.

There are eight new taxes including; an agriculture tax, a tax on empty residential land, a water tax, a fertiliser tax, an environmental footprint tax, a natural capital enhancement tax, a waste levy and a Capital Gains Tax.

“This is an attack on the Kiwi way of life. This would hit every New Zealander with a Kiwi Saver, shares, investment property, a small business, a lifestyle block, a bach or even an empty section,” Mr Bridges says.

“For farmers, who are the backbone of our economy, this is a declaration of war on their businesses and way of life. They would pay to water their stock, feed their crops and even when they sell up for retirement.

“Labour claims this is about fairness, but that’s rubbish. The CGT would apply to small business owners like the local plumber, but not to investors with a multi-million dollar art collection or a super yacht who won’t pay a cent more.

“The TWG has recommended one of the highest rates of Capital Gains Tax in the world. The Government would reap $8.3 billion extra in its first five years from ordinary Kiwis – small business owners, farmers, investors, bach and lifestyle block owners. After 10 years it would be taking $6 billion a year from Kiwis.

“It will lead to boom times for tax lawyers and accountants and even Iwi advisers, given recommendations for exclusions that include Māori land in multiple ownership.

“We believe New Zealanders already pay enough tax and the Government should be looking at tax relief, not taking even more out of the pockets of New Zealand families.

“National says no to new taxes. We would repeal a Capital Gains Tax, index tax thresholds to the cost of living and let Kiwis keep more of what they earn.”

The government keeps trying to counter the accusation it’s not a good economic manager.

Introducing new and higher taxes is not the way to do it.

It should be aiming for higher quality spending not more spending and reducing the burden of tax to allow us all to keep more of our own money.

 


‘When do we stop talking and start doing?’

February 13, 2019

The Prime Minister has promised this is the year the government will deliver, but what and when?

The Mental Health Working group delivered its report and the government’s response is more working groups:

The 21-member working group set up to advise the government’s response to the mental health inquiry has been replaced with several more working groups.

But mental health advocates have said the process runs the risk of unnecessarily repeating the inquiry. . . 

Mental Health Foundation chief executive Shaun Robinson raised concerns.

“Part of our feedback was you have to be really clear what it is you’re asking people, otherwise this could look like the inquiry is just carrying on. When do we stop talking and start doing? . . 

Working groups are beginning to look like mushrooms – breeding in the dark.

The question on when the government stops talking and starts doing applies to a lot of other areas where action is needed and words are all we’re getting.

Take the Prime Minister’s address last week.  It had lots of fine words but not a single concrete policy.

Contrast that with National leader Simon Bridge’s first address of the year which had clear and coherent policy on inflation indexing tax brackets.

 

 


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