Let's talk about tax, baby... We're two weeks out from the election and we know what
the major parties tax proposals are, so it's time to rate them! Let's start with
National, who pretty much want to keep the status quo. Is that good for economic
growth? Well, given that most of our money goes into housing rather than investing
in businesses that create exports and jobs, that is a big fail. Is it simple?
This is one area that National actually get a tick on because our current tax
system is pretty simple. Is it avoidable? In other words, can I pay
an accountant to help me avoid paying as much tax? Absolutely we can in the
current model so they get a fail there. At the moment we've got an 11 billion
dollar hole because of the way we treat property taxation. So, the current system
has massive holes in it and is avoidable. Lastly, fairness. Well, given that in some
recent years the average house has earned more than the average wage–
$50,000 per year the average house has been increasing by– that's absolute
madness, that's not a fair tax system. So, National fails on that mark as well.
Let's move on to Labour and the Greens, or at least as much as we know about
Labour's Tax policy two weeks out from election they haven't really told us
what it is. But let's assume they go with the Green's idea of a Capital Gains Tax,
excluding the family home. Will that help economic growth? No it won't. We've seen
this overseas, all the Capital Gains Tax does is encourage people to not sell the
home or not sell businesses, so you get less turnover happening in the economy
and a drag on economic growth as a result. Is it simple? Another big fail
here for Capital Gains Taxes they are not simple to administer, very
complicated beasts. Are they avoidable? Well, if you're excluding the family home
unfortunately there is a massive gap in this tax system and makes it very
avoidable. People will just put more money into their family home. Currently
we have some family homes with 50 million bucks! You'll see people putting
more and more money into the family home to avoid paying any tax. Another way
that they can avoid paying tax is simply by– if they've got six homes and six
grandchildren, for example, they just give those homes to the grandchildren and
call those their "family homes". There's ways around that system.
Lastly, is it fair? Well this is one area that actually Labour and the Green's policy
is marginally better than National's one, because they will at least tax some of
that increase in capital gain that we are seeing in our housing stock.
Lastly, New Zealand First's policy. Well, given the fact that they have promised about
fourteen billion dollars of extra expenditure every year and about
eighteen billion dollars of one-off capital expenditure, you'd expect New
Zealand First would have a clearly outlined revenue policy to be able to
pay for that... but, they don't. So, what's left is a whole lot of question marks
about how they're actually going to pay for the promises that they're making.
Unless you're going to print money Winnie? No.
And that brings us to TOP's policy.
So, the problem with our tax system at the moment is we put all of the burden
on to wage and salary earners and very little on to assets. We have some of the
lowest taxes on property in the world. People put more money into property than
any other country in the world, and as a result we have some of the highest house
prices in the world. It's an 11 billion dollar hole in our tax system and we
want to close it. That'll allow us to cut income taxes by a third cutting the
burden on wage and salary earners. So, how we will do that is by making sure that
property pays at least as much tax as other investments, such as a bank deposit.
That'll generate about 11 billion dollars and push people into investing
in businesses, that actually create jobs and exports. And that is good
for growth. It is also very simple to administer and very difficult to avoid
because we're not excluding any sort of assets from that. And lastly, it is more
fair, because we're reducing income taxes for wage and salary earners. People are
concerned about having taxes on housing but actually at the moment renters and
people who don't own any assets get totally stung by the current system. Half
of New Zealanders rent, 40% of New Zealanders own nothing, where's their
tax break New Zealand? And finally, of course people are concerned about the
impact of this tax on the elderly. Well, we are allowing them to defer payment
and turn it into an estate duty, which actually exists in most
other countries in the world. Where's the bad? TOP's system wins on every count.