Land tax, RFRM tax, capital gains tax all out – Key
The government today shied off any radical changes to the country’s tax system, ruling out all the more difficult options proposed by the Tax Working Group.
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Key’s opening statement a slow burner
A land tax is off the table, so is a risk free rate of return tax on residential property, Prime Minister John Key said in his opening statement to Parliament this afternoon.
So, too, is a “comprehensive” capital gains tax. That could turn out to be weasel words but it is more likely to be carefully chosen words to reflect the fact New Zealand does already have a number of small, specifically targeted capital gains taxes.
The government will include more specific tax changes aimed at property investors in the Budget on May 20 but there is no hint in the statement.
“A land tax is effectively a lump sum tax on people who own the land at the time the tax is introduced, would only fall on people who hold their wealth in one particular form, and would create cashflow problems for many landowners, especially those with lower incomes,” Mr Key said.
An RFRM tax has “some conceptual appeal” but would also create cashflow problems for taxpayers as it is applied at a fixed rate – probably 5% of the value of the property, adjusted for the taxpayer’s marginal tax rate – every year.
And while a capital gains tax is progressive and extends the tax net more widely to areas not currently covered, it “would make the tax system more complex to administer and comply with and may encourage taxpayers to hold on to assets longer simply to avoid tax.”
As for what the government will do, all Mr Key said was that there were gaps in the tax system “around property investments where income is being derived but, in aggregate, no tax is being paid – in fact the government is actually losing revenue in this sector.
“We will therefore be making changes to the way property is taxed, which will result in increased government revenue and more fairness for taxpayers.”
Those changes will be in the Budget on May 20, and will be implemented either with the Budget or shortly afterward.
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Comments
Where are the changes?
Apart from a possible increase in the GST rate and a little dabbling to proprty investment tax rules, there appears to me no major overhaul of the tax system. Certainly appears very few recommendations from the Tax Working Group will be acted on.
Where's the meat?
What a bunch of wet lettuce!!!
What changes?
Like the other commenters, I am left wondering what the hype was all about. Nothing here.
Tax cuts
If personal tax cuts aren't substantially greater than those already promised during National's campaign, we can take this as a net tax increase with the rise in GST.
What a gutless bunch of losers this government are.
Is that it?
Wow, that was the biggest speech he ever gives?
It's really true - he is soft-centred, stands for nothing, does nothing.
That was empty today.
TAX
Well, no decision is better than bringing in some of the committees recommendations that would have done more harm than good.
Tax changes
I am not surprised. Any hard decisions that have the potential of losing votes at the next election are off the agenda. Why bother to appoint advisory groups in the first place if there is no intention to heed the advice given. What a waste of tax payer money!
Wet fish, not lettuce
At least Labour, in all their inadequacies, had the proverbial balls to make a stand and enact reform. We so clearly need some clear headed, sobering economic reform, yet what we’re getting is a placid and pleasing Mr Key, bereft of leadership.
lack lustre, poor,
lack lustre, poor, un-inspiring, weak, politically correct, boring, very cullen, very clark, all out of the socialist manual for economic mis-management.
all he had to do was slash the size of government. slash taxes. sell any remaining needed services to the private sector. yes, privatise!
in doing so, he'd have been heralded an economic genius. instead, we are left paying for an irreversible hike in GST - to justify a lack of desire to slash this monster of a pointless government.
the problem is that phil guff's ramblings are just that.
NZ economy. RIP
Tax and benefits
It is disappointing to see that Working for Families is not being axed. WFF is a disencentive for those on the fringe to improve themselves. Rather than address this issue - get people motivated back into work all the talk is about those who shouldn't be entitled collecting it. Lower taxes and axe benefits such as this; the net result will be a harder working workforce rewarded for their efforts.
A land tax at a low rate was just the answer to spread the tax base, shame!
All key needed was his
All key needed was his tele-prompter. Did Helen Clark write his speech?
Mr Key has no intention of
Mr Key has no intention of fixing the economy. NONE whatsoever
The GST rise equates to 4.3% not a "modest 2.5%". Why?
GST partners with the implications of Nick "Corrupt" Smith's Emissions Scam for an all transaction tax of all taxes.
Key is trying to buy time until those that orchestrated Global Warming work out what to do next.
If Key had any genuine care over NZ's interests, he'd slash the size of government, SLASH THE ETS (now it's been exposed as a fraud) and it's IMPACTS in addition to GST. He would slash welfare. He won't.
Point: A tax reform is a tax reform. It's either a take or not. In Key's case it's a take. You can't confuse economic recovery with tax take diversification.
Memo to New Zealand: Key still supports taxing NZ to death with the Emissions Con. Remember Key still supports the signing of a global government/global warming treaty.
Big distraction going on people!
Well done John
Well done John, a considered and reasonable tax reform package with an aggressive strategy for tackling some of the issues plauging this country that Labour would never have the guts to namely settling once and for all Waitangi claims, violent crime, welfare dependency and the unlocking of some of the natural wealth we have sitting redundant in remote Crown land. You've bagged my vote.
Very poor performance -
Very poor performance - National have thrown away the opportunity to make meaningful changes. What is the point in being 'in' government if you dont govern?
wingers
For those who wanted to see a land tax or some radical reform you clearly do not understand one of the most crtical issues with tax
KISS Keep it simple stupid
Land tax would have required many exemptions: farmers, elderly, maori, and these exemptions all lead to manipulation of ownership and avoidance.
Risk Free Rate of Return: people will manipulate the loans on property via other business structures to ensure there is very little equity in the property and hence very little "return" will be assessed by the tax department.
Stop the use of Trusts and other shelters to lower personal incomes below the threshold for WINZ and gain Working for Famlies tax credits, a legal and imoral wrought.
Get the three marginal tax rates aligned: (personal, company and trust) and people will stop spending time effort consulting fees, lawyers and accountants to "arrange their affairs" to legitimately minimise tax. The wasted $$$$$ can be spent, invested, put to good use rather than funding what is essentially beuracracy.
GST ETC ETC
Wow, I think I will dust off my Accountancy suit, head back to NZ and make lots of money in fee income sorting out those who do not know the difference between a debit and a credit, or maybe my other LLB degree needs the rust removed and back to work again charging a fat fee to unravel the clouded minds of those who cannot see the benefit of a Tax reduction for the increase in GST
land tax
thank you john key for a very considered approach.
it was the tax distortions created by the calcn of depreciation etc that first created the problem/imbalance
thank you for only targeting "revenue producing" rentals,and for considering the issue of cashflow
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