NZ POLITICS DAILY: Capital gains tax emerges as key election flashpoint

Labour’s likely capital gains tax (TVNZ: Property investors face capital gains tax under Labour) looks set to be the main point of difference between the two main parties at the election.

That reporters like Duncan Garner Labour tightlipped over capital gains tax describe it as a ‘bold and courageous move’ may owe more to Labour’s previously timid approach on economics and just how far to the right mainstream economic debate has swung in New Zealand.

Nearly all commentators acknowledge that capital gains taxes are mainstream in most western economies.

As the Dim-Post points out Political suicide? there are many more voters affected by Kiwisaver cuts than by a tax on investment properties. Bold or not, it could be an effective strike at National’s economic policy: ‘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’.

For a truly bold view Rob Carr Implosion a good thing picks up John Key’s assertion that a capital gains or land tax would cause a property price ‘implosion’ and argues it would actually be a good outcome. Such a view has been strongly resisted by property investors, bankers and real estate agents who all prospered within the housing bubble but Labour’s policy shows the political centre is catching up with what most voters figured out a while ago – the years of debt fuelled spending and speculation are over.

However, Labour’s proposed CGT appears to be a relatively mild version. It seems to be the sort of ‘CGT you have when you don’t really want a CGT’ – because it exempts the so-called family home. This might be seen as a major flaw in the proposal. CGTs can be very complex – and that’s the big downside of them – they lead to tax avoidance and creative accounting. So by including a major exemption like the family home, you open up a huge potential loophole, and it’s one that can greatly reduce the effectiveness of the tax – because it can be extremely difficult to define a ‘family home’ in a watertight way. If Labour truly wanted to be bold, not only would it not allow exemptions to its CGT – as in most western countries – but it would also propose a land tax and a financial transactions tax.

Meanwhile the big infrastructure bills in Christchurch and Auckland must be paid (Andrea Vance: Infrastructure blueprint ‘step to privatisation’ & TV3: Resilience a focus of new infrastructure spending) so it appears Labour will tell voters that they have to decide between National’s slash and sell approach and Labour’s speculator surcharge.

Some politics are very much business as usual with Labour and National voting together to further increase the SIS powers of surveillance (SIS given stronger powers). And also, as usual, the Greens, led by soon to be retired spokesperson Keith Locke, were the only party to oppose it.

The news that ex-MP David Garrett will not face prosecution (Belinda McCammon: Ex-MP David Garrett cleared of perjury) will be cold comfort for Act. First Garrett and then leader Rodney Hide were sacrificed to revive dismal poll ratings – 10+% was the target after Brash’s ‘make me your leader or I will destroy you’ coup. The latest polls (David Farrar, Stuff: Where the latest polls point) show Act at 2.5% and only 3 MPs. There has been plenty of pain for no gain to date.

Today’s content

Labour’s capital gains tax
TVNZ: Property investors face capital gains tax under Labour
Duncan Garner (TV3): Labour tightlipped over capital gains tax
NZPA: Labour set to reveal tax policy
Alex Tarrant (Interest): Labour leader Goff says tax policies to pay for spending plans will be released in next few weeks
Vernon Small (Stuff): Capital gains tax in Labour’s sights
Adam Bennett (NZH): New property tax will hit tenants, says investor lobby
John Hartevelt (Stuff): Labour’s big policy pay
Rob Carr (Political Dumpground): Implosion a good thing
No Right Turn:  A capital gains tax?
The Standard: Labour capital gains tax rumours
The Dim-Post: Political suicide?

Polling and MMP
David Farrar (Stuff): Where the latest polls point

http://www.stuff.co.nz/national/blogs/david-farrar-by-the-numbers/5232648/Where-the-latest-polls-point

Socialist Aotearoa: Mana – the Map
http://socialistaotearoa.blogspot.com/2011/07/mana-map.html

goNZo Freakpower Brains Trust: The Silent Deficit
http://gonzofreakpower.blogspot.com/2011/07/silent-deficit.html

Andrew Geddis: Well, that was quick…
http://www.pundit.co.nz/content/well-that-was-quick

SIS powers
NZPA: SIS given stronger powers
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10736510

NewstalkZB: More powers for NZ’s spy agency
http://tvnz.co.nz/national-news/more-powers-nz-s-spy-agency-4287253

NZ in Afghanistan
Kate Chapman (Stuff): Goff calls for SAS Aghanistan exit strategy
http://www.stuff.co.nz/national/politics/5231008/Goff-calls-for-SAS-Afghanistan-exit-strategy

Audrey Young (NZH): Friendly fire possible, but no official apology
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10736375

Danya Levy (Dom Post): Key wants speedier news on welfare of Kiwi troop
shttp://www.stuff.co.nz/national/politics/5231807/Key-wants-speedier-news-on-welfare-of-Kiwi-troops

Infrastructure spending
Andrea Vance (Stuff): Infrastructure blueprint ‘step to privatisation’http://www.stuff.co.nz/national/politics/5231853/Infrastructure-blueprint-step-to-privatisation

TV3: Resilience a focus of new infrastructure spending: 
http://www.3news.co.nz/Resilience-a-focus-of-new-infrastructure-spending/tabid/370/articleID/217585/Default.aspx

Lloyd Burr (TV3): Wellington rail to become ‘modern, reliable’ – Joyce
http://www.3news.co.nz/Wellington-rail-to-become-modern-reliable---Joyce/tabid/419/articleID/217641/Default.aspx

David Garrett cleared
Belinda McCammon (Stuff): ACT leaves ‘door open’ for Garrett
http://www.stuff.co.nz/national/politics/5238723/ACT-leaves-door-open-for-Garrett

Belinda McCammon (Stuff): Ex-MP David Garrett cleared of perjury http://www.stuff.co.nz/national/politics/5237131/Ex-MP-David-Garrett-cleared-of-perjury

TVNZ: No perjury charge against former Act MP
http://tvnz.co.nz/national-news/no-perjury-charge-against-former-act-mp-4286578

Edward Gay (NZH): No criminal charges for David Garrett
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10736489

Maori education and welfare
Amanda Fisher (Dom Post): Maori pupils’ needs ‘not met by system’
http://www.stuff.co.nz/national/politics/5238839/Maori-pupils-needs-not-met-by-system

Yvonne Tahana (NZH): Tamaki’s wife takes voting row to court
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10736614

Simon Collins (NZH): Parliament study won’t stop abuse: Tau Henare
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10736337

Paul Easton (Dom Post): Fluency in Maori dying with elders
http://www.stuff.co.nz/national/5231778/Fluency-in-Maori-dying-with-elders

Other
John Hartevelt (Stuff): Gender pay gap in PM’s office three times wider
http://www.stuff.co.nz/national/politics/5238841/Gender-pay-gap-in-PMs-office-three-times-wider

Simon Cunliffe (ODT): Fixated on price, blind to value
http://www.odt.co.nz/opinion/opinion/167870/fixated-price-blind-value

Yvonne Tahana (NZH): Bold bid for common path for Crown, Maorihttp://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10736518

Juanita Copeland (TV3): Rebuild contract awarded ‘behind closed doors’
http://www.3news.co.nz/Rebuild-contract-awarded-behind-closed-doors/tabid/309/articleID/217658/Default.aspx
http://www.3news.co.nz/ChCh-rebuild-contract-awarded-behind-closed-doors/tabid/423/articleID/217658/Default.aspx

RNZ: Councillors demand ‘more open’ contract process
http://www.radionz.co.nz/news/canterbury-earthquake/79185/councillors-demand-'more-open'-contract-process

Russell Brown (Hard News): Radion NZ: Sailing on in straitened times
http://publicaddress.net/hardnews/radio-nz-sailing-on-in-straitened-times/

Amanda Fisher (Dom Post): Kiwis getting rough end of Aussie Stick
http://www.stuff.co.nz/national/politics/5231882/Kiwis-getting-rough-end-of-Aussie-stick

Andrea Vance (Stuff): Call to support palm oil labeling
http://www.stuff.co.nz/national/politics/5235867/Call-to-support-palm-oil-labelling

TVNZ: Parata at odds with Key over Pike River
http://tvnz.co.nz/national-news/parata-odds-key-over-pike-river-4286792

Andrea Vance (Stuff): Mine buyer must try to recover men, says PM
http://www.stuff.co.nz/national/pike-river-mine-disaster/5231743/Mine-buyer-must-try-to-recover-men-says-PM

Adam Bennett (NZH): Claims of wasted opportunities in China ‘plain nonsense’
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10736548

NZH: Tony Blair to speak in Auckland
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10736466

NZPA: Laws and Mair to debate with boxing gloves
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10736444

Dan Parker (TV3): Michael Laws fighting for ‘colonial oppressors’ in charity bout 
http://www.3news.co.nz/Michael-Laws-fighting-for-colonial-oppressors-in-charity-bout/tabid/309/articleID/217516/Default.aspx

RNZ: Union members to picket over Chinese rail wagons
http://www.radionz.co.nz/news/national/79130/union-members-to-picket-over-chinese-rail-wagons

gblog: The right to strike outside collective negotiations
http://greenvoices.wordpress.com/2011/07/05/the-right-to-strike-outside-collective-negotiations/

Dom Post: Little leaves union to campaign
http://www.stuff.co.nz/national/politics/5239272/Little-leaves-union-to-campaign

NZPA: Little steps down from EPMU as he seeks seat in Parliament
http://www.odt.co.nz/news/politics/167829/little-steps-down-epmu-he-seeks-seat-parliament

Kate Chapman/Stuff, with Manawatu Standard: State welcome for Tongan King
http://www.stuff.co.nz/national/politics/5234959/State-welcome-for-Tongan-king