Fed Farmers is just plain wrong on CGT

Federated Farmers has deliberately played politics with Labour’s capital gains tax by delaying the release of an incorrect report they have had since June to just a week before the election, says Labour’s Finance spokesperson David Parker.
“It’s clear that this is an orchestrated attack. Federated Farmers sat on their June report and released it at the same time as National’s attack on our CGT.
“Federated Farmers is just plain wrong. Yesterday I wrote to NZIER showing errors in the report. Further errors have been identified by BERL overnight. Federated Farmers should admit their errors and print a correction.
The report they rely on has two fundamental errors.
·         The report asserts that based on the Australian CGT (which has a different headline rate) the CGT revenue estimates for New Zealand are too high. This is incorrect because, in Australia individuals and small businesses are taxed on just half the capital gain. In New Zealand the whole gain (from the date of introduction) is taxed at the lower 15% rate.
·         The report mistakenly underestimates capital gains because it does not properly calculate all realised gains after the date of introduction. It wrongly focuses on the gain in the year of sale.

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Bill English was right the first time on tax cuts

Bill English was right the first time when he stifled John Key’s dangle of vague tax cut promises, Labour’s Finance spokesperson David Parker says.
“Bill English said before the PREFU that tax cuts weren’t affordable and John Key seemed to accept that, albeit reluctantly.
“Now the PREFU has shown a downturn in growth and tax revenues. The forecast budget surplus under National is forecast to be $500 million a year lower. Tax cuts on the Government’s own figures are even less affordable.
“It’s hard to escape the view that this latest dance is because of the fallout from the stain on John Key’s reputation, caused by the involvement of his office and Judith Collins with Whale Oil. Mr Key is now trying to resurrect his campaign using vague promises of unspecified future tax cuts.
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Government has no solutions to tackle risks to economy

The National Government has no solutions to tackle the serious risks to the economy identified by the Reserve Bank today, Labour’s Finance spokesperson David Parker says.
“Reserve Bank Governor Graeme Wheeler this morning highlighted falling dairy prices, declining log exports, strong immigration and high house price inflation as factors threatening the economic recovery. The Governor also noted that the exchange rate was at an unsustainable level.
“The quarter-point rise in the Official Cash Rate to 3.25 per cent means mortgage interest rates are well on their way towards 9 per cent.
“These pressures will add to the increasing cost of living. Kiwis know times are tough when 46 per cent of working New Zealanders have had no increase in their wage rate in the past year.
“National’s tool box is empty.
“Conversely, Labour has ideas to curb all these risks.
“Interest rates are going up because house prices are out of control in Auckland. Continue reading

Fonterra payout shows need for diverse economy

The drop in the Fonterra payout shows New Zealand needs to diversify its economy and provide the settings to allow other industries and sectors to grow, Labour’s Finance spokesperson David Parker says.
“Fonterra’s 2.9 per cent cut in the forecast milk payout highlights the concerns Labour has repeatedly expressed over our economy being too reliant on the price of one commodity.
“Yesterday’s NZIER forecasts confirm growth in this country is driven by two areas – dairy and the Christchurch rebuild. A significant drop in milk prices could have serious flow-on effects for the economy.
“Labour’s Economic Upgrade will diversify our export economy and support other sectors through policies to support investment, innovation and industry.
“We will encourage investment through universal KiwiSaver that will boost our investment pool. Our capital gains tax will get that money away from property speculation and into productive businesses. This will lift wages and take pressure of house prices.
“We will support innovation through our research and development tax credits and tax incentives to encourage investment in new technology which will encourage businesses to expand.
“Our industry support policies for manufacturing and forestry have been well received by business and more will be released in the coming months.
“Our Reserve Bank Upgrade will lower the dollar and keep interest rates and the cost of capital lower for business.
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Nats’ housing policy shown up by international central bank

National’s housing policy has been shown up by the Bank for International Settlements which says housing taxes are the only way to slow house price rises and LVRs have less impact, say Labour’s Finance spokesperson David Parker and Housing spokesperson Phil Twyford.

“LVRs won’t have a big impact on skyrocketing house prices because property speculators step into the gap left by first home buyers, says Phil Twyford. “We’ve seen that start to happen already.

“Now the Bank for International Settlements has shown what Kiwis know to be the case. LVRs won’t slow house price increases. Only housing taxes, such as a capital gains tax can do that.

“Recent polls show that 52 per cent of Kiwis believe a CGT will slow house price rises compared to just 37 per cent that think LVRs will.

“National needs to stop the damage being caused by LVRs by, at the very least, re-negotiating an exemption for first home buyers. That’s what Labour will do, says Phil Twyford.

“The BIS research is the most comprehensive study yet done and proves that a housing tax such as a CGT is the best tool to tackle house price inflation, says David Parker.

“But National has ruled out a CGT. That is condemning Kiwis to becoming a generation of renters as house prices continue to increase. National only supports LVRs because they favour their backers, while a CGT hits them in the back pocket.

“Labour is the party of first home buyers. The home ownership dream can be kept alive by clamping down on speculators through a capital gains tax on investment properties and through Labour’s KiwiBuild programme to build 10,000 affordable starter homes a year, says David Parker.
25 November 2013 MEDIA STATEMENT

English doesn’t know what sales are hit by his tax on traders

Bill English tries to claim taxes paid by property traders are an effective substitute for a capital gains tax on profits from the sale of investment property yet today admitted he has no idea what proportion of sales are taxed as traders, says Labour Finance spokesperson David Parker.

“The reality is only a small fraction of properties are captured by the tax on property traders. The vast majority earn tax free capital gains and are cross-subsidised by every other tax-paying business and worker in New Zealand.
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OECD says CGT would address inequality and grow the economy

National’s misrepresentation of the OECD’s latest economic survey of New Zealand is cynical bluster and its diversionary tactics should be ignored, says Labour Finance spokesperson David Parker.
“The OECD, like the Labour Party, endorses the Government’s planned return to OBEGAL surplus in 2014/15, but it also highlights that there are myriad social and economic imbalances that must be addressed.
“Rather than looking at the report through rose-tinted glasses, the Government’s time would be better spent implementing policies like a Capital Gains Tax (CGT) that would address growing inequality and our various economic imbalances.
“The OECD says upfront that New Zealand would be wise to implement a CGT to ‘make the tax system more conducive to both growth and equity’.
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