Posts tagged GST

Capital Gains Tax – the numbers

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I think someone got the numbers MAJORLY wrong on this story. Today it was leaked (probably by the Labour Party) that Labour will introduce a Capital Gains tax policy as part of its election campaign sometime next week, as reported in the NZ Herald.

While all speculation at present, the details appear to be:

  • a 15% capital gain tax
  • excludes the family home
  • excludes property purchased prior to when it is introduced (so around 2012) (this has to be the case, since Govt’s cant pass retrospective laws).

The article reports it will raise around 4 billion.  I think that’s wrong, and here’s why:

  • The tax workging group sais a FULL capital gains tax, on ALL property at the marginal tax rate of 33% would raise around 9 billion (around 2007/8) (they admit this is a very rough figure).
  • It’s estimated that around 15% of property is investment property (ie not the family home).  So 15% of 9 billion = 1.35 billion
  • At a marginal tax rate of 15% this would raise $613 million

Now many of these figures are rough.  Many will even be wrong, but my point is that its VERY hard to raise any large amount from this tax without making either the tax equal to the marginal tax rate (ie 33%) and/or putting it on the family home too – a sure vote killer.

In addition this tax only raises money when property prices are rising.  At present they aren’t ( by any large factor).  So the value from this tax in 2012 might be closer to zero.  In 2013 I would doubt it would raise $100 million.  This si going to create issues for Labour, since none of this helps with paying for their billion of dollars of already announced policies (remember GST off fruit and veges which will cost almost a 1/4 billion alone?)

Now I would also add that I am in favour of some sort of capital profits tax, but not of this sort.  Its too watered down to be effective, and too forced on “tax the rich” to actually do anything other than piss a bunch of people off.

Of course that last point isn’t a worry for Labour – they have so few supporters at the moment they need bold initiatives like this to give it a go.

Black and White Version: Capital gains taxes aren’t all bad – but the one proposed by Labour just wont work, because it wont raise much money.

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Misleading Headline about businesses disatisfied about GST increase

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This is all too common.  The NZ Herlad reported yesterday Half of Kiwi business owners oppose GST hike.

Simple right?  So 50% or so are not happy?   No, not at all.  As stated in the article:

The latest MYOB business monitor of more than 1000 New Zealand business owners has found 31 per cent are dissatisfied with the Government’s support of their business, with Wellington business owners (31 per cent) showing the most dissatisfaction of any region.

So 31% is the HIGHEST dissatisfaction of any region?  That’s less than a third (I say that in case the journalist who wrote it is reading this – as they clearly struggle with fractions).

It goes on to say

Business owners in the retail and hospitality (40 per cent) and construction and trades (37 per cent) sectors showed the highest levels of industry-based dissatisfaction.

So I haven’t event seen ONE figure that’s 50%.  Not half of a region, half of a group, half of ANYTHING, and they are all the top (highest) number they are quoting, so all others are LESS.

In fact the article is so poor, that I cant find ANYWHERE what the actual overall level of dissatisfaction is.   It’s not the 31% that’s mentioned above, as it cant be the same as the HIGHEST of any region unless all regions were the same.    I do know it’s not 50% or anywhere near it.  In fact it MUST be less than 31% (since Wellington has the highest dissatisfaction, all others must be less, meaning the average is less).

Black and White Version: Sloppy Journalism (Journalist even) that makes up headlines or just doesn’t know that half is 50%!

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