The Herald has an article about a recent English immigrant to NZ. The article says that he may leave the country because he will be paying $30,000 more per year in tax, tipping his business from the black into the red.
Upon thinking about it further, the new tax is a bold introduction of a capital gains tax on shares. The Labour government does not market the move as such, but that is what it is, a capital gains tax. The government calls it ‘a tax on overseas investment’ or ‘the investment tax’. Lets face it, the Labour party is smart. A capital gains tax would be political suicide given New Zealanders aversion to anything by that name. So they have resorted to their usualy tactics, come up with a capital gains tax, leave a big carve out for property, and then rename it something else. Bingo, the general public are happy because capital gains on houses aren’t being taxed.
Another marketing tactic that the Labour party seem to be using to promote the tax is that it will only be applied to those who are ‘rich’. I listened to Cullen on the radio the other night and that was all he emphasised… The tax is not for ordinary New Zealanders, the tax is only for rich people who can afford to invest overseas, and of course if you can afford to invest overseas, you can afford to pay a small tax on unrealised gains.
What are the odds that the ‘investment tax’ will later be extended so that it covers property? Pretty high given that the Stobo report recommended having a singular regime called the IST – Investment and savings tax. The same marketing approach will then be used… The tax is only on rich people, and the general public will think that it’s great.
The government will then wait until the majority on New Zealanders are caught by the tax because of ‘bracket creep’.
This reminds me of this quote by Alexander Tytler:
A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury.