The Aussie approach

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Heed the GST warning

Regardless of the outcome concerning the Government’s attempt to extract even more tax from its citizens, New Zealanders would do well to remember when GST was introduced.

The Labour government promised hand on heart that the new tax called GST would never require increasing above 10 per cent. The reason given: “It is inflation-proof.”

It is indeed inflation-proof, but so too is the proof that you must never trust governments to cease digging their hands into our worn-out pockets.

Jim Simons, Waikanae Beach

The language of tax

It has been interesting to note the difference in the language used by the two different sides of the debate since the release of the report of the Tax Working Group.

The negatives use inflammatory words like ‘‘monster tax grab’’ and ‘‘assault on Kiwi way of life’’, and Guyon Espiner was called a ‘‘toady for Labour’’ on RNZ on Friday. On the other side, in my always humble view, the words are reasonable and to the point.

And I wonder how many of the 80 per cent of the population who have never experienced a capital gain would be influenced by such rhetoric. Amy Adams of National clearly would be affected by a CGT, owning six houses currently, as she does. Selwyn Boorman, Waikanae

Where’s the fairness?

A person living in small-town New Zealand owns their house, plus two rental properties to provide for their old age. Total value of all three properties is less than $1 million, but the rentals are liable for CGT under the proposed tax regime.

A person living in Auckland owns just one house, value much more than $1m, but has no CGT to pay. Where’s the fairness in that?

Arthur Woollard, Levin I see the prime minister supports Michael Cullen’s plans (Ardern backs CGT proposal, Feb 26). She cites the Australian experience of less than 5 per cent of tax coming from this source. There are many reasons for this.

Capital gains aren’t generally yearly, as portrayed by Michael Cullen in his media chats. They tend to be infrequent and lumpy. The CGT approach Cullen proposes will tax individuals at the top marginal rate, whatever their usual marginal rate may be. Australia uses a special tax rate for capital gains, not the marginal rate of income tax.

There are many other more complex reasons why the Australian CGT tax take is lower than under the Cullen approach. Ardern and Robertson should also consider those before leaping to judgment. If they want to claim fairness, they should heed the thoughtful and considered views of Robin Oliver and the other dissenting members of the TWG.

Ivan Hoshek, Camborne [abridged]