Capital gains tax

I should provide a history lesson for Mervyn Cave after his latest fact-free rant defending ‘‘risktakers’’ (March 5).

Employees pay tax on income whereas property developers don’t.

For this reason, Australia introduced a Capital Gains Tax in 1985 for Fair Dinkum justice, not ‘‘envy’’.

New Zealand is now the only one of 35 countries in the OECD without a CGT and the resulting inequality from the ‘‘Casino’’ economy has widened inequality to lock out millions from ever owning a house.

The 2008 Global Financial Crisis was caused by financial deregulation, lobbied by the ‘‘risktakers’’, who traded bundles of disastrous high-risk mortgage in a spiralling pyramid scheme until the bubble burst. Who paid the bill for the worldwide financial collapse and bailed out the banks? You guessed it – not the ‘‘risk-takers’’ but the longsuffering taxpayers, to the tune of trillions.

The same wheeler-dealers in the ‘‘Casino’’ economy even increased their bonuses after the bail-outs.

On a smaller scale, if you had a spare million in NZ without a CGT, you would use it in buying properties for speculation or rent, as equity and rent were doubling on a regular basis. Where’s the ‘‘risk’’ in that?

I have nothing against investments, especially if put into NZ company stock for the benefit of the economy, but the lack of a CGT did nothing to incentivise this.

Following Cave’s ridiculous argument that we were all born with equal entitlement, shall we take it to the extreme before Labour Party expansion of public facilities in the 1930s to the Workhouse and doffing caps to the landed gentry?

Bronwyn Turner

Abridged – Editor