Re: Lies Damn Lies And Australian Gdp

Postby philstar on Thu 3/Dec/09 12:29pm

phunk wrote:I agree. But I am arguing against a CGT not arguing that we should not invest in other assets.



why not have CGT as a tool to encourage the investment elsewhere?
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"misanthropic"
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Re: Lies Damn Lies And Australian Gdp

Postby jo on Thu 3/Dec/09 12:31pm

Cool.
I'd also argue that focussing on a CGT should be well down the list of government instruments used. Any barrier to investment in companies should be brought down thats at the pointy end of stimulating the NZ economy - a high efficiency knowledge economy. Property value increases are a side-effect of an improving economy not a cause.

But, yup, if a capital gains tax forced NZers to consider investments other than rental properties as a means to wealth then yes, I can see its place.
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"Windy"
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Re: Lies Damn Lies And Australian Gdp

Postby Slim on Thu 3/Dec/09 12:33pm

jo wrote:I didnt say that it doesnt have its place. Its just at the wrong end of things.
Where NZers have money to "invest" to get a return, it is better for the economy if that money were invested in companies. It stimulates growth in the first place.
Growth in the companies capital -> More employment - > more people required - > more demand for housing - >increased property value.

I think because most NZer dont participate in the sharemarket, thats what makes it arse.

Caveat: I'm no economist.

edit: Slim, I'm being overly simple. I agree, it'd be better to make stuff more efficiently, and at a higher price. That would take R&D - and investment is very handy for that kinda thing.



Problem with that is the people that are investing in residential property generally don't have actual cash, they generally just have some equity in the family home that they can draw against to borrow some more money to buy another title. I don't think the banks will start lending for people to invest in the share market.
Slim
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Re: Lies Damn Lies And Australian Gdp

Postby phunk on Thu 3/Dec/09 12:40pm

philstar wrote:
phunk wrote:I agree. But I am arguing against a CGT not arguing that we should not invest in other assets.

why not have CGT as a tool to encourage the investment elsewhere?

Because it largely doesnt work.

I would rather they removed tax on savings.
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Re: Lies Damn Lies And Australian Gdp

Postby philstar on Thu 3/Dec/09 12:44pm

Slim wrote:Problem with that is the people that are investing in residential property generally don't have actual cash, they generally just have some equity in the family home that they can draw against to borrow some more money to buy another title. I don't think the banks will start lending for people to invest in the share market.


on an individual basis that is true, but holisticly if we have a 10%pa growth in houses prices that money has to come for somwhere? if we say the that ~3% of that is from new construction (which most people don't figure in when investing in houing)
if that was only 6%pa (with 2% construction) then there would be a shit load of money to invest elsewhere.
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"misanthropic"
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Re: Lies Damn Lies And Australian Gdp

Postby philstar on Thu 3/Dec/09 12:47pm

phunk wrote:
philstar wrote:
phunk wrote:I agree. But I am arguing against a CGT not arguing that we should not invest in other assets.

why not have CGT as a tool to encourage the investment elsewhere?



I would rather they removed tax on savings.


you have no argument form me on that, or at least remove the tax on the inflation component on savings earnings :)
but I think if you are going to tax income you should tax all income.
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"misanthropic"
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Re: Lies Damn Lies And Australian Gdp

Postby jo on Thu 3/Dec/09 12:49pm

I dont think we want people to save. We want them to invest in making stuff, better, that the rest of the world wants and is prepared to pay premium for.

CGT would certainly kill Slims scenario. Hmmm. My flatmate is "highly leveraged", in that she has ~6 properties, and I cant figure out where the $$ of hers is in the whole thing. I think its all gone pearshaped since she's got 3 months notice on redundancy and the place she and I lives is on an interest only loan (and she bought at the top of the market feb last year). :blink: And she relies on her company bonus to pay her tax bill at the end of the year. :huh:
I wonder what it would have taken for her to invest in companies instead...
jo
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"Windy"
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Re: Lies Damn Lies And Australian Gdp

Postby lloydy on Thu 3/Dec/09 12:54pm

jo wrote:I didnt say that it doesnt have its place. Its just at the wrong end of things.
Where NZers have money to "invest" to get a return, it is better for the economy if that money were invested in companies. It stimulates growth in the first place.
Growth in the companies capital -> More employment - > more people required - > more demand for housing - >increased property value.

I think because most NZer dont participate in the sharemarket, thats what makes it arse.

Caveat: I'm no economist.

edit: Slim, I'm being overly simple. I agree, it'd be better to make stuff more efficiently, and at a higher price. That would take R&D - and investment is very handy for that kinda thing.


Agree investing in Property adds pretty much zero to our overall economy and international prospects.

The fact that that there is 0% CGT charge on any gains in property investment on 2nd & more homes makes it more attractive simply tax wise in comparison to other investments, and hence those stats recording % invested in property in NZ.

Pretty much all other countries have some kind of capital gains tax on non main residences. It would be easy to enforce, but no doubt there's little political will for it (self interested parties)
lloydy
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Re: Lies Damn Lies And Australian Gdp

Postby phunk on Thu 3/Dec/09 12:56pm

jo wrote:I dont think we want people to save. We want them to invest


Where would the money to invest come from if not from savings? By savings I dont mean putting it under a mattress. Having money in a bank account is an investment.
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Re: Lies Damn Lies And Australian Gdp

Postby phunk on Thu 3/Dec/09 12:59pm

lloydy wrote:Agree investing in Property adds pretty much zero to our overall economy and international prospects.

The fact that that there is 0% CGT charge on any gains in property investment on 2nd & more homes makes it more attractive simply tax wise in comparison to other investments, and hence those stats recording % invested in property in NZ.

Pretty much all other countries have some kind of capital gains tax on non main residences. It would be easy to enforce, but no doubt there's little political will for it (self interested parties)


We already have a CGT on properties that are purchased for the purposes of resale and capital gain, its not really enforced now and its not very easy to enforce if you widen it either. How do you adjust for capital improvements for example?
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Re: Lies Damn Lies And Australian Gdp

Postby philstar on Thu 3/Dec/09 12:59pm

phunk wrote:
jo wrote:I dont think we want people to save. We want them to invest


Where would the money to invest come from if not from savings? By savings I dont mean putting it under a mattress. Having money in a bank account is an investment.


yer but banks will just lend it to someone to buy a rental property :p
Last edited by philstar on Thu 3/Dec/09 1:04pm, edited 1 time in total.
philstar
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"misanthropic"
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Re: Lies Damn Lies And Australian Gdp

Postby philstar on Thu 3/Dec/09 1:04pm

phunk wrote:We already have a CGT on properties that are purchased for the purposes of resale and capital gain, its not really enforced now and its not very easy to enforce if you widen it either. How do you adjust for capital improvements for example?


the simple what to do it is to put it in two categories, either its capital gains and you have to pay 12.5% of the difference between what you paid for it and sold it for, or its a development and you pay 30% of the difference between what you paid for its and what you sold it for less expenses + FBT if you lived in it.
philstar
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"misanthropic"
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Re: Lies Damn Lies And Australian Gdp

Postby phunk on Thu 3/Dec/09 1:06pm

philstar wrote:
phunk wrote:We already have a CGT on properties that are purchased for the purposes of resale and capital gain, its not really enforced now and its not very easy to enforce if you widen it either. How do you adjust for capital improvements for example?


the simple what to do it is to put it in two categories, either its capital gains and you have to pay 12.5% of the difference between what you paid for it and sold it for, or its a development and you pay 30% of the difference between what you paid for its and what you sold it for less expenses + FBT if you lived in it.


So more complications to an already overcomplicated and economically destructive tax system :thumbsup:
phunk
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Re: Lies Damn Lies And Australian Gdp

Postby philstar on Thu 3/Dec/09 1:13pm

phunk wrote:
philstar wrote:
phunk wrote:We already have a CGT on properties that are purchased for the purposes of resale and capital gain, its not really enforced now and its not very easy to enforce if you widen it either. How do you adjust for capital improvements for example?


the simple what to do it is to put it in two categories, either its capital gains and you have to pay 12.5% of the difference between what you paid for it and sold it for, or its a development and you pay 30% of the difference between what you paid for its and what you sold it for less expenses + FBT if you lived in it.


So more complications to an already overcomplicated and economically destructive tax system :thumbsup:


you were the one who asked about capital improvements? all I was saying that if its a house you pay 12.5% on what you make, and have to suck and capitol improvements. if its a business to make money then its just like an other business.
philstar
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"misanthropic"
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Re: Lies Damn Lies And Australian Gdp

Postby jo on Thu 3/Dec/09 1:18pm

philstar wrote:all I was saying that if its a house you pay 12.5% on what you make, and have to suck and capitol improvements. if its a business to make money then its just like an other business.

:thumbsup:
jo
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"Windy"
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