Ian Malcolm of Greenlion notes that the Greens proponents have great positive reasons for their push for a 1% wealth tax pa on those with a net worth over $1 million, and 2% on net assets worth over $2 million, although normal household goods worth less than $50,000, including vehicles, would be exempt. Fairer social support, redistribution of wealth.
Wealth inequality is an underlying structural problem, and drives investment away from job creation and into property speculation. Those who have large amounts of wealth should be asked to contribute to help everyone else. Financial gain for the Expected to raise $7.9 billion in its first year – increasing annually due to inflation.
Some important points have been recognised: Increased compliance burden, collating / calculating items such as: What are net assets – do they include bicycles, whiteware, computers, furniture, antiques, paintings, jewellery, stamp / coin etc collections – look around your home tonight. Who will value all the 550,000 private businesses in NZ – annually? Who will value the approximately 4.5 million cars, bikes, caravans (many unregistered) and boats of all kinds in NZ – annually?
Similarly, Malcolm explains Assets in Trust – will a Trust be a separate entity, allowing spreading of wealth? Or perhaps allocated evenly over all discretionary beneficiaries, again creating scope for asset spreading, with that being another reason to Settle or retain Trusts? Housing is not exempt, so a property that increases in value from the Auckland average of about $900k to over $1 million – even after debt there will be a large number of Aucklanders potentially paying this new tax by default, without the cash to do so.
Many “wealthy” taxpayers such as superannuants who have saved hard all their lives to be able to have a few years of peaceful life without worrying about every last cent, farm owners again asset rich but cash poor, plus many others, will have to pay tax out of cash they simply don’t have, many unable to raise mortgages due to lack of income. May cause a “spend don’t save” culture, or even a wealth flight out of New Zealand similar to when income tax was raised many years back, ultimately a long term loss to NZ Inc.
To Malcolm this seems a faulted policy with more questions than answers, a logistical nightmare, massively more difficult than say CGT which Labour have also ruled out in this session. Everyone is entitled to their own opinion – we will wait with baited breath as to any softening of Labour’s present stated position “Jacinda Ardern has drawn a line in the sand by ruling out a wealth tax for as long as she is Prime Minister.“
We see no reason Labour as a majority would back down on that position, at least for this Term of Government. However definitely worthy to take this as an alert of a potential future tax under a different MMP election result next time, so for more information on Xero bookkeeping services, tax accountants and financial consultancies please go to https://www.greenlion.co.nz .
