House interest rates

[Naki Rat]

Interesting discussion on the repercussions of Bollard's comments regarding the house market on Nation Radio this afternoon, particularly Bernard Hickey's commentary of what Australia's input to NZ's economy did to stave off the recession.

Link to National Radio program here ...from 3:45 mark on.

So what is the long term solution to NZ's boom - bust property investment habit? Capital gains tax or a finish to offsetting rental income losses against other income streams? Or perhaps a mix of both?

[Hitcher]

A capital gains tax is a political death sentence. LACQs and trusts may be a different matter entirely, depending on the changes that may be mooted. LACQs were the means of allowing the rort that was Bluechip to get traction.

[discotex]

A capital gains tax is a political death sentence. LACQs and trusts may be a different matter entirely, depending on the changes that may be mooted. LACQs were the means of allowing the rort that was Bluechip to get traction.

Yeah take away the tax breaks first and see if you have an effect on the market. I've got no issue with people rolling losses forward like a normal company but offsetting against your salary for one asset class creates an imbalance.

If that fails the next step would be to look at pump-and-dump and find a way to slow down speculation (read gambling) in the property market.

I'd rather encourage the right behaviour than penalise the wrong. With that in mind the better alternative to CGT would be to massively lower tax for all asset classes, employees (especially low paid) and companies and up consumption taxes such as GST.

Lower PAYE would stop people trying to hide their personal tax. Higher consumption tax means those with wealth pay more tax. Simple really.

[Phurrball]

A capital gains tax is a political death sentence. LACQs and trusts may be a different matter entirely, depending on the changes that may be mooted. LACQs were the means of allowing the rort that was Bluechip to get traction.

LAQCs I think Hitcher. Say the words of the acronym.

Thanks to the OP for the Nat Rad linky.

[Forest]

CGT has completely failed to stop the housing boom in Australia.

In my opinion, the government needs to make alternative investments more attractive. They could start by reducing the company tax rate.

[Grahameeboy]

Yeah take away the tax breaks first and see if you have an effect on the market. I've got no issue with people rolling losses forward like a normal company but offsetting against your salary for one asset class creates an imbalance.

If that fails the next step would be to look at pump-and-dump and find a way to slow down speculation (read gambling) in the property market.

I'd rather encourage the right behaviour than penalise the wrong. With that in mind the better alternative to CGT would be to massively lower tax for all asset classes, employees (especially low paid) and companies and up consumption taxes such as GST.

Lower PAYE would sttaop people trying to hide their personal tax. Higher consumption tax means those with wealth pay more tax. Simple really.

Is it Bermuda where there is no income tax but high tax on purchases?

I think Switzerland has something similar but have more local taxes...

Makes sense to me...would stop the poor buying large on credit maybe...but keep food out of high tax as they do in other countries

[Hitcher]

LAQCs I think Hitcher. Say the words of the acronym.

Very laqcs on my part. Sorry.

[discotex]

Is it Bermuda where there is no income tax but high tax on purchases?

I think Switzerland has something similar but have more local taxes...

Many other countries do it in some way or another.

Noumea has no income tax so everything is fucking expensive for tourists due to the consumption based taxes.

Means the locals do ok and the tourists put in a load of tax dollars.

Makes sense to me...would stop the poor buying large on credit maybe...but keep food out of high tax as they do in other countries

Yeah food should be exempt. It's a no-brainer really.

If average house prices were more in line with average wages half the problems in this economy would disappear. Think of the billions that would be freed up for consumer spending (that's based on productivity not based on off-shore credit).