Capital Gains Tax, (again).

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Capital Gains Tax

So the news last night has Bernard Hickey being interviewed and labelled as a “Property Commentator”.  So good on Bernard for being cleverly marketed but he is no more a property commentator than I am a Ballerina.  And this is confirmed by the nonsense he was saying about Capital Gains Tax.  I have talked about this this before but the only way to try and stop the foolishness is to keep it out there in the hope that enough of you with influence do something about it.

So first of all CGT was being promoted as the solution to housing affordability.  The only problem with that is as soon as you accidentally look up any stats at all you discover that Capital Gains Tax in every country that has it has done zero to slow growth as I explained in detail HERE.

So the argument is so fallacious it seems to have been dropped.  Now the so called experts like Bernard are saying it will release funds into businesses which we desperately need.  I can hardly believe he could keep a straight face while he was saying it.  Think about it for a minute.  Property Investors fall into 2 broad groups:

A: Professional multiple owning investors like me, which make up a small minority of total investors and

B: Mum and dad investors who have been shown how to use the equity in their home to buy a second property as a retirement fund.

So the first group will work with Capital Gains Tax and  enjoy the UPWARD pressure more tax puts on housing.  None of us will move out of property into business lending, hello??

And the second group would no more put money into businesses than fly.  Businesses are risky.  90% of them fail.  These people, the vast majority of the 190,000 investors will simply keep the property they have or sell it and leave the money in the bank.  Neither group is going to create business funding.  And if either group did exit housing who on earth is going to house everybody in this country.

It never ceases to amaze me watching people comment on things they know nothing about because they are not actively involved in an industry.

So the only viable reason why the Government is cultivating this drivel can be that they simply see it as an opportunity to increase the tax take and who cares whether it is reasonable or not.  I hope I’m wrong about that but I’m struggling to see any other possible reason why such stupid arguments are being raised to introduce something that doesn’t achieve the desired goals.

If we want to control house prices in New Zealand and increase lending to businesses then the Government either needs to legislate directly, (which would be communist in nature but effective) or realise that in a free market economy we don’t always get what we want and we don’t have t pander to every minority nutcase voice demanding to be heard.

I guess if we are willing to ignore the 90% of the population who think the anti smacking bill is wrong and listen to a handful of unqualified zealots try to bring in unworkable taxes I shouldn’t be surprised really.

Rant over.  If you have any influence anywhere please get this Capital Gains Tax talked about and let’s try and kill this stupidity before it becomes law.

Stay Inspired and Stay Safe ~ Dean Letfus

The Ethical Investing Strategist