Ok, so I am a tax nerd. I have seen all sorts of taxes come and go during my career, and I can tell you, within reason, what works and what doesn’t. I can tell you with absolute certainty that capital gains tax will not magically fix the housing market. Our educated readers know this only too well, but it doesn’t stop so-called journalists from spouting off about things that they clearly don’t understand. But I have a little bit of career advice for Ms Bowron; if you are going to write an article about a topic, do at least a tiny bit of research first.
If she did, she would understand that any proposed form of CGT will automatically exempt the family home – not because the government wants to do that, but because it would otherwise be political suicide. This means that the vast majority of houses will not attract the tax at all. Approximately 62% of houses in New Zealand are owner-occupied, which means 62% of houses would not attract the tax when sold. Given that CGT only applies to a house that is sold, and not to owner occupied houses, it means that a relatively small number of houses will be subject to the tax each year. And, bearing in mind that the Bright Line test already taxes the profits on investment properties sold within 5 years of purchase, the actual additional tax take from a CGT on property would not be very much.
So, Ms Bowron, you have not fixed the housing market by your tired and trite claim that CGT will be the panacea that is needed. Not even close.
Her other brilliant suggestions will not fix the housing market either.
Not a day goes by without more reports of escalating house and rental prices, and the Kiwi dream of owning a home slipping further out of reach.
Building whole new suburbs by passing urgent legislation to rezone land would lead to councils having to massively whack up the rates to pay for new roads, schools, transport, hospitals etc. And when rates rise, councils are voted out. As shops retreat from city centres, due to online shopping and people working from home, the empty commercial space could be transformed into housing that requires no new infrastructure.
Stuff.
If you read the rest of the article, she suggests, after a few snotty comments about the people of Wellington, that the David Jones building should be turned into a library, or better still, apartments or ‘affordable housing’, yet somehow she thinks that would involve no new infrastructure. How long can we simply go on adding to the number of users of the existing water and waste water systems without the systems falling apart all together? We cannot continue to keep adding water supply, drainage, sewerage and power connections to the existing systems in Wellington which, as we know, are crumbling already, and expect everything to be fine. The difference between the connections needed for a retail store and those for an apartment block is enormous, but Ms Bowron seems to think it is simply a matter of turning on the existing taps. It would be interesting to see the occupants of 20 apartments using 6 toilet cubicles, one cafe kitchen and no showers, but Ms Bowron seems to think it is all a piece of cake.
As for the suggestion of ‘affordable housing’ on Lambton Quay, that experiment has already been tried in the Pigeon Park (Te Aro) area, with the park now being a centre for sexual assault, drug use and trafficking… and nowadays most people avoid the area like the plague. Not only is she a poor tax advisor, but she isn’t a great town planner either.
In fact, Jane is way behind the times. In parts of Wellington, multi- storey buildings are slowly being converted from commercial premises to apartments, and now that so many public servants seem to want to continue to work from home that trend is likely to continue. But these are buildings where each floor is completely separate from the others, can already be locked off for security, have existing bathroom and kitchen facilities, and the building can easily accommodate a mixture of residential living and commercial accommodation if necessary.
Converting single floors in multi-story buildings, where new owners apply for rezoning and then do most of the work themselves, will be relatively inexpensive and residential owners will use less water than office workers. There will soon be lots more inner-city apartments in Wellington with the conversion of such multi-story buildings, but somehow, I doubt if the David Jones building will be one of them.
As for turning it into a library, well, I am not sure if that is a good idea or not. WCC do have plans to strengthen or rebuild the existing library, but to follow Ms Bowron’s suggestion, the council will have to leave that site empty and then purchase the David Jones building and completely refurbish it, even though it was extensively refurbished about 5 years ago. I’m sure Wellington rate payers will be delighted with the consequence of that suggestion, resulting in a public library on the most expensive commercial street in Wellington and a white elephant where the library used to be.
Still, she obviously thinks these are all great ideas. No journalist ever explains how capital gains tax (or wealth taxes) are going to fix the housing market – they just believe it will. But if it took 15 years from its introduction for CGT to raise a significant amount of tax revenue in Australia, why would anyone think it would be different here?
And, more importantly, why is it that journalists just jump on every bandwagon that comes along without ever, EVER doing even a tiny amount of research to see if what they are saying is remotely correct? We can all see why the level of respect they command has fallen below that of used car salesmen and politicians, can’t we?
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