The government has struggled for even a mildly positive headline about their “game changer” Housing lurch to the extreme left. Troy Bowker has given them a lashing as well:
Finance Minister Grant Robertson emphatically ruled out changes to the bright-line test during the election campaign and in anyone’s book the tax changes announced last month constitute a major broken promise.
These changes have been rushed out for political expediency despite IRD strongly advising against them. Buried on page 53 in fine print of the Regulatory Impact Statement published on the IRD website it says “Inland Revenue recommended against both extending the bright-line test and denying interest deductibility”.
In a well-functioning democracy, a re-distribution of wealth of that magnitude should not be rushed out the door in a desperate attempt to be seen to be doing something to fix the housing shortage.
These tax changes should’ve been part of the policies Labour campaigned on so that a legitimate and transparent debate could take place.
The excuse? The facts have changed. That simply does not wash. The facts are going to constantly change in the world we live in and Robertson should’ve borne that in mind before deceiving voters by making false promises.
NZ Herald
A broken promise and a direct lie by the Finance Minister of that magnitude would have been met with howls of outrage if it were a National minister. The compliant and docile media have just let it slide.
The real news is how Labour was forced into doing something, anything, by a diligent approach by National in highlighting the dismal failure to achieve anything in the area.
Both Nicola Willis and Judith Collins have hammered various Housing ministers hard; so hard that, as a result, they’ve all been placed in witless protection.
Willis has been far too nimble and quick-witted in exposing Megan Woods, whose lumbering approach to answering a rather simple question resembles her running style. As a result, the Labour brains trust have now decided that Woods needs protection, both in the house and in public, and so we have seen a quiet tactical withdrawal on that front.
This year the Herald uncovered evidence from an Official Information Act request that Robertson twice ignored advice from Treasury to include landlords in the Business Finance Guarantee Scheme.
In doing so, bizarrely and perhaps revealing Robertson’s true feelings towards property investors, Robertson put property developers and investors in the same category as weapons dealers, whale meat processors and the illicit drug traders as the only other sectors unable to access the preferential loan scheme.
And now we have a new $1b a year tax impost on property investors announced by Robertson without any consultation or public debate and once again, against the advice of Treasury and IRD.
A pattern is emerging of a Labour government with a major chip on its shoulder against property investors in New Zealand.
Labour, and Grant Robertson and David Parker in particular, have giant chips on their shoulders with property investors. That and their petty socialist dislike of anyone who earns more than them on their fat, padded Government salaries.
One thing is certain: the rich pricks they think they are slaying are altogether far more intelligent than those two fools. Their plans to fix housing by hitting investors will not only fail, they will actually achieve the opposite of what they intended.
Property investors are business people. They operate in a market where demand from tenants exceeds the supply of houses.
Most landlords will increase rents because of the tax changes.
Renters who are struggling to save for a house will have less in the bank at the end of each week to put towards a deposit on a house.
In addition the tax on sale under the bright-line test is the easiest to avoid by simply selling in 10 years instead of 9 years and 364 days (or less).
The tax will therefore only be paid by those investors who are forced to sell because of unfortunate circumstances where they must sell and cannot wait for the 10-year clock to tick over.
Rent WILL go up…of that you can be sure. But perhaps the most egregious part of the changes was in relation to interest deductions:
Property investors who borrow pay interest. Interest payments are a cost of doing business like any other cost. That is not a “loophole”. It has been part of tax law for more than 100 years.
If Robertson is going to prevent these expenses being deducted each year, surely they should be allowed to be deducted if there’s a sale at a gain inside 10 years.
These tax changes not only constitute a brazen breach of promises made by Labour during the last election campaign, they have been rushed out without being properly considered or debated and against the advice of the IRD.
If this does not constitute an abuse of power than I’m not sure what does. Trust between the voting public and a Prime Minister is an essential ingredient to a party to remain in power and can easily be lost. Broken promises of this scale do not occur without political consequences and Jacinda Ardern should be well aware of that given the public reaction to these rushed tax changes.
Word from inside Labour is that they think they’ve gotten away with it, and the electoral damage will be slight. I think they may in fact be dreaming, as is often the case with a book-learned academic still thinking that this is all a bit like university debating club.
The good news is that Labour have invested heavily in this, and lack the skills to dismount the dead pony they are currently riding.
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