David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
(view article + comment)
David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
(view article + comment)
siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
(view article + comment)
Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
(view article + comment)
John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
(view article + comment)

Recent News

House price increases slow as new lending rules begin to take effect - QV - Stuff Business, 1 Nov 2016 New Zealand's hot housing market is showing signs of cooling down.

Global debt hits $152 trillion - New Zealand Herald, 6 Oct 2016 Global debt has hit a record high of US$152 trillion (NZD$217 trillion), weighing down economic growth and adding to risks that recovery could turn into stagnation or even recession, the International Monetary Fund has warned.In...

Business owners confident in economy - survey - 3 News Business, 4 Oct 2016 Kiwi businesses were more optimistic about the state of the economy and their own activity in the September quarter, even as their profits were squeezed. ...

Households losing wealth as debt keeps going up - Stuff Business, 4 Oct 2016 New Zealanders have become poorer over the past year.

Signs of challenges for exporters - NZMEA survey - Voxy, 6 Sep 2016 The latest New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions completed during August 2016, shows total sales in July 2016 decreased 15.27% (year on year export sales decreased by 20.48% with domestic sales decreasing by 6.03%) on July 2015.

Ad enquiry


Balanced taxes needed to help quell asset bubbles

Print-friendly 29 comment(s) Posted in: Blog only

Finance Minister Bill English has recognised the dangers of a recovery led by housing and consumption. He has also indicated a willingness to take the necessary steps to avoid one. Based on past experience a Capital Gains Tax is at the top of the list of initiatives that politicians would like to avoid, but the obvious imbalance in our economy is compelling evidence that a shift to a broader, more balanced tax base is necessary. Even the Government appointed Buckle tax review looks likely to recommend a Capital Gains Tax.

One of the arguments against introducing such a tax centres on the fact that other countries which have a Capital Gains Tax already have still suffered a housing boom. While this is the case, New Zealand’s boom has been the worst.

New Zealand’s increase in prices has outpaced those of our competitors.
As Brian Gaynor illustrated in this table in the Herald this investment in housing has had a pronounced affect on investment in business.

Bank lending to businesses has grown at less than half the rate of lending to individuals and investment in the stock exchange is particularly telling. As the earlier graph showed, Australia has also experienced a housing boom, but better balance as a result of their Capital Gains Tax means that business there has not suffered to the same extent.

There has been a lot of talk over the years about how a Capital Gains Tax is unpalatable to voters, however, more investment in productive activity creating more and better jobs, increasing incomes, more affordable housing and reduced personal tax rates as a result of the broader tax base all sound like very politically salable ideas.

In the January 2009 Register of Pecuniary Interests of Members of Parliament 65 out of the 122 MPs owned two properties or more, so perhaps this is a more pressing reason for the persistent reluctance to deal with our asset tax haven.

Putting aside self interest is always difficult, we will see.

tags: capital gains tax, housing bubble, house prices, lending


0 Comment(s)

No comments have been posted yet

Website URL:
Remember Me:
Email Replies:
Please play the ball not the man.