Monday, January 7, 2008

ZenTiger The issue of the Greens lying is a vexed one

[A reprint - see end of post]
Should we tax the family home? Well that issue is a "vexed one", according to the Green's written policy on Capital Gains Tax (CGT).

The Greens like to make soothing speeches like "the reason to ban smacking is to get people that abuse children. The law will not be enforced against regular mums and dads". So, make the law say one thing and promise another. It seems the same with the Capital Gains Tax on the family home. In speeches - no worries. In writing. Hmmmm.

So the Green Party Submission in 2001 on CGT comes out strongly in favour of a CGT. Here's their summary position from the paper:

The Green Party believes the Review needs to seriously and thoroughly examine a comprehensive capital gains tax (CGT) for New Zealand

Keywords - thoroughly and comprehensive. Key omissions - "but we would recommend against any CGT being applied to a family home"

The only time they discuss how CGT would apply to the family home is in this section:

There is little information available on the effect of CGT in practice. In particular, the treatment of owner-occupied private homes is a vexed one. It would be helpful to consider the impact of a comprehensive CGT on house values over time. To the extent that aggregate capital gains on the housing stock fall, the impact on individual home owners may be positive.

A slower rate of appreciation of house prices makes housing more affordable as well as lowering the asset value of homes. The latter effect does mean that any comprehensive CGT would need to be introduced with a long transition to avoid seriously disadvantaging those who have used home ownership as their main retirement savings plan.

Now lets examine this. What do they mean exactly when they say "the treatment of owner-occupied private homes is a vexed one" and do not follow it up with, "but not really, because we would exempt it"?

And their final sentence about introducing CGT with a long transition period to avoid disadvantaging those who use home ownership as their main retirement savings plan implies that there may well be a CGT on the family home. There is nothing in writing to clarify what they are only prepared to say out loud.

This summary was taken from the Green Web Site, on a document dated 5 September 2005. It is basically an excerpt from their 2001 submission. Jeanette used this on her rebuttal of the Brethren brochure on 3 September 2005. I can't find any updates where the Greens "clarify" this.

So when I say that the issue of them lying is a "vexed one", surely they would agree that I am only speaking favorably in the strongest of terms?

The Greens might be publicly stating their opinion, but they are still submitting policy that invites discussion of a comprehensive CGT, and do not feel obliged to put some information around why they would like the family home excluded from this comprehensive legislation they wish to introduce.

In Green terms its like handing a taser to a policeman during a protest march and saying "we are aginst the use of tasers on protestors".

Some Comments from Original Post:

By Sean | Mon, 01/01/2007 - 3:59pm:
I agree. It is very clear that private residences will be included in their CGT policy.

By ZenTiger | Tue, 02/01/2007 - 12:43pm:
Sure, we got some media coverage, but we still had people telling us that they would’ve voted Green but that we wanted to put a capital gains tax on the family home – one of the lies in the Brethren leaflet. Nonetheless, I’m sure that we only survived the election because we were able to respond quickly, effectively and creatively to the attack by the Brethren. Otherwise, just like the United Future leaflets last time, they would have sat out there and damaged us with their lies.

That's Russel Norman in December 2005, unaware of his written policy, versus his personal belief.

As I said, they want to introduce a comprehensive CGT, claim loudly to the public they don't support it being applied to the family home and then let the government vote in the whole package. ...Like handing out Tasers to police at a protest march.

By Psycho Milt | Tue, 02/01/2007 - 1:17pm:
Perhaps Russel thinks actually reading the policy docs is the MPs' business! Not a good look really - duplicitous, or just incompetent?

By ZenTiger | Tue, 02/01/2007 - 1:30pm:
It was either duplicitous or incompetent when Jeanette labeled that claim by the Brethren as an outright lie, and then provided a link to the source document that said otherwise.

If she had read it, she could have come back with a "we can see how they got that impression but our stated policy has always been to exclude it. We'll update our submission paper accordingly and we'll vote against CGT if the family home is included."

Instead, the danger is a Labour government deciding a blanket coverage is going to be easier to implement than a raft of exclusions, and the Greens, regretfully supporting the whole package for the overall benefits and hastening to add that they are convinced this will still benefit people because it will slow the housing market down.

Except that the rich investor will figure out a convenient way to offset a gain against a nominal loss and the mums and dads will find it difficult to up-size their home as their family grows, or a job opportunity forces them to move location. The retiring couple will suddenly lose a swag of their pension when they sell a bigger house to move into a smaller house.

Then again, the Green Party vision is pushing more people into smaller apartments in the cities as they despise the suburban lifestyle and subsequent pressures placed on the infrastructure (roads, land usage etc).

The issue of a CGT is a vexed one, and I get a sense the Green Party want the entire CGT package, and are only held back by the worry of losing votes.

Related Link: Green Party Submission on Capital Gains Tax

This is a reprint with some comments, from an old post of mine at Sir Humphrey's that offers a counter-opinion to the Greens accusing the Brethren of lying about Green Policy over Capital Gains Tax.

Update 2008: It seems the old submission documents are no longer available, so the links don't work. I will look for alternate copies!

See also my first summary of this: CGT on the family home

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