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6:00 am, July 16th, 2025 - 55 comments
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Today's Posts (updated through the day):
Everybody is wrong except David Seymour *
New Post up:
Everybody is wrong except David Seymour *
Pondering over my coffee this morning that rates are actually a Wealth Tax, albeit a very small one. So the fact that rates have been rising rapidly over the last few years is actually a very good thing.
There may be some scope for an incoming government of the Left to load other costs on to rates bills, in addition to a Wealth Tax.
These thoughts were inspired by an article in The Guardian today.
“One study suggests a global levy on the top 0.5% could raise about $2.1tn – roughly 7% of national budgets – with the UK alone bringing in around $31bn a year. That revenue could be transformative if used to fund the NHS, education, affordable housing, climate resilience, and long-term care.”
https://www.theguardian.com/politics/2025/jul/15/what-is-a-wealth-tax-and-would-it-work-in-the-uk
While yr theory is good, that would only work if we had folk owning the dwelling they live in.
Because landlording is viewed as a business, those rate bills just get passed down to the tenants.
Just another way the rich get richer.
Landlording, yet another extractive industry.
I don't pass my rates down to my tenants.
[Corrected typo in user handle]
It's been good seeing our IRD take a much more aggressive stance taxing trusts, which is where an awful lot of our untaxed property wealth is tied up.
A broad wealth tax isn't a goer. No-one outside QLDC is making any property gain over the last few years.
A future NZ government should re-establish the Bright Line Test and as you say more aggressive rates. That's the most progressive thing they could do that would actually do some good.
I think the tax we need is on water use and wastewater production, for all industrial users including dairy farmers, water and drinks companies, and power companies. They generate the great majority of the pollution and the export wealth in this country and at the highest environmental cost.
Quite apart from the bright-line test being brought back (Treasury recommends 20 years), should be making it retrospective to when it was first introduced (so National cannot realise anything with its changes).
*an estate tax and related gift duty taxation.
*stamp duty on property over $2m.
*a 1% surcharge on landlord mortgages (exemption for new builds).
"A broad wealth tax isn't a goer. No-one outside QLDC is making any property gain over the last few years.".
You don't need to have any gain at all to be slugged with a wealth tax, at least in the form that the Green Party or TPM are advocating. It is a wealth tax, not a CGT.
Suppose that you had property worth a net $12 million on 31/03/25. The Green Party tax would present you with a wealth tax bill of $250k. Then suppose that the value of the property dropped to $11 million by 31/03/26. That isn't just no gain, it is a loss. You will then still get a bill for a wealth tax of $225k. The fact that you made a loss for the year doesn't matter. You will still, somehow have to find the money. It might be a bit less but it will still be assessed.
I can see the arguments for a CGT on realised gains. I don't like it on unrealised gains and even less on this abortion of a wealth tax.
The Bright Line Test is already a tax on realized gains.
It's the closest we're ever going to need to a Capital Gains Tax here.
And particularly positive because it disincentivises property ownership in favour of other forms of investment. Such as business ownership, share ownership, etc.
We just need to take the BLT back to its stronger form.
Yes but the BLT only works as a CGT if it is 10 years. This government, by making it 2 years, has meant investors can buy a hose, renovate it for a couple of years and then sell it with no tax on the capital gain. So effectively there is no CGT at the moment.
Treasury actually advised the government to make the BLT 20 years.
And in answer to your post earlier, a Wealth Tax does not rely on capital gain so I am not sure what you are talking about there. I think a WT is a wonderful idea and entirely feasible. A Land Tax has merit as well.
For mine any wealth tax should be seen as a credit in any future estate tax liability.
They might pay half their liability in advance (and we need money now).
The BLT at 10 years was hard enough.
My question on a Wealth Tax is simple: what's it for?
Easy-to fund the chronically under-funded health service. I posted a while ago that a health expert said it needs roughly $8 billion more a year to make it work properly.
I don't trust a National government to use it for that, and neither should you.
Under a well-funded NAct
governmentoperation, any Wealth Tax would be gone by school lunchtime – quid pro quo for sorted support.Management by the sorted, for the sorted.
Or suppose you won the first division Lotto prize, several times. How many Kiwis have property worth $12 million? The CoC is govt for the sorted, by the sorted.
I chose the number $12 million because it made the arithmetic easy, and clear.
12 – 2 (the amount that is exempt) = 10.
10 * 0.025 (the 2.5 % rate) = $250k.
If you don't like the amount choose any figures you like. The aim was to illustrate that you get slugged with the wealth tax even if you actually have negative income for the year. It is a crazy tax that will hit people in New Zealand even if people who live overseas will all be exempt.
Yes, a Kiwi with $12 million would be 'slugged' more tax – is that so terrible?
Where we're heading…
22 Jan 2015
I think that conflates two very different things.
Rates are a local tax on property ownership, designed to fund local services. Not a wealth tax. While property value can loosely correlate with wealth, rates are about resourcing councils to deliver essential infrastructure and services based on local needs.
This distinction is especially important now, given the tensions over proposed arbitrary rates caps. Councils are already stretched, with central government offloading responsibilities while limiting their ability to raise revenue. Loading more costs, like national policy priorities, onto rates risks undermining local services and increasing inequality between regions.
If we want a wealth tax, let’s have that conversation transparently at the national level. Because the government already has the machinery to do it properly: it’s called the IRD.
That’s where national tax policy belongs. Not buried in your rates bill.
I agree that a Wealth Tax should come from central government, but I hold to the argument that it is better off people who pay rates rather than the 34% of families who can't afford a house. So it is a de facto WT.
"According to Stats NZ, around 155,000 households feel their incomes aren’t sufficient to meet everyday basic needs. Foodbanks report ever-rising numbers of families unable to feed themselves.
The major source of this lopsided wealth is the housing market. New Zealand has seen the biggest housing boom in the western world. Property owners have ridden the wave to make large tax-free capital gains, while others languish in substandard emergency housing or are forced to live in garages and cars."
https://theconversation.com/nzs-housing-market-drives-inequality-why-not-just-tax-houses-like-any-other-income-208003
With the exception that the landlord class can simply pass along the costs of any increase in rates, taxation, or lending rates to their tenants. Which puts them even further away from property ownership themselves.
Not sure where you get the idea that low income, non-home owning people don't pay rates. It's included in the rent.
Everyone who owns or rents a property that is rated contributes to local body funding, and framing it as if only wealthy people do reinforces the idea that some people have that only direct rate payers should have a say in local body spending.
In principal I agree with the concept of using analogies of existing policies to understand the likely outcomes of untested ones (like new taxes). Regarding rates however I think it should be obvious these look a lot like a land tax, or Bernard Hickeys recent idea of central government collecting tax to be spent on local government infrustructure. This indicates to me that a land tax isn't going to influence the property market to behave markedly different to how it does, and additional rates will be very unpopular (probably political suicide to propose as a party policy).
This doesnt seem like a wealth tax as the asset class levied is too narrow for that however. The point of a wealth tax is to restrain wealth, primarily to limit it intruding into politics excessively.
Its also worth highlighting that most sensible public policy spending is effectively fully self funding. It rapidly comes back via PAYE, GST at a high enough rate to cover any deficit. In reverse this is similar to the way the govt has gutted public spending and exacerbated the deficit with a corresponding diminished tax take.
People should be able to intern to get on the job training while receiving the benefit.
(And partners of those in work should be able to receive the benefit for up to a year, lest this impact on their housing circumstance).
The other issue is allowing people to focus on training (part-time courses and or online).
People should be making progress, rather than discouraged by rejection and hounded by the W and I bureaucracy treadmill.
Another matter is opportunity for part-time work and as John Carter of the north would say paid (community) work programmes should also occur.
https://www.1news.co.nz/2025/07/16/older-jobseekers-struggling-to-find-work-amid-tough-economic-climate/
I’m wary of this idea.
Too often, “internships” end up as a way for employers to get free labour. And under this policy, the government covers the cost via the benefit system.
We already have a problem with taxpayers subsidising poor-quality, low-wage jobs through things like Working for Families. Let’s not expand that logic into unpaid work.
If we’re serious about helping people gain experience, we should be talking about properly paid placements with real protection, and not unpaid or underpaid roles that exploit desperation.
Otherwise, we risk entrenching a two-tier labour market, where the most vulnerable are expected to work for little or nothing in the hope of eventually being deemed “employable.”
Should be able to, they would only do it while it was of worth to them.
Working in return for on the job training is of mutual benefit.
And a reference is nice.
SPC. We already have that. While building I could get "free labour" from the guys sent to ""training" by WINZ.
We were not allowed to pay them because they were on the dole. I was spoilt for choice, as I used to feed them, they were housed when we worked away and I bought them tools. Also I seriously trained them. Which they told me was not the case with most builders. The ones that avoided drugs have since done well.
However, on hindsight, it was still wrong. Though i’m still pleased a gave a few youngsters, a “start” who wouldn’t have had a chance otherwise. Only those who could cope with a long period with low or no pay could afford those "opportunities". And their availability, like that of temporary visa workers etc, means employers could avoid employing people on real wages. Exacerbating the lack of jobs locally. The rest had to take the first low paid Mcjob that they were offered. Perpetually trapping them in low paid "unskilled" jobs.
The fate of many at the moment is
1.a treadmill of job applicants (and interviews) and visits to W and I (the travel is not free).
2.study which comes with course costs and if they do not qualify for Student Allowance is expensive (borrowing for living costs).
Being able to intern voluntarily, while on the JSB, and doing so where there is mutual return in terms of training and also a likely reference provides some way forward.
Are you sure we currently have this?
Your experience was with the building sector, I was thinking more of office work and warehousing (forklift work, warehouse and some light truck driving – urban distribution)
No we do not.
We have people working in a market where some jobs have wages that are too low to support families. Thus we help them provide for their families.
Sure we can support pay equity and the FPA (industry awards) and MW increases and the concept of a LW. But there is nothing wrong with helping people who have low wage jobs start families.
They are not subsidised jobs, they are subsidised families.
And why do they need subsidies in the first place?
Because we don’t have a minimum wage worth a damn. Because we allow public money to be funneled, by the billion, into propping up employers who can’t be bothered paying their workers properly, even as their profits climb year after year.
This isn’t about helping families. That part’s essential.
The real scandal is that we’ve normalised a system where the state underwrites low wages so employers don’t have to. That’s not support: it’s nothing more than a transfer of wealth from taxpayers to shareholders, dressed up as social policy.
If the minimum wage doesn’t provide an acceptable standard of living, it’s not a “labour shortage” or a “cost of living crisis.” It’s a broken market.
And the job of the state isn’t to prop that up: it’s to fix it. With every tool and ounce of power it has.
If not, what the fuck do we have a government for?
+100
… but we don't have an economy weighted with high wage/salary industries.
There are also limits to the state's leverage outside a highly unionized workforce, or even with successful MECAs.
The state can do no more than regulate the (private sector) labour market.
We in fact have one of the highest in the OECD.
It is also high relative to the median wage.
The Labour government tends to see increases as part of an effort to assist low wage workers, whereas National says it helps employment to moderate increases in the amount paid.
What we have is a low median wage because
1.lack of pay equity
2.no FPA (Industry Awards)
3.low productivity (sometimes lack of capital investment)
The MW is $45,000 pre tax, the median wage c$70,000 pre tax and a Job Seeker benefit is closer to $18,000 after tax ($15,000 under 25).
So, we just accept market failure and keep throwing public money at it?
I'd rather set the minimum wage at the living wage, eliminate WFF entirely, and let businesses fail if they can't survive it.
Because if your business model relies on the state topping up your employees' wages, you shouldn't have a social license to operate.
The LW is also not sufficient to support a family without WFF tax credits.
Even some on the even higher median wage get WFF tax credits.
Yes. What happened to Capitalism? "A business that cannot meet it's true costs, should be allowed to fail and make way for more efficient businesses".
Capitalists, however, are the most ardent supporters of Socialism. When they are the ones benefiting!
Walmart is one of the most egregious examples in the world. It is said almost all of their employees are on food stamps. We have our own examples in fruit picking contractors, farm labourers and many others.
No way should employers be given free interns. They are avoiding the costs of training staff already. One of the factors in our underfunded polytechnics and undertrained youth, is employers have successfully passed most of their training costs onto employees and tax payers since the apprenticeship system was gutted in the 90's. Yet another subsidy to employers. It is bad enough that they can go bleating to immigration to subststute for paying and training staff properly. Already, internships are a sure way of entrenching good jobs within the class that can handle lack of pay for several years.
It is simply a fact that interning for free training on the job and a reference (while on JSB) is advantageous.
There is a reference, and the person can leave whenever they want (such as into a job).
Setting the MW at the little higher LW and eliminating WFF tax credits would cause immense family poverty.
Does anyone have any idea what the unemployment rate would be if the working wage was set at the rate for supporting a family (and would that be one or two incomes)?
We have one of the highest minimum wages in the OECD, for the very good reason that we have some of the highest housing and food costs as a proportion of income.
And. It is high compared to median wage, because the median wage is also low campared with costs.
Look at what it would be, if it was still coupled to labour productivity.
Our MW is close to Oz, who have better median wages and stronger unions (Industry Awards) and better productivity.
Australia still supports those in lower income families, despite their better wages.
Opposing WFF tax credits places one in the Don Brash territory (see 2005).
Stopped clock and all that.
We should definitely stop subsidising inefficient businesses. That is not even good capitalism.
Once again we do not subsidise jobs, we subsidise families.
And without that there is more family related poverty.
Not true.
We subsidise up to a living wage level.
So people can afford to survive working in underpaid jobs.
It is a subsidy to employers, just as the accomadation subsidy ends up in landlords pockets.
If there is such a thing, who then pays the subsidy?
Sobering piece on the Stuff website (also in today's print edition of the Post):
https://www.thepost.co.nz/politics/360758007/auckland-vs-nz-parallel-worlds-christopher-luxon?cx_testId=10&cx_testVariant=cx_1&cx_artPos=0#cxrecs_s
The CoC appears from this still to have solid support in Auckland and the "golden triangle" (of which Hamilton and Tauranga are the other vertices). As Mr Malpass remarks, "Labour needs to claw back votes in Auckland over the next 15 months in order to have any shot at being able to form Government".
No surprise there-Malpass is always well to the Right in his views.
Very instructive even with 5% statistical uncertainty.
If you've been through a Labour loss of a previously safe Auckland seat you will see all the signs Malpass and Hurdle note here.
I see the private health insurance industry would like tax breaks for health insurance premiums.
JUST. NO.
1/3 of NZers have private health insurance. One can assume they are the wealthiest 1/3, who have already had tax cuts from this government.
One can also assume these tax deductions will come from the health budget. So the public health system has less money to spend, particularly for the bottom 2/3 who have no other option.
And this whole fecking churn of money and resources continues, away from the bottom towards the top.
God, I hate this government.
The government has decided all future classrooms built will not be on the open plan design. Apparently open plan is not delivering the needs of students: https://www.stuff.co.nz/politics/360759413/government-scraps-open-plan-classrooms
Education methods in NZ have regularly swung back and forth. I guess it's like fashion; black is in one year and out the next.
Do all these education theories make any real difference? Remember Osbert Sitwell:
"My education [takes place] during the holidays from Eton."
The most effective Government education intervention, in recent times, has been school lunches.
Which indicates where the real issues with the "long tail of underachievement" begins.
Otherwise NZ education is a long history of experiments on innocent students. Looking for a "one size fits all" "fix"! The popular ones with right wing Governments are ones that seemingly allow more results with less resources. Repeated as soon as academics and politicians have had long enough to forget the results of the, last time it was tried.
The present Coalition of Cockups however, is engaged in a long standing right wing tradition. Fuck up State provision, so it can be privatised, using tax dollars, for their cronies benefit. Despite all the noise about "improving schooling", literacy etc the sacking of the people who do just that, is indicative of their real aims.
This is as relevant now as when I first wrote it.
The real aims of National’s “Education” policy. « The Standard
KJT you have obviously been around the NZ political rodeo..for quite a time ! Respect : )
I read the link you gave (and good it was) , near the end comments, there was this…..
Where we are now. Talk about prescient?……
At least they don't force milk on kids at school these days. I still remember having to drink it in summer after the stuff had been left in the sun for a few hours.
Likewise at Welbourne Primary, New Plymouth, in the 1950s. The standard response to kids who complained that the taste made them feel sick: "You're lucky to be getting any." Didn't feel like luck. More like torture (drinking it was compulsory and refusal could get you expelled). Public health mandate.
Yes, it's great to see the coalition tackling the evils of a now-debunked fad rushed through by checks notes the last National government.
From my wife’s experience as a teacher: absolutely. They can make a huge difference to students’ learning outcomes. But the problem isn’t always the theories themselves: it’s the way they’re implemented.
The Ministry of Education has access to some brilliant educational theorists and psychologists. What it doesn’t have is the funding or capability to consistently translate that theory into practice in classrooms. Or to evaluate outcomes in anything close to real time.
So, we end up with a patchwork system where teachers are constantly being told to re-train, adapt, and shift their practice based on inconsistent directives. Some of which, frankly, are driven more by political agendas or exaggerated concerns about "wokeism" than by sound pedagogy.
The bland leading the blind. I agree your wife's experience is the learning hinge. My experience of the system when young was that teachers and principals seemed average in expertise, and the agenda was neo-colonial. That's why we spent so much time marching in unison in hot summer sun.
Encultured to be individualistic means participants are all over the place. Collaboration only ever happens when folks operate on the same basis. At the margins, creative potential is optimum. Teachers are trained to head in the opposite direction, in the interests of traditional majority rule. Such internal contradictions guarantee dysfunction by design. No surprise then, that system failure persists as the output of left/right governance. I suggest flipping the damn thing: use the principle of `inmates in charge of the asylum'. When kids collectively self-organise, they have fun. They have the inherent capacity of engaging with constraint simultaneously!