taxing equity?

From: GoAnna !


Just thought I would share some information which came to me via Dolf de Roos' newsletter. This is how the article began and if interested you can read the entire article on www.dolfderoos.com

"July Newsletter

Controlling People by Taxes

The news from New Zealand this week stunned me.

There is, probably at tax-payers expense, a study being undertaken to advise the government on changes to the taxation system that should be entertained.

This week they released their interim report. Known as the McLeod tax review, the most startling suggestion is that too many New Zealanders have money tied up in property, and that to discourage this, we need to tax the equity in those peoples homes (be they owner-occupied or investment properties)."

If anyone knows any more information on this topic I would be interested to hear.


GoAnna !
"Obstacles are those frightful things you see when you take your eyes off your goal."
-Henry Ford
 
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Reply: 1
From: Duncan M


Hi Anna,

We've had an "equity tax" in most Australian states for years, its called "Land Tax".

Duncan.
 
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Equity tax. (Hidden levies)

Reply: 1.1
From: Brett Burt


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We have also had a hidden superannuation levy since WW 2, called the non =means tested old age pension scheme which is still being levied (it =disappeared off tax returns in 1966) except now it is means tested.

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We have also had a hidden superannuation levy since =WW 2,
called the non means tested old age pension scheme which is still being =levied
(it disappeared off tax returns in 1966) except now it is means
tested.

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Equity tax. (Hidden levies)

Reply: 1.1.1
From: Sergey Golovin


Do they have negative gearing system down there?

Serge.
 
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Equity tax. (Hidden levies)

Reply: 1.1.1.1
From: Ctrader .


Down where Serge? Actually, NZ has no Land Tax, Capital Gains Tax, no Stamp Duty and lower income tax rates. Yes, they can also negative gear. As for the Equity Tax, well with a high percentage of home ownership, how do you think a government would fare in an upcoming election year proposing such a scheme.
 
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Equity tax. (Hidden levies)

Reply: 1.1.1.1.1
From: Waverly Bay


Thanks c trader - And that leads me to ask: "why is this NZ proposal so complicated?".

So the NZ gov want to tax investors/(owners?) on their property transactions?

Fair enough.

For a comparative experience .... in Singapore a few years back, to reduce speculation on property transactions, the government simply introduced a capital gains tax on gains made on properties sold within 12 months of purchase.

I would have thought that a capital gains tax would be far simpler than taxing the "unrealised" gains of property owners. There will be valuation issues - which valuer would be acceptable, when should the property be valued and ...if the property drops in value, should a refund of tax be given ?

cheers

waverly
 
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Equity tax. (Hidden levies)

Reply: 1.1.1.1.1.1
From: Ctrader .


Waverley,
Politicians and Civil Servants always seem to love to go the complex route. Speculators (Property Traders and Developers ) are income taxed on their gains. This proposal to tax the equity in property is to discourage everybody tying up their money in property and get it circulating in the economy, but the cynic in me sees another way for a government to get more money to waste. There is no suggestion of taxing equity in any other type of asset. From a property investors point of view though this could have positive spin offs. The little guy sees another tax coming his way and feels he is better of renting and the big boys borrow against their equity to buy more rentals with extra demand and new borrowings to offset their tax liability.
Ctrader
 
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Equity tax. (Hidden levies)

Reply: 1.1.1.1.1.1.1
From: Owen .


You're right Ctrader. The tax is probably needed to pay for all the NZ pollies who voted themselves a 5% payrise 2 weeks ago, their 2nd since July this year.

One of the pollies was interviewed on TV and said that 'they couldn't refused it' even though they proposed the rise themselves. Same the world over unfortunately.

Owen

"Gambling promises the poor what property performs for the rich – something for nothing"
 
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Equity tax. (Hidden levies)

Reply: 1.1.1.1.1.1.1.1
From: Dale Gatherum-Goss


Hi

Another thought to consider is that the pollies come up with these "wonderful" ideas and then ask someone to see how workable the idea is . . . and, if the results of this seems OK, they often "leak" the idea to the press to see what fall out it creates. If the fall out is too much, the idea is shelved for a while (see GST over the last 16 years!!) and if the fall out is not too much it is put into a working party to implement.

Have fun

Dale
 
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Equity tax. (Hidden levies)

Reply: 1.1.1.1.1.1.1.1.1
From: Ctrader .


I have learnt that when this Equity Tax concept was mentioned, the uproar caused it to be dropped immediately. Those Politicians want to keep their jobs along with the pay rises which they don't want anyone else to have. C'est la vie!
 
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Reply: 1.1.1.1.1.1.1.1.1.1
From: Sergey Golovin


Well, I was always puzzled - who gives them all those ideas on the first place, surely politicians themself are not that bright, especially in such technical area as taxation.
So, obviously someone created "report" (like Ralph (?) report, etc.) and politicians running around trying to sell it to the public.
Now, it is matter of funding out who produced that report on first place. Is it someone who is clever enough or jealous enough or both? Is it genuine desire to improve the society or to screw them up or both?

It is like with cars, we all know and talk about cars so much, but when something goes wrong, car repair shop suddenly looks like most reliable business enterprise in the neighbourhood.

Basically what I'm saying is that it is quite often Government Departments give them (politicians) recommendations/reports, which they act on, if the environment is right. What about lobby groups? Where do they fit in the picture? And party machine?

I'll say it again politicians them self are not that good at technical bits. They are good at general staff and they are shroud, but technicalities… I'm not that sure. It takes years to know taxation and accounting in details. How often did you see practicing politician acting as practicing accountant? What was the name of that Liberal Leader – Dr. Huson? And where is he now? Well, he was very good at economics…

But I agree with Dale, they only will introduce something if it does not heart them or even better suits them. And quite often they do have second opinion available to them, on very same way as to us. Now, who gives them second opinion?…


Serge.
 
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Equity tax. (Hidden levies)

Reply: 1.1.1.1.1.1.1.1.1.1.1
From: The Wife


Serge,

I think the politicians ARE bright in the area of taxation, bright in a way of HOW to tax us the hardest way possible.

This drives me crazy, and would be the only reason I would be tempted to leave my beloved Australia is all the tax.

Dont get me wrong, I love to pay tax, I believe in Advancing Australia Fair, this country is worth it, its an awesome place to live and bring up a family, but the tax system is so harsh. I am not an economist, so I cant really say we dont need to be taxed so hard, I just wish we weren't, I'm sure if Australia's number one economist sat me down and showed me how exactly all this taxing is helping I will feel much better, but I will then show him how the tax is poorly affecting so many people.

Just as an example, people on the land ( I'm a long distance primary producer), are taxed to heavily on water. Yes, the government took the liberty of saying that any rain that falls from the sky, belongs to the government, and that if you have any more than 10% of the rainfall on your land, that has fallen from the sky, you shall be charged for it, and yes they come and measure your storage water, and yes they charge for the excess of the land/rainfall/sqm water storage. Where once upon a time a farmer could build a dam and hold rain water in catchments for a drought, he can still do this, but has to pay for the privelage of using the governments rain. OR he could just hold his 10% of rain and let the rest flow into the rivers and creeks which in turn goes into the public dams, and then the government will sell you water by the truck load if you need it. oooh...taxed any which way you look at it.

How did the government get to own the rain? well they went to bed with the greenies, they did a great song and dance campaign for the greenies, because if those dirty rotten farmers ( who supply all the food for the greenies to buy from the supermarket) couldnt hold to much rain, then it would all flow into the creeks and rivers and be ever so environmental, good said the greenies, and they all went to bed together to tax the rain.

Ok, yes some farmers rape the land and water, but not all, some regulation was needed, not another tax, and certainly not a tax on rainfall.

Or maybe I am wrong? I dunno. Tax out of control sucks, yet I havent thought up a better way so I'm no help at all.

TW
~Life is a daring adventure, or nothing at all~
 
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Equity tax. (Hidden levies)

Reply: 1.1.1.1.1.1.1.1.1.1.1.1
From: Michael G


TW,

Maybe they'll do a case study and see how much air different plants produce and tax people for the volume of air produced on their land based on size and quantity :p

"You have been fined $113 for producing 120 kilolitres of air in a 90 kilolitre zone"

"You have been fined $61 for breathing without a permit"

Regards
Michael G
 
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Equity tax. (Hidden levies)

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1
From: Robert Forward


And double demerit points on long weekends for breathing to much and watering your garden to much....

Cheers
Robert
 
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Re: Equity tax. (Hidden levies)

Reply: 1.1.1.1.1.1.1.1.1.1.1.2
From: Brett Burt


Learn Spanish, this is the best tax reduction scheme of all ! BB
----- Original Message -----
From: "propertyforum Listmanager" <listmanager@bne003w.webcentral.com.au>
To: <Recipients of 'propertyforum' suppressed>
Sent: Friday, December 28, 2001 9:55 AM
Subject: Equity tax. (Hidden levies)


> From: "The Wife" <the_wife@freestyler.net.au>
>
> Serge,
>
> I think the politicians ARE bright in the area of taxation, bright in a
way of HOW to tax us the hardest way possible.
>
> This drives me crazy, and would be the only reason I would be tempted to
leave my beloved Australia is all the tax.
>
> Dont get me wrong, I love to pay tax, I believe in Advancing Australia
Fair, this country is worth it, its an awesome place to live and bring up a
family, but the tax system is so harsh. I am not an economist, so I cant
really say we dont need to be taxed so hard, I just wish we weren't, I'm
sure if Australia's number one economist sat me down and showed me how
exactly all this taxing is helping I will feel much better, but I will then
show him how the tax is poorly affecting so many people.
>
> Just as an example, people on the land ( I'm a long distance primary
producer), are taxed to heavily on water. Yes, the government took the
liberty of saying that any rain that falls from the sky, belongs to the
government, and that if you have any more than 10% of the rainfall on your
land, that has fallen from the sky, you shall be charged for it, and yes
they come and measure your storage water, and yes they charge for the excess
of the land/rainfall/sqm water storage. Where once upon a time a farmer
could build a dam and hold rain water in catchments for a drought, he can
still do this, but has to pay for the privelage of using the governments
rain. OR he could just hold his 10% of rain and let the rest flow into the
rivers and creeks which in turn goes into the public dams, and then the
government will sell you water by the truck load if you need it.
oooh...taxed any which way you look at it.
>
> How did the government get to own the rain? well they went to bed with the
greenies, they did a great song and dance campaign for the greenies, because
if those dirty rotten farmers ( who supply all the food for the greenies to
buy from the supermarket) couldnt hold to much rain, then it would all flow
into the creeks and rivers and be ever so environmental, good said the
greenies, and they all went to bed together to tax the rain.
>
> Ok, yes some farmers rape the land and water, but not all, some
regulation was needed, not another tax, and certainly not a tax on rainfall.
>
> Or maybe I am wrong? I dunno. Tax out of control sucks, yet I havent
thought up a better way so I'm no help at all.
>
> TW
> ~Life is a daring adventure, or nothing at all~
>
>
>
> To reply: mailto:propertyforum.18274@bne003w.webcentral.com.au
> To start a new topic: mailto:propertyforum@bne003w.webcentral.com.au
> To login: http://bne003w.webcentral.com.au:80/~wb013
>
 
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Re: Equity tax. (Hidden levies)

Reply: 1.1.1.1.1.1.1.1.1.1.1.2.1
From: Sergey Golovin


All I'm saying folks, is -

If people who "invented" the tax law and regulations do not always know them self how it works and how complex it is, how on earth politician would know. It takes years and years and years to study it in full to be good at it. Like music on sense - takes years to be good at it. Or like medicine, you need formal education as well as seminars, forums, meetings, deals, partnerships, etc. etc., trial and error, trial and error, and trial again.

Simply because they have to deal with so many different issues simultaneously (law and order, finance and taxation, communication and transport, education and community care, military and hospitals, building and infrastructure, etc.), they have no time to study one particular subject in details. So, they have no way of knowing that subject in full even if they had formal education in that particular subject earlier in their lives. They have to relay on someone else’s knowledge and research.

It is obvious that someone behind the seines giving them good professional advise on how to approach or how deal with that issue. Now, the question is who?

Back to that original question - Taxing equity.
Assuming that it is only 10% of population in Property IP game and only 1% who knows what is going on and assuming same percentage figure amongst the politicians - 1%, who knows anything or enough about property investment (which I doubt, simply because they have no time do think about it, they have bigger and better things to worry about), they have to relay on someone else’s information and research how to deal with it. So, that equity tax as well as taxing the rainwater was introduced somewhere by someone.
Someone was determined to push it through to "improve" our society. Politicians looked at it and accepted it, simply because it suited them down to the ground and also it keeps them busy. So they can be proud of their own achievements. Mark the territory - as they say. Mark the territory...Women as good as men...

This one point, the other one is about how heavy we are all taxed in this country. Well, I guess this the price we have to pay to be so greedy. What I mean by this is - the large the country the more money required looking after it. Bear it mind that Australian Antarctica as big as Australia it self, plus all the "colonies" in the surrounding oceans, all the islands etc.
The opposite will be try - the smaller the country the less effort required to look after it, like New Zealand for example.

Well, cutting back on the immigration intake is a good thing to some extent - it helps to push all "unemployment scam" back into the workforce, but it also has reverse effect as well. The less immigrants in the country the less population growth. The less population the less new buildings we need to satisfy the demand...

Now, who would be the next one to advise the Government to increase immigration intake? Wont be me that's for sure. Bake on same circle again?

Happy investing.

Serge.
 
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