Friday, July 15, 2011

A Diversionary Attack

Adolf does not believe the Labour Party is collectively stupid.

Vicious, mendacious, nasty, duplicitous, despicable, untrustworthy etc, YES but stupid, NO.

Their so-called 'package' released yesterday is gift wrapped in stupidity which makes Adolf suspect it is in fact a smoke screen. A diversion to distract from the real agenda which may well not be released until well into 2013. The package is a softener upper whose purpose is to get people ready for the real BIG TAX GRAB which is Labour's objective. The package is merely a tactic. It is not a strategy.

What makes me think that?

Apart from that lovely old song 'Is That All There Is?' there are three signs.

  1. The package does not do what Labour needs to do. It does NOT demonstrate how they will pay for their election promises which now amount to over $12 billion.
  2. It does NOT actually raise any serious revenue for at least ten years. It sounds good but delivers nothing. Goff already has conceded that he will borrow more than Bill English has borrowed and for longer.
  3. This is a Cunliffe scheme, not a Goff scheme. Cunliffe is front footing the charge to sell this somewhat turgid deal and Cunliffe will be leader during the next parliamentary term.
Numbers 1 and 2 above simply reaffirm the conventional wisdom that Labour knows it cannot win in November. Therefore, all the planning is aimed at 2014. But what will they spring on the public when the real deal is released, some time in 2013?

My guess is that the CGT will morph into a transaction tax or stamp duty on THE FULL SALE PRICE of selected assets. It will not cost Labour's core 29% a penny but it will sock the middle income and wealthy every time they sell something significant. In fact it will be a damned easier sight to 'sell' than a CGT.

Adolf has recently experienced just such a tax here in South Australia. He bought a house and paid an extra $11,000 over and above the purchase price to the state government. He bought a car and paid an extra $600 to the state government.

NZ Labour will essentially shift the current package, with all it's exclusions, to an easy to understand, easy to administer, stamp duty of 1.0% on the sale or transfer of land, residential property, commercial property, company shares, capital stock, goodwill, plant vehicles and equipment, none of which are owned to any extent by its dumbarse, dog eared, face pieced tattood followers who inhabit the lower class 29& of voters.

The beauty of this move for Labour is that the only people who will ever pay this new tax will be the CASHED UP wealthy bastards. The REAL rich pricks out there. And hell, they won't even notice if it's ONLY 1.0%.

For example, when Cathy Odgers parents (for example) sell their dairy farm for say $3.0 mil as a going concern (that's a pretty modest family farm these days) they'll only have to turn over $30k to Cunners. It's unlikely they'd have a mortgage of more than $500k so why will they worry if they've still got $2,470,000 in the kick? That the line the Labour party will take. What could be fairer? They'll shout. Everybody wins! They'll proclaim.

I suggest somebody looks up the aggregate value of farm sales, house sales, business sales, stocks and shares, plant vehicle and capital equipment sales and works out how much dosh Labour will rake in at one percent of the total.

They'll tell you it doesn't affect first home buyers because the duty is paid by the vendor when he receives the cash and the market will adjust house prices downward as a result. (And they'd be right.)

So there you go folks.

Labour's package is nothing more than a publicity stunt designed to get their new Labour leader into the limelight and soften you up for the BIG HIT which is coming later.


kevin said...

and should this scenario ever eventuate, the bulk of monies would be swallowed up in admin/public servants. Trickle down, improvement in our economy? Nil. Losers remain so.

Anonymous said...

Yes, a good heads-up Adolf.

However it will only work where the purchase/sale is of a fixed address in NZ and the purchaser/seller has a NZ identity.

Internet payment, as distinct from Internet Banking has become a moving target as we are all finding out.

By 2014 this facility will be well advanced. Leaders and Fast Followers will find a way, regulatory authorities are sedentary in the sense that they concentrate on local residents.

I bought a small piece of software from Portugal, I paid with the Aussie dollar even though I do not live in Australia and he received his fees in American dollars through a collection agency in Spain.
All legal, all recorded correctly, completely and quickly.

The cost of discovery by NZ IRD would be prohibitive.


smttc said...

In Australia, the purchaser pays the duty. It is too easy to avoid unless the purchaser pays the duty to the vendor who then accounts to IRD.

alex Masterley said...

Don't forget that death duty is and always has been on the labor agenda too.
I'm picking some-one like Nash will drag that out of the bag at some stage in the next term.

gravedodger said...

They had you on the 11k for the land purchase but isn't it Vic that has no sales tax on vehicles. I looked at caravans in the ACT some years ago and I thought the salesman told us to buy in Vic.
If so A night in Melbourne would be preferable to giving it to a bloody taxman.

Anonymous said...

The FTT is a good idea on paper as it gets everyone and does away with a chunk of admin. I would love it to replace every other tax but bet it wouldn't.

Adolf Fiinkensein said...


Yes , you're right but in reality, were there no stamp duty, the vendor would have received $11k more for his house. That's what I was getting at, so maybe Cunliffe needs to find a way to make the vendor do the transaction.