When will I have enough to retire?
Investment companies and other big names are pushing back against a government plan to give them a bigger slice of the nation’s investment boom.
Key points:Auckland property boom has been buoyed by the New Zealand stock market, but has also fuelled housing prices, and could become an issue in the 2019 electionThe government is proposing a tax on large and mid-sized investorsThe tax could raise around $1.5 billion over five years, and is likely to pass ParliamentThe Government is proposing to tax investment companies on their shareholdings in companies that make money from their assets, such as real estate.
This would help fund infrastructure projects and other infrastructure needs.
The Reserve Bank of New Zealand has recommended a levy on large-sized and mid-$100m investors, but that would need to be indexed.
The move comes after the government announced in January that it would give them more support, in a bid to stimulate the housing market.
Investment companies and their backers are saying they will fight the move to raise the income tax on big-size investors.
But Prime Minister Jacinda Ardern said the Government was acting within the law and that the tax was necessary to ensure Kiwis had enough to live on.
“It’s the right thing to do.
We don’t want to raise taxes on the middle class,” she said.”
I think that this is the right time to look at the tax.
It’s important that we keep the tax at this level.”
Ms Arderns said she was confident the tax would pass Parliament.
“This is the most important issue for the economy and the future of the country,” she told reporters.
“We’ve got a lot of work to do and a lot to do to get it right.”
So that’s why we’re bringing forward tax changes and making it easier to raise revenue.
“The Reserve bank has said it is concerned that the levy could be regressive.”
The Tax Office is concerned by the proposed tax on investment companies.
It believes this would have a disproportionate impact on low-income families, especially young families, and would encourage investors to shift capital from the lower income brackets to the top brackets.
“Ms Armfield said the tax could bring in around $500 million a year, with the Reserve Bank forecasting it would generate around $3.3 billion a year.”
And that’s before you take into account that the impact of the tax on other tax liabilities will be more severe than that,” she explained.
Ms Armfields also said the government was seeking a tax change to increase the amount people could deduct from their tax.”
That’s what we are also looking at in the budget, the changes to the income taxes for the middle income brackets,” she added.
The tax proposal is set to pass in Parliament on Monday.
Ms Arden said the focus would be on infrastructure, particularly around Auckland.”
There are some big projects going on across the country, we’ve got the city of Auckland on top of that.
“Aucklanders are going to have a big impact on what the city can achieve in the next five years.”
But that’s not what’s really at the centre of it.
It is a question of how do we provide the infrastructure to get people out of the city, how do they access jobs and housing.
“Ms Archer said the Prime Minister had taken the right decision in announcing the tax proposal.”
When we talk about tax, we need to look very carefully at what it is that is being taxed, how much of it, and how much the Government is supporting that,” Ms Archer said.