NZ Herald 3 June 2006

AI agree that no capital gains tax is preferable to the government’s proposed changes, which would tax only some investments.

But I still think a tax on all capital gains, along with a cut in income taxes, would be better. And judging by letters I’ve received from successful New Zealanders overseas and those thinking of leaving this country because of the government’s proposals, I think such a scheme might be as good as any for attracting and keeping talent in New Zealand.

Many talented people would benefit from a lower income tax. And even those who would end up paying more tax in total wouldn’t necessarily baulk at that, as long as the system was simple and fair.

A quote from another reader is relevant here: “I live abroad in New York City after many years in London, and I can tell you the average Kiwi doesn’t think to include thoughts for his/her fellow countrymen when finance and future personal stability come into play.”

He might well be right about the ordinary person. Could it be, though, that the world’s winners — the kind of people you want to attract to New Zealand — look for the best for the country rather than the best deal for themselves?

I also agree that Brent Sheather’s column last week was good. I especially liked his point that the “fat cats” who Michael Cullen wants to tax harder can easily dodge the tax — either by leaving their investments overseas until they die or by bringing all their investments back to Australasia and putting up with the consequences of less diversification. They don’t need optimal portfolios nearly as much as the rest of us.

Sorry if I disappoint you for not being a financial adviser. But my occupations have always been stated at the end of the column.

AI’m not sure how you know whom I’m debunking, but thanks for your comments.

My qualifications are a BA in economic history from Victoria University, an MA in journalism from the University of Michigan and an MBA in finance from the University of Chicago — all of which really help me in my work.

But I’ve probably learnt as much from three decades of covering business, taxes and personal finance for eight newspapers and one magazine in the US, Australia and New Zealand — to say nothing of what this column and its readers have taught me.

AI couldn’t agree more. It’s time to get practical, and the most practical idea is for the government to give us and itself more time.

Why rush through legislation that could have such far-reaching results, and then give people so little time to work out how it will affect them and to take wise action? Act in haste; regret at leisure.

ATo take your last point first, I know of a few brokers who have yelled. Here’s one example, in a report from ABN AMRO Craigs:

“The proposed changes place (offshore share investments) at a taxation disadvantage relative to other asset classes such as domestic shares and rental properties. In our view, it will distort investment decisions and discourage diversification into global equities.

“Diversification is one of the pillars of prudent wealth management, and this tax proposal undermines that core principle.” Well put.

I agree that it’s a pity we haven’t yet seen the tax proposals debated. I hope that will happen in Parliament.

As for the Shareholders Association, Bruce Sheppard reports the following:

“The NZSA has encouraged all of its members to write to Helen, and they are. I am bombarding her with daily emails of new stuff as it comes to hand. You should get your readers to do likewise. You should forward her all your letters, all in separate envelopes. Postage is free, her mail bag needs to be full, she has to understand that this is a defining moment for her government.

“I personally will be doing a submission to the select committee as will the NZSA and GPG.” Sheppard continues. “The thrust of mine is that the playing field is already screwed against overseas investment including Grey List countries as against NZ investment, so this just makes it worse. So when they say they are levelling the playing field they are lying.”

I’m not going to take up the suggestion about forwarding your letters. The people at Parliament will realise that they all came from me, and that won’t carry nearly as much weight as if you all take the trouble to send them yourselves.

I suggest that even those of you who have questions — as opposed to opinions — about the proposed changes turn that into a submission. Why not make the point that this whole thing is horribly complex?

Submissions don’t have to be long. I was once on the receiving end of some submissions to government. We categorized them into groups — the main point of the ones in this pile is X, the main point of the ones in that pile is Y. Then we gave the powers that be a list of the numbers in each category. They certainly didn’t read every last word from every person.

I doubt if the process this time will be very different. So you might as well state your main point, or a few points, clearly at the top, and then add a bit of explanation. But there is little to be gained from going on for page after page.

Send your submissions by email to [email protected] or by mail to The Finance and Expenditure Select Committee Secretariat, Bowen House, Parliament Buildings, Wellington. You can also mail your MP. On the envelope put their name, Parliament Buildings, Wellington — and you don’t need postage when mailing to individuals in Parliament. It would be a good idea to both email and mail if you can. The deadline is July 7.

I haven’t got room to run submissions in this column, but I would be interested to receive copies of them. Last year, in the earlier round of submissions on this subject, the government received 815, of which 712 were from individuals. Let’s get it into the thousands this time.

For inspiration, an excerpt from a letter that Bruce Sheppard sent to some GPG shareholders:

“I am asking you to take direct personal action because it is important. I have always been prepared to say to those in power things that they will find unpleasant. I have been prepared to do unconventional things to achieve just purposes. It hasn’t hurt me yet, and it won’t hurt you either. I am not asking you to embark on civil disobedience, but I am asking you to tell those that can make a difference and who were elected to represent you how this will affect you and why you oppose it.”