As the arguments for and against Capital Gains Tax go back and forth, an inevitable question rears its very ugly head. What about Maori land? Will that be subject to CGT? On the face of it, there is no obvious reason why not. All land sales are to be subject to CGT. Yet even before the government has come out and signalled its intentions regarding the treatment of the sale of Maori land, we already have those campaigning in favour of a special exemption for iwi. This could make the whole issue, complex as it already is, completely divisive.
First of all, I would like to say that the issue will probably not become a major one, because not much Maori land is ever sold. With the Maori attitude being that they see themselves as tied to their land, it goes without saying that they will not part with it easily. However, there will be times when land is sold, possibly to free up capital for other projects. This will particularly apply to those iwi that have used their settlement funds to set up in business.
While I’m prepared to consider any arguments put forward that suggest exemptions should apply for Maori land, the first of such arguments falls flat on its face straight away. See what you think of this. quote.
Naturally, no-one enjoys parting with their hard-earned cash – which is why the proposed capital gains tax is such a great idea. It fairly taxes cash which is not hard-earned. It taxes money you make from sitting on land and doing nothing. Money you make because you already have enough cash to invest would be taxed under this scheme. It stops double dipping, and closes a loophole which lets investors pay less tax than the rest of us. end quote.
All of that is rubbish, of course. Most people paid for their assets with ‘hard earned’ (and already taxed) money. It doesn’t stop double dipping in any way. It merely taxes the profit made on the sale of an asset. quote.
One possibility is to exempt the “family home” from the tax – this is mostly just a crowd-pleasing idea, which will almost certainly be exploited. end quote.
Yes, the exemption of the family home is definitely being exploited, but not in the way Glenn McConnell thinks. So many family homes have been specifically excluded from the exemption, (lifestyle blocks, homes with a room used as an office, homes that have rented out rooms) that it is almost pointless. quote.
While business people across the nation scramble for excuses about why they shouldn’t pay this very fair tax, iwi leaders have found a reason which actually stacks up: They’ve already had their land “taxed” numerous times. end quote.
Er… what? quote.
The original price paid, whenever it was, is irrelevant to capital gains tax. The land will be valued at the date of the implementation of the tax, and any capital gains made on sale after that will be taxed. Same rules apply to everyone. If there was a loss of capital at some point in the past, it is irrelevant. All that matters is the value of the land now. quote.
By 1975, Māori had about 3 per cent of their land. The other 97 per cent certainly wasn’t sold for a capital gain.
When the Treaty claims settlements came along, Iwi Chairs Forum spokesman Ngahiwi Tomoana said Māori settled for about 2 per cent of the value of their claims.
“We already think we have been taxed 98 per cent of our Treaty settlement,” he told RNZ‘s Te Manu Korihi. end quote.
I repeat, CGT has nothing to do with former values or settlements for less than (what is perceived by the parties to be) fair value. It is a tax on sale price less the value of the asset on the day the tax was introduced. What McConnell is talking about happened decades ago. It is nonsense.
McConnell’s argument seems to be, because Maori have not had all the lands they previously ‘owned’ returned to them, they should be exempt from the application of CGT, because, somehow, he views the fact that 97% of the land was not returned to Maori as a form of taxation. This is nonsense. He is applying one issue – the ‘return’ of Maori land – to another where there is no nexus whatsoever. If only 97% of Maori land was ‘returned’ to Maori, that does not provide an exemption from paying tax. The two issues are poles apart. quote.
Desperate as ever, it appeared the National Party was willing to forgo important facts and histories to make it seem like Māori would be granted some sort of unfair advantage.
Stuff. end quote.
It would be an unfair advantage, and if the government adopts this policy, it could blow the whole issue wide apart. Many groups think themselves to be unfairly disadvantaged by the tax, such as those who have rented out rooms in their homes to make ends meet, or such as people with Kiwisaver funds. If an iwi opts to sell land, it should be treated in the same way as everyone, and it would be an unfair advantage if that were not the case.
Prepare yourselves for more of these arguments though. This one can be batted away easily for the pure idiocy that it is. The next argument may not be quite so ridiculous.