Superannuation and Capital Gains Tax
The age at which NZ Super becomes payable has to increase.
It seems pretty obvious from the latest mortality statistics that we're all living longer so the rate at which the Super 'kitty' gets fed and drained must increase. Agreed, it may not be the best vote-catcher ever devised, but the longer the change takes to implement, the more pain will be felt by more people when the inevitable occurs. The current age of entitlement was set when average mortality was significantly lower, so the drain on the public purse to pay super benefits was commensurately lighter. But that has changed dramatically in the last 20 years, and moving the age up to an acceptable and sustainable level is inevitable.
Of course, the P.M. stated that he'd resign if the entitlement age ever moved beyond 65, but it simply isn't possible, expedient, or realistic, for a politician to be held to every promise - especially when the ground is shifting with the addition of new information and evidence.
We'd all like to have sustainable Superannuation at a selected point in our lives, but economic reality dictates that as we live longer, as medical and dietary practices increase the ability to keep working, it's likely that many people will seek to stay in the work-force longer - well past 65, in my view. Raising the age of entitlement has already been adopted in a number of O.E.C.D. territories faced with a similar demographic pattern to that of New Zealand. So it's not as if we're looking at some revolutionary measure which will alienate the senior members (i.e. voters) in the community.
It's really just a matter of common sense, and I believe raising the age could be presented to the population at large as a sensible and pragmatic measure aimed at embedding a more realistic level of sustainability for future generations.
In the same space, is the introduction of Capital Gains Tax - C.G.T. It has been claimed that introducing a Gains Tax "won't work" - but I must confess to not knowing what that means. If it means it won't change investment habits, then I'm sorry the claim that it won't work is 100% incorrect. In the U.K., investment in second and subsequent properties is subject to C.G.T., and while the total tax revenue received is fairly close to the cost of collection, savvy investors avoid the tax by avoiding the investment asset, and seeking better returns elsewhere. So in this respect, the tax is effective - it does work.
Furthermore, as has been pointed out in various media, residential property speculators drive prices up as they take housing stock out of the market purely for the purposes of making capital gain. Of course, it makes sense to exempt the primary residential property, but again it seems to me to make perfect common sense to use a tax instrument of this nature to drive investors to the stock market where more productive use of funds can be achieved.
For sure, introducing a new tax isn't a politicians favourite ploy, but in this instance it makes good sense to discourage speculative behaviour and encourage investments to be made where there is a more appropriate use of the funds available.
However, if someone has any better understanding and can clarify these two issues for me, I'd be delighted to hear from them.
The Laird of Albany