The Second Leaders Debate: A Response to Key on Capital Gains Tax

The media has proclaimed John Key the winner of last night leaders’ debate  because Labour leader David Cunliffe was caught off guard by Key’s question as to whether his proposed capital gains tax would apply to “300,000 family homes held in trusts”.

Given that Key made over $5 million dollars in tax-free capital gains last year, and most National supporters are adept at using things like family trusts for tax avoidance, this is clearly something Key knows a lot about, writes Brian Roper.

The short answer, which Cunliffe should have given, was that those 300,000 houses would be subject to capital gains tax. He should have said this loud and proud. If you own the house you live in then a strong case can be made for exemption from a capital gains tax. But the wealthy and high-income earners generally use family trusts for tax avoidance. It is an absolute disgrace that so many houses are owned by trusts. In my view both LACQs (Loss Accumulating Companies) and Family Trusts should be outlawed.

Ever member of the top 1% should be assigned a case manager from the Inland Revenue, to whom they have to report on a regular basis (let’s take the treatment of beneficiaries by WINZ case managers as the benchmark) to ensure they understand they are obligated to pay tax just like everyone else, and that they do pay it.

Oh that’s right, in New Key-Land it’s OK for WINZ case managers to hassle welfare beneficiaries struggling to survive and provide for their children with inadequate income support, but it is not, according to John Key, OK for the state to introduce effective measures like a capital gains tax to prevent his own supporters from avoiding paying hundreds of millions of dollars in tax each year.