#1 - Nancy said:
2010-04-23 13:01 - (Reply)

in your speech today to the Wellington regional chamber of commerce, you talk about using the tax system to encourage savings, investments and exports and to discourage borrowings, consumption and property speculation. This is to be applauded. However the measures that have been rumoured to be introduced like removing depreciation on residential building and ring fencing losses will hurt property Investors and not property speculators. Speculators/traders do not claim depreciation but are/should be tax on their trading gains as it is their deemed income. The present tax law is ambiguous and rest on the notion of Intent and thus allow some traders to fudge their way out of paying their rightful tax. By introducing your bright red line test and enforcing the present tax laws that tax Trading gains you will achieve the aim of discouraging speculation. Property investors claim depreciation which is merely deferred taxation so ultimately they do pay this tax, but the cash flow allows them to ensure that the properties they provide are not slum dwellings. The Reserve bank has now introduced the concept of Core Funding Ratio which is working well towards controlling borrowing. when you put your budget together and you talk of fairness, please take these points into consideration and ensure that by wanting to rein in the speculators you are nor hurting the investors instead.