The bach-tax proposal is purely a tax on wealth

by Bill Ralston / 15 January, 2019
RelatedArticlesModule - Bach tax proposal

The Government needs to lift people out of poverty, not punish the “wealthy”.

Sitting on the bach deck, soaking up the sun, watching the surf roll up the beach, I find it hard not to feel fortunate to be able to live the Kiwi dream every summer. Every spring, summer and autumn, actually, with the winter proving just a little too cold and wet even for me.

Before I go any further, I should point out that we are not rich, at least not by my standards. There are three other families with a share of the place. In high summer, it is similar to a mini commune, with a dozen or so folk sunning themselves, whipping up a meal on the barbecue or sitting around the deck yarning over a beer. As I implied, it’s idyllic.

Recent speculation that the Tax Working Group is considering a bach tax doesn’t worry us. That is because we don’t own the shack – we lease it. It may be of more concern to the Māori family who have title to the property, but I presume some tax must already be paid on the earnings from our rent.

There are a couple of dozen ramshackle but charming old places sited on ancestral land along our surf beach. Some are leased to folk like us and others are periodically occupied by members of the owners’ family. The bach-tax proposal is not an income tax or a capital-gains tax, it’s purely a wealth tax, with the Inland Revenue Department assessing the potential income from a bach regardless of whether it is rented out. Curiously, the family who own our one don’t look wealthy at all, nor do the remainder of their bach-owning relatives on the beach. They just look like regular Kiwis.

I suspect elsewhere in the country there will be other bach-owning families nervously patting their pockets at the prospect of such a tax and, should it become law, divesting themselves fairly quickly of a property that will become a liability. Actually, they better sell the family holiday home fairly quickly because in a year or two, there could also be a capital gains tax and a sizeable chunk of the sale price could go into the Government’s coffers.

There is no guarantee there will be a bach tax. Like a capital-gains tax and a host of other revenue-gathering ideas, the Government says any new tax proposals it decides to implement will first be put to New Zealanders at the next election. The danger is that a new tax regime then becomes a highly politicised election issue, a battle between the supposed “haves” and the “have-nots” that will rip a great divide in our society.

Quite why we need a new tax regime isn’t that clear. Finance Minister Grant Robertson has been chuffed to tell us the Treasury is forecasting hefty tax surpluses over coming years. This means the Government is theoretically already collecting more in tax than it is actually spending. Therefore, it’s hard to avoid the conclusion that it simply wants to punish anyone it considers “wealthy”.

The trouble is, the Government’s definition of “wealthy” may include those average Kiwis who have the misfortune to earn a good wage and are somehow keeping their heads above water.

Is it naive to hope a government that aims to close the income gap in New Zealand might concentrate on raising up those at the bottom rather than pulling down those who are precariously a little higher up the income ladder?

This article was first published in the January 19, 2019 issue of the New Zealand Listener.

MostReadArticlesCollectionWidget - Most Read - Used in articles
AdvertModule - Advert - M-Rec / Halfpage


What you need to know about knee replacements
105774 2019-05-26 00:00:00Z Health

What you need to know about knee replacements

by Ruth Nichol

Replacement knee joints are giving thousands of Kiwis decades of service, but don’t rush to get one.

Read more
How a hit romcom took indigenous Aussie star Miranda Tapsell back to her roots
106072 2019-05-25 00:00:00Z Movies

How a hit romcom took indigenous Aussie star Miran…

by Russell Baillie

Miranda Tapsell tells Russell Baillie how she came up with Top End Wedding and why its Northern Territory setting means so much.

Read more
The link between cardiovascular health and dementia
105915 2019-05-25 00:00:00Z Health

The link between cardiovascular health and dementi…

by Nicky Pellegrino

New research into the brain has found that cardiovascular ill health is linked to cognitive decline and dementia.

Read more
Following the call of New Zealand's abandoned freezing works
106317 2019-05-25 00:00:00Z Life in NZ

Following the call of New Zealand's abandoned free…

by John Summers

John Summers wonders if his abiding interest in New Zealand’s abandoned freezing works is actually a long farewell to his grandfather.

Read more
Tech Week: Time to celebrate Aotearoa’s own overlooked moonshot
106359 2019-05-25 00:00:00Z Tech

Tech Week: Time to celebrate Aotearoa’s own overlo…

by Peter Griffin

“We bow down to this idea of Elon Musk or Jeff Bezos going to Mars, when here in our own country, we had the equivalent."

Read more
Kiwi composer John Rimmer: An instrumental figure
106331 2019-05-24 11:09:35Z Music

Kiwi composer John Rimmer: An instrumental figure

by Elizabeth Kerr

Contemporaries and students are paying tribute to composer John Rimmer and his musical legacy.

Read more
Why Caroline Easther is thanking her Lucky stars
106325 2019-05-24 10:39:21Z Music

Why Caroline Easther is thanking her Lucky stars

by James Belfield

Well-known drummer Caroline Easther has stepped out front with a debut solo album.

Read more
Comedian buys Destiny Church's new political party's domain names
106322 2019-05-24 00:00:00Z Politics

Comedian buys Destiny Church's new political party…

by RNZ

Comedian Tim Batt buys up domains for new Brian Tamaki-backed political party.

Read more