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    Compulsory reading for today


    Compulsory reading for today

    Post  canterella on Wed Jan 27, 2010 7:33 am

    So much for working for 'the greater good'.

    Fran O'Sullivan: Tax report a minefield for wealthy MPs

    Bob Buckle's tax report will have many of our more wealthy MPs working their calculators overtime to assess the effect of different reform options on their net wealth.

    Major tax reform always produces winners and losers.

    Buckle's taxation working group went to some lengths to point out just who would win or lose from its reform options.

    We all want to end up in the winners' camp, but most of us are not in a position to influence the outcome. MPs can - and do.

    A flick through Parliament's annual register of MPs' pecuniary interests reveals many parliamentarians could lose out if the Government moved to plug the tax loopholes that sprang up after its predecessor whacked the top personal tax rate up to 39c.

    More than two-thirds of the National line-up have beneficial interests in trusts (entities that the Inland Revenue believes are responsible for a $300 million hole in tax revenues at the current 33 per cent tax rate).

    Then there are investments in rental property (another area which IRD says cost the Government $150 million in lost tax revenue) and the traditional investments in farms and share portfolios.

    The MPs' personal wealth - like those of National's support base - is spread across asset classes which stand to either retain or lose value depending on which of the working group's options the Government chooses to fund major cuts to company and personal taxes.

    The Buckle team estimates significant revenue could be raised through broadening the tax base.

    For instance, introducing a comprehensive capital gains tax would produce up to $9 billion, or $4.5 billion if owner-occupied housing is excluded; a land tax could produce $2.3 billion; levies on imputed residential investment properties $700 million and axing depreciation on buildings $1.3 billion.

    But even before the Buckle team reported, Prime Minister John Key said he was not in favour of broad-brush capital gains taxes. Key contends they are difficult to implement, something the IRD agrees with and now also the Buckle group.

    How fortunate.

    A glance at Key's own list of pecuniary interests shows he would be a sitting duck for a capital gains tax regime given his tally of top-class homes and the share portfolio which he has tucked away in a blind trust.

    His colleagues (and party supporters) will have breathed a sigh of relief that the Buckle group did not make an overwhelming recommendation to pursue this tax.

    read the whole article @

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