Kanwaljit Singh Bakshi
You don’t have to be rich to live on a lifestyle block.
There will be a lot of worried New Zealanders as a result of the Government’s efforts to re-engineer our tax system.
We are not talking about the wealthy.
There are 403,883 properties in New Zealand that are larger than 4500 square metres and perhaps 50,000 of those are farms.
That suggests a large number are lifestyle blocks – a home on a big section with some fruit trees and a vegetable garden.
Lifestyle, not business
It could be the three bedroom house on two acres in Wyndham, Southland, listed on Trade Me with an asking price of $260,000. The owner may be hoping that the proceeds will be enough to secure a room in a retirement village.
It could be the home on two acres at Ruatangata, near Whangarei, which is on the market for offers over $249,000. It would not matter that the property is a modest home in need of TLC that may suit someone who can’t afford Auckland prices.
Under a Capital Gains Tax, the Government will grab 33% of the gains when these modest properties are sold even though for those families it is their family home.
It will penalise people who may be more hard-scrabble than hard-nosed.
At the same time, the multi-million dollar family home in Remuera and Oriental Bay will be tax free, but those New Zealanders who choose to buy a block on the outskirts of town get punished.
Is that fair?
Lifestyle block owners will be treated with the same disregard as farmers.
Many farmers don’t feel rich after a lifetime of toiling on the soil. Any gains are likely to be the result of years of hard work.
But lifestylers will not be thinking about the returns on a farm.
They could have a palatial country estate or a modest version of the good life.
The Government will take a third of any gain either way.
The Tax Working Group claimed that the family home will be exempt but that exception is taken away for anyone who lives on a section of more than 4500 square metres.
The reality is, that’s a little over half a rugby field.
Those people are now in the Government’s sights.
Even the family home on a smaller section is not protected.
Anyone who has taken in flatmates or boarders to help pay their mortgage could find it that much harder to make it work.
Anyone running a business from home will be fretting about whether they are building a future or creating a future tax liability.
National will fight the Government’s proposed tax grab every step of the way.
We will repeal the Capital Gains Tax and we will not introduce any new taxes in our first term.
Kanwaljit Singh Bakshi has been a Member of Parliament on National List since November 2008. He is the Party’s Spokesman for Internal Affairs.
