NZIER warns of double dip, National's response is economic darwinism
Double dip recession still on horizon
A leading economic thinktank has again raised the question of a double dip recession for New Zealand.
The New Zealand Institute of Economic Research's latest quarterly report, published today, forecasts "wintry" economic conditions as the country heads into summer but spending remains muted.
"The economic recovery has reversed ... Critical indicators like house sales and QSBO (Quarterly Survey of Business Opinion) domestic trading activity point to a slow finish to the year, even without the destruction and disruption of the Canterbury earthquake," the report said.
NZIER, which has remained persistently downbeat in its forecasting this year, said a double dip recession cannot be ruled out, but "is not our central scenario".
So what is national's response to this global economic crises caused by neoliberal, deregulation, low tax, milton Friedman free market dogma?
Economic Darwinism.
National have decided to bash the filthy bennie, and those that can work, be put to work, those who aren't productive however are to be thrown onto the scrap heap of the underclass. The bullshit figures that the ideologically stacked Welfare Razor Gang are using to justify forcing the most vulnerable in NZ back to work or have their benefits cut should anger any fair minded NZer with a passion for social justice because we know as the equality in society falls, the worse that society becomes.
This recession is barely starting and if Christmas is as dreadful to retailers as it could be in NZ this year, we could have the next vast wave of lay offs early next year in retail.
This meltdown will continue right when public services and welfare are being cut. As the poor are asked to do with less because greedy corrupt Wall st. corporates pyramid-scheme-crashed the global economy, there will be a rising anger and that anger will be ripe for political expression
posted by Bomber @ 9:03 am
22 comments
22 Comments:
How do you propose that the government borrows more money for social services, whilst avoiding a credit downgrade?
Attacking the disabled, defending economic darwinism - where do you find the time to be an apologist for Israel Scott?
I've heard of a bind follower but you take it to a new level. I've already blogged on where we find the money Scott, why do you post pointless questions?
In the post where you rave about no state assistance for the disabled to teach them independence I talk about where we find the extra revenue to support the disabled.
I love how you always avoid explaining why the most vulnerable should shoulder the costs for corporate greed from Wall St.
Thats right you want to tax land owners and financial transactions. This will increase rents, put up costs for those with mortgages.
In borrowing offshore, you may force a downgrade of our credit rating, leading to higher interest costs. This will put further pressure on mortgage holders, and businesses who rely on credit.
At the same time you are increasing the financial debt on future generations, who have to pay this money back.
Your prescription would prolong the recovery.
And I have never attacked the disabled in my life.
Thats right you want to tax land owners and financial transactions.
Oh so you did read it, you are just trolling, silly me.
This will increase rents, put up costs for those with mortgages.
In borrowing offshore, you may force a downgrade of our credit rating, leading to higher interest costs. This will put further pressure on mortgage holders, and businesses who rely on credit.
At the same time you are increasing the financial debt on future generations, who have to pay this money back.
A Tobin Tax will DAMPEN harmful speculative activity while a land tax will do the same. Your desire to walk right back into the bubble is laughable.
Your prescription would prolong the recovery.
bullshit, they will pull us away from the worst elements of the double dip depression you're neoliberal free market dogma has doomed us to scott.
And I have never attacked the disabled in my life.
Your position was i was patronizing for demanding the most vulnerable not face deep cuts for a crises they had no hand in making, your prescription was that the disabled should receive no aid from the state to teach them independence. If you want to call that something other than an attack, go ahead.
Speculation is taxed. If you are a property speculator, and you make a profit, it is taxable. Period. If its your business, and your intention if profit, you are deemed taxable by IRD. Enforcement is another matter.
How will imposing a land tax now help people already struggling with a mortgage?
And yes, I do believe it is patronising to tell all disabled people they need the government to prosper.
Scott don't email me personally, i have no interest in that.
Speculation needs to be tightened - you seem to ignore the lesson from 1929 and 2008. Land tax will not impact people as deeply as you pretend and it will raise the revenue to help those vulnerable whom you claim it is patronizing to aid.
ps to the anonymous poster who made the deeply offensive comments about sexual violence and myself, I think it is pretty disgusting to make those comments, and my 'go back to the handmirror' was in response to their post on me claiming I was minimizing sexual assault. Your inability to understand that and then claim some deeply offensive comments is the abuse only those without the courage to add their name to their comment.
Anonymous posts have had their day on this site.
"Real Estate Institute figures show Auckland's median section price is $227,000, so the proposed 0.5 per cent land tax would draw a new annual $1138 payment."
And thats the median. Plenty of people would be up for much more. So yes, I think it would be a significant cost. (try finding a section in auckland for $227K)
TAKING A HIT
AUCKLAND
Manly
Section prices: $485,000
Annual 0.5 per cent land tax: $2425
Glenfield
Section prices: $260,000
Annual 0.5 per cent land tax: $1300
Mairangi Bay
Section prices: $370,000
Annual 0.5 per cent land tax: $1850
Devonport
Section prices: $770,000
Annual 0.5 per cent land tax: $3850
Massey
Section prices: $230,000
Annual 0.5 per cent land tax: $1150
Pt Chevalier
Section prices: $440,000
Annual 0.5 per cent land tax: $2200
Mt Albert
Section prices: $350,000
Annual 0.5 per cent land tax: $1750
Epsom
Section prices: $800,000
Annual 0.5 per cent land tax: $4000
Onehunga
Section prices: $350,000
Annual 0.5 per cent land tax: $1750
Kohimarama
Section prices: $780,000
Annual 0.5 per cent land tax: $3900
Remuera
Section prices: $1.3m
Annual 0.5 per cent land tax: $6500
Pakuranga
Section prices: $360,000
Annual 0.5 per cent land tax: $1800
Dannemora
Section prices: $580,000
Annual 0.5 per cent land tax: $2900
Papatoetoe
Section prices: $325,000
Annual 0.5 per cent land tax: $1625
Manurewa
Section prices: $185,000
Annual 0.5 per cent land tax: $925
Clarks Beach
Section prices: $335,000
Annual 0.5 per cent land tax: $1675
Source: Barfoot & Thompson, figures based on a random selection of residential valuations, compiled for The Herald. Land value segmented out from total capital value. Herald tax calculations.
And btw: Its not patronising to help people. Its patronising to tell people they need the government to have quality of life.
Thank you for that vast waste of time Scot, the land tax is an annual tax ON THE RENTAL VALUE OF LAND!!!!!!!
oh and i totally support a capital gains tax as well.
Your sad semantics to defend demanding no state assistance to the most vulnerable in society no longer shocks me.
"Thank you for that vast waste of time Scot, the land tax is an annual tax ON THE RENTAL VALUE OF LAND!!!!!!!"
No its not. The tax working group proposed a land tax on land value. Thats the proposal that is on the table.
How you calculate that land value, be it through the square metre method, the rental method or the direct comparison method seems to me to be largely irrelevant.
Yes it is. The tax working group had one version they looked at, basing it on the rental valuation bypasses the excessive speculation one wishes to avoid which is why it is relevant.
So how would that work? Use a yield figure to determine rental level? Wouldn't the outcome be largely the same? Given the close relationship between property and rental valuation? (I did some valuation papers last year)
How much money would it cost the average house holder per year?
And if you support a capital gains tax, will you be treating shares the same way? If so, what effect will that have on the NZ capital markets? If not, why are you treating investments differently?
Are you claiming a years rental is equal to the valuation of the property? That is clearly ridiculous.
We would tax housing and not other investments because housing is where we have the problem, you might have noticed that if you had been in nz for any period of time, could you name many economists in nz who haven't noted that we are spending too much time speculating on property scott?
"Are you claiming a years rental is equal to the valuation of the property? That is clearly ridiculous."
No I am not saying that. Annual rent needs to be capitalised to determine value. Valuation 101 - the rental method.
One of the methods valuers use to determine a properties value is to capitalise its annual rent. Without getting too technical, (and ignoring the nett vs gross debate), it works like this
Weekly rent x 52 (or 50 to allow for vacancy) divided by the desired yield = value.
eg weekly rent $450 x 52 divided by 6% yield gives a value of $390,000. Thats how valuers use rental levels to determine a properties value.
You can also use a Discounted Cash Flow method, but that is far too difficult to explain here.
I am not dissagreeing with the problem, merely your suggested cure. We are spending too much on housing, to the determent of other productive sectors.
I question whether imposing a significant cost on most of the population is the right cure in the middle of a recession.
Right, so the costs may not be as high as you have claimed when based on a rental valuation.
God forbid land owners pay more for speculating, but I disagree that those costs are excessive and can fund the public services the most vulnerable will need. Any land tax would also need to be focused on subsidizing housing energy efficiency as part of a new green deal investment programme to boost the economy and reduce energy consumption.
"Right, so the costs may not be as high as you have claimed when based on a rental valuation"
How the hell do you reach that conclusion? You still end up at a central value, upon which a tax would be applied. And can you link to the proposal which says a rental valuation method would be used? And can you explain how the rental valuation method can be used to determine the land value of a property (it cant)?. You are advocating a LAND tax.
They wont do it that way. You already have a central rating system done by the council. They spend shit loads doing it. Why have a separate valuation system. Councils use a complicated regression valuation system. If they are going to introduce a land tax, they will use the CV data.
"God forbid land owners pay more for speculating"
So because I bought a house, I am a speculator? Isn't that the equivalent of saying "because you are Muslim, you are a terrorist" (ie totally nonsense).
So let me ask you a very simple question. How much per year would the average auckland house holder pay as this tax?
And agree on the energy efficiency. With a new born baby we put new insulation and a heat pump in - terrific investments in what was a very cold 1940s house.
No, no, no - you don't seem to understand the point i'm making...
Most taxes distort economic decisions. If labor, buildings or machinery and plants are taxed, people are dissuaded from constructive and beneficial activities, and enterprise and efficiency are penalized due to the excess burden of taxation. This does not apply to LVT, which is payable regardless of whether or how well the land is actually used. Because the supply of land is inelastic, market land rents depend on what tenants are prepared to pay, rather than on the expenses of landlords, and so LVT cannot be directly passed on to tenants.
No I understand your point. Land is fixed, it cant move, its hard to avoid, so tax it.
And I also understand that the market determines rental values, and therefore landlords couldnt automatically pass any taxation on. Although over time, the 'end user' pays.
My problem is at a time in which families are struggling, is it right to impose additional costs? Its all very well to view all land owners as speculators, but that is not the case.
Would you tax Maori Land?
Would you tax church land?
The problem with the market was caused by people speculating in housing, as opposed to investing. Investment in its purest form is about return, or yield. Speculators are chasing capital gains. So they would accept a bullshit yield (3%), finance the thing at say 8% (during the peak), in the hope of making a capital gain. They would be quiet about it, so IRD didn't deem them to be a trader. The irony was of course, that the rental was run at a loss, often in a LAQC - so the state would subsidise their loss, and they would then claim a tax free capital gain at the end. The market was fucked.
Deal with this shit, not just impose a tax on everyone who happens to own property.
I already pay a heavy price for people like you sdm can play out your life style/progress game. Pull your head out and look around.. it's not working.
You have all the answers, and when you are questioned you want all the answers replaced, as if you were a balloon losing air.
It's a true epidemic or a rash of boredom, self obsessed economic experts who've been playing the markets suddenly have an ethics crisis and start looking for reasons and people to blame.. for why they are miserable... and if your not sdm.. you sure sound it
a miserable, tight wad, fuss budget.
Merry Z mas.
Oh the irony is delightful.
"You have all the answers, and when you are questioned you want all the answers replaced, as if you were a balloon losing air. "
But yet you have a profile pic which implies that you are 9/11 truther.
I am not miserable I dont need anyone to blame. My own personal investment into property is the purchase of my own house. How the hell you draw those conclusions seems beyond me. I know a little about property because I have worked in it. One would imagine that most people who have worked in a field for a few years would have learned a thing or two.
Go back to your 9/11 truth la la land.
GRIN - If I get pissy and huffy with Scot, it is because sometimes he is right.
Sometimes.
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