BNZ profit upsets Greens
Wed, 31 Oct 2012 12:07p.m.
The Bank of New Zealand's latest profit figures have drawn another call from the Green Party for the Government to do something about the "unsustainable" flow of capital to Australia.
Co-leader Russel Norman says the BNZ's announcement on Wednesday of near-record $741 million after-tax full year profit shows how much the foreign-controlled banking sector is costing the country.
"BNZ is the third of the four big Australian banks to post excessive profits this year - profits made at the expense of New Zealand businesses and households," he said.
"Most of these profits will flow offshore and they constitute the single biggest income outflow in our current account deficit."
Dr Norman says there's an urgent need for greater competition between banks and higher levels of local ownership.
"The government's complacency over foreign ownership and the worsening current account deficit means the banks are free to strip mine capital out of New Zealand."
Dr Norman says Kiwibank is the only New Zealand-owned bank that is anything like a suitable rival for the Australian-owned big four but it controls only 4 percent of the country's total banking assets.
He says the Government should give Kiwibank a capital injection so it can increase its capacity, as well as giving it the Government's banking account held by Westpac.
"Besides electing a new government, the only thing New Zealanders can do about our profiteering banks is to switch to New Zealand-owned banks, building societies and credit unions," Dr Norman said.
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9/11/2012 9:44:03 a.m.
It'l be easier to just become a state of Australia. Otherwise when milk collapses in price we will be bankrupted.
8/11/2012 1:26:57 p.m.
Daniel Lang wrote:
To be fully confident in this policy, they would need to address the loopholes down to the finest detail. It makes sense to me that the banks would still be paying 28% instead of 15%, however successive past Labour governments have always introduced popular policy such as this without adequating patching up the outstanding loopholes.
8/11/2012 7:41:37 a.m.
You haven't addressed the loopholes the proposed CGT introduces Daniel.I can see if CGT was introduced the amount of tax collected would be quite large, but at the expense of lowering income taxes paid.Eg the importers and exporters mentioned, currently while not like banks and traders in currency, they make profit and losses from currency which they pay 28% on. Under CGT they could argue to use the 15% CGT instead on currency profits, and they would then pick a echange rate that gave them currency profits every time as it would be lower tax than the business tax rate of 28%.Banks main trading is not currency, so they too could shuffle plenty of money into currency profits to be taxed @ 15% vs 28%. This goes well with the lefts outrage at bank profits, as their CGT will push the tax paid on those profits down.The problem with the policy is they have made a 'CGT' but not thought it through on how it will affect other aspects of tax. Then to appease some they added excemptions which at the same time give loopholes to be abused. That is not smart policy. Labour keeps saying that people are applying it different than they intend, thats what taxpayers do! If you make a law, it needs to not have loopholes, and the CGT is not. If you have some money that can be taxed two ways, the taxpayer will look to move to the lower tax. Eg Labours 39% income tax which saw people move personal income to trust/business rates that were lower, which lowered the tax collected from the 39% below what was collected at the lower rate before raising it.Another loophole is if have CGT, it will also have tax credits on capital losses. If buy a investment property, and pay too much, have to sell at a loss, then you can claim back 15% from the govt/NZ for that loss. This has potential to make NZ the patsy in a property shell game. Small time investors with 1-2 rentals that dont get traded will pay almost no CGT compared to the large players like banks.
7/11/2012 6:07:36 p.m.
The point is to target non-traders and I think their plan was very reasonable. Firstly, 15% is lower than the 20% that I would want if I was in Parliament. Secondly, it will be applicable to the sale of investment properties and businesses but not land or the family home. It will mean that we can afford superannuation in the future and those that are retired (many of whom may own two or three investment properties and sell one off at retirement) play more of an active role in effectively and partly financing their retirement once they are at retirement age. In a perfect world, they wouldn't have to do this because they have already paid for their retirement in personal income tax during their working years, but CGT of a measly 15% on what will probably amount to one investment property out of three for the average retired couple, is a better deal than raising the retirement age and/or cutting the amount of the payments.
6/11/2012 12:33:37 a.m.
Since we already have income tax that makes Capital Gains taxable for traders, what is the point of a CGT of 15%?The only reason is to give people curently paying income tax a break, ie the housing speculators, and the banks. So who purchased this dumb policy of Labours, how many dinners did it cost?They say the CGT will target the speculators trading in homes, but such speculators defenitely fall under the current IRD defenition of 'Trader' who have to pay income tax on that capital gains. If know someone not paying income tax who should be, give IRD a call, they will be happy to hear from you.If going to have income tax, we need to set a top business tax rate suitable to promote business, and our current 28% appears to do this better than 33%. For a personal income tax rate we need to set a rate similar to business tax rates, or anyone faced with high personal income tax rates will move their income through businesses/trusts to lower their tax legally, as they did with Labours 39% rate which lowered the amount of tax collected. A CGT suggestion of 15%? What drugs are they taking? This means likes of banks would seek to pay CGT vs income tax, and with likes of exchange rates, it would be easy to argue and get 15% tax instead of 28% they currently pay.Take an importer, they can cost a lower dollar, make less profit and more capital gain on exchange. Exchange rates not their main business, so they will move profit from income to CGT under Labours policy. Similar for exporters but costing a higher dollar. This CGT of 15% is a loophole waiting to happen, when we already have the capital gains taxed for traders.
5/11/2012 11:15:38 p.m.
Mike, I didn't hear any Labour announcement of any plan to redefine the definition of income tax, so people/businesses that make income from trading would not be paying income tax on the profits under Labour but instead the CGT. One would think that they would still be paying income tax, because even though the money is a capital gain, it is still their method of making money.
5/11/2012 3:05:13 p.m.
Take Labours Capital Gains Tax.This would see a more fair payment of taxes for cappital gains - according to Labour.So lets look at some capital gains currently, and how the capital gains tax of Labours would change that.Take the Banks capital gains from exchange rate change. Now Labour claims we dont have a capital gains tax, which we dont. But our existing income tax laws treat any traders income as income, even capital gains income. Banks are traders in money, so pay tax on any income, including income from exchange variation. So say the banks made $1 billion in exchange profits, under current tax laws they pay tax on the $1 billion of 28% being the business tax rate, ie $280 mil in tax.So how much under Labours proposed Capital Gains Tax? Well Labours CGT is 15% and would see the banks pay less tax of only $150 mil vs the $280 mil they currently pay.Now everyone but a blind left supporter should be able to work out that the banks would pay less tax, not more with Labours proposed capital gains tax, as the 'BUDDIES' benefiting would be Labours buddies, not Nationals. Please Labour explain how corporates like banks paying less tax helps NZ!Any time someone claims they are making things fairer, we need to look hard and see if it really is, or if it like Labours CGT is 100% bullshit. Under Labours CGT the banks would make less tax payments than currently - the opposite of what Labour/Greens are saying in public about banks profits being excessive!
1/11/2012 9:54:52 p.m.
That's right, because superannuationn isn't nearly as means tested as it ought to be and Norman's idea gives young people the chance to pay down debts or buy a vehicle. I do not see the problems with high youth unemployment abating soon.
1/11/2012 11:34:30 a.m.
I know I'd rather live in the world that Mr Norman wishes to create than the one currently being led by short sighted, narrow minded people who are too scared to admit we need to change everything about our current economic and social model. Our older generations should be ashamed of what they are creating. Or just switch the t.v. back on, and bury their heads in the sand!!
31/10/2012 6:04:24 p.m.
I don't like BNZ because I think their fees are too high. But, in all fairness, I've never used Kiwibank so I don't know if they're any better.
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