Capital Gain Tax through the eyes of a Babyboomer

As a response on the discussion regarding the proposed Capital Gains Tax (CGT) I received the story from one of my property report readers. She is a baby boomer and just wanted to express herself to get her story out. Just like many others who have their story either for or against the proposed CGT, she also has hers.

As for myself, I pray that our government may receive the wisdom to govern our country well with or without CGT. Another read I was made aware of by this ‘Babyboomer’ is an article from The New Zealand Herald called Political Roundup: The arguments in favour of a Capital Gains Tax. This article – including my writing about the CGT – initiated her to write the story below:

My Great grandparents and grandparents went through The Depression and wars, cut their farm from scrub, worked 12 hour days, 7 days a week and provided this country with both local market and export produce, took in and feed extra local people during the depression when they had hardly any food to spare themselves. They raised families, taught good Christian principals, insisted their children all did their very best at school and grew up to be good New Zealand citizens.

My father was one of these children and he in turn made sure that I did my very best at school and I was expected to come out of school qualified and ready to work. He was a farm labourer, one of the mostly lowly paid of all NZ workers.  I never had a home to call my own, the houses, mostly pretty awful went with the job.  They were never heated, let alone insulated and mostly in a state of disrepair. If he had he lost his job, we would have been homeless and on the streets.  Had he not grown his own vegetables and shot rabbits and hares for stews when the meat ran out, we would have been hungry.  I was expected to eat whatever was put on my plate and to be very grateful.  Never to ask for any treats and appreciate what food that I had.  Only in my latter years did I find out that putting food on the table was a struggle. 

My Mother made all my clothes.  I had 3 sets of clothes, one on, one in the wash and one to spare.  My toys were few and mostly second hand, and I spent considerable time outside playing with whatever I found to amuse me.  No TV, no technological devises, no going to town for takeaways or meals out.   A trip to the beach for a swim was a luxury and if by chance an ice cream was bought I thought it amazing. Money for petrol was scarce, so I walked or biked for miles, including getting to school.  Times even then for girls on their own were not safe, and I had strict instructions should anyone approach me, I was to scream and yell and run for my life.  On one such occasion, I took to running. 

I had far less than what todays citizens have, yet I had everything.  A loving home, parents who cared what became of me and who insisted my life was based on Christian principals and who did not waste money on alcohol, racing, smoking, drugs, lavish holidays or the latest technology or flash car.  There was no keeping up with the “Joneses”, as the “Joneses” were probably in the same boat as we were.  They expected I grew up making the most of everything life offered me, especially my education.  My life would have been considered financially underprivileged on today’s standards.

For my financially underprivileged life, I thank my parents, because from it came the following.  I left school at 17 fully qualified to go out to work.  My pocket money, which at a young age was 6 pence a week and at its peak at 16 years of age was 50c a week, was banked.  I worked hard to get that pocket money and from it I learned to save, to budget for birthday presents for the family and to buy my first typewriter, something of a museum piece.  That typewriter along with my education got me my first office job, to which I biked many kms from the countryside into Papatoetoe.

At 21 years I left home and paid nearly half my $28 a week salary in rent, for a cold, unheated, uninsulated, dusty 1930’s beach house at the Mount.  A draconian land lady lived on site, ready to snap my head off over everything and no tenancy contract for my protection, in those days.  I thought to heck with this and bought my first house at 22 years.  A $16,000 box on a quarter acre in Greerton, with 3 mortgages.  One to State Advances $10,500 at 5.5%, $2,500 to the bank at 8.5% and a private one for $1000.  I scrimped and saved my salary, that had by then risen to $32 a week, and landscaped the section over a number of years, and paid back 2 of the loans.

At 28 I got married and we sold the house in Greerton and bought a very scruffy 16 acres in Oropi in 1987, a week later the share market crashed and he lost his job.  We lived in a caravan, with a portable toilet, solar shower and no running water and definitely no insulation.  With winter frost on the inside of the caravan we decided to build a garage which we lived in for 3 years and in 1992 we finally built our house, that we live in today.  Like my ancestors, we cut our farm out of the scrub, gorse and thistles, fencing with second hand materials from dismantled Kiwifruit orchards and anything else we could lay our hands on.  We skimped and saved every cent, progressing little by little every year.  Our daughter was on this journey with us and wrote an English piece called “20th Century pioneers”, very well put.

We are where we are today, not because of hand outs or hand ups, but because we like our fore bearers, have made the most of what life offered us.  We had good parents who set good examples and in return expected us to do the same.  We made the most of our education, our working life, did not waste our money on drugs, smoking, alcohol, flash cars, or expensive trips and cruises and endless meals out and lattes.  We are, where we are, today through sheer hard work and savings.

Previous governments for years have said, “Baby Boomers” save your money, prepare for retirement, because there may not be enough in the Government Funds to fully support you.  So we have worked hard on our land, worked hard as wage earners, saved and bought a rental and paid our taxes all the way along.  Therefore, to show appreciation for our hard work and savings, the Labour Government intends to bring in a Capital Gains Tax, just right when we “Baby Boomers” are facing retirement, needing to down size to smaller properties and sell our rentals to support ourselves in our latter years.  That’s fair you say.  Well not from where we are standing after a life time of slaving our guts out and paying taxes.  Why would anyone want to know that a 3rd of all their life long hard work is going to go in tax, just when they need it most, to support their old age.

No Capital Gains Tax is going to change the fact that people need to have good parenting to set examples.  No amount of Capital Gains Tax is going to stop people, wasting their education, wasting their opportunities in life, however big or small that opportunity is.  It’s not going to stop them wasting their money and themselves on drugs, alcohol, and smoking.  It’s not going to change habits of gambling, holding the hand out for every benefit they can scrounge or spending beyond their means on luxury’s, holidays or anything else that they think they must have right now. I have always said that Economics should be made a compulsory subject in school.  If parents can’t teach it, at least students get to hear it from a teacher.

If we Baby Boomers, come from nothing, have nothing as we grow up and yet make something of ourselves, then why can’t other generations follow.  Times and finances are no harder now, than they ever were.  I’ve done the calculations and a modest house v salary today is the same ratio as in the late 1980s.

So your email said, “correction CGT may or may not come in”.  I’ve been around long enough to know that when we start to hear of a change, it is likely to come.

Examples are GST, Salary fixed to inflation rate, investment rates lowered, various social bills past that many citizens do not approve.  Unfortunately, too many think Labour and CGT will help sort their living and financial situation and will vote with their feet, rather than their brains.

This country did not vote for a Labour Government, but one man changed all that and I can only hope HE comes to his senses over this CGT and should he ever be in the position again to sway a party into power, that he too votes with his head, rather than his feet.