World of Finances

July 14 – Labour Party leader Phil Goff unveiled the worst kept secret in recent New Zealand politics by confirming a Labour-led government would introduce a flat rate 15% capital gains tax, unadjusted for inflation, on all assets other than the family home from April 2013.

It is promoting the tax and a range of other measures, including putting the top personal tax rate back to 39% for incomes over $150,000, as an alternative to the partial privatisation of state businesses promoted by the National-led government.

The first $5000 of personal income would also be made exempt from tax, and would likely be introduced in two steps in the first term of a Labour-led Government, Goff said.

The package also includes removal of GST from fresh fruit and vegetables, at an estimated annual cost of $300 milliion.

Describing the policy as a “game changer” for economic policy – and implicitly for Labour, which has polled poorly for most of the current term of Parliament – Goff said it was time for New Zealand to adopt a capital gains tax, which all developed countries have, apart from Switzerland and Turkey.

However, the capital tax would take 15 years to reach a “steady state”, collecting an expected $3.7 billion annually by 2028, according to “headline estimates” from the economic consultancy, BERL.

In the short term, the Labour package would increase government deficits between now and 2018, adding around $1.9 billion to total government borrowing over that period.

The package is highly dependent in the short term on additional revenue from a range of roughly calculated anti-tax avoidance measures, likely to concentrate on taxation of trusts and more effective collection of outstanding unpaid tax.

The package also assumes that agriculture will be brought into the emissions trading scheme, raising as much as $254 million by 2014, offset by new spending on research and development tax credits.

Exemptions from the proposed tax are few.

While the family home will be exempt, the family bach will not be.

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Galaxy Tab TouchWiz update: does Honeycomb need a custom skin? Vanilla Honeycomb is ace. So why slather it in a custom UI, asks joe Minihane.

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ETF Spotlight on Financial Select Sector SPDR Fund , part of an ongoing series.

Assets: $7.3 billion.

Objective: The ETF’s tracking index represents the financial sector of the S&P 500.

Holdings: Top holdings include: JP Morgan Chase 8.81%, Wells Fargo & Co. 8.16%, Citigroup 6.43%, Bank of America 5.83% and Goldman Sachs 3.80%.

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Financial Select Sector SPDR Fund

Case in point: McCue’s newest startup, Flipboard, a 20-month-old iPad application that transforms social media feeds into an elegant, print-like magazine. Though the Palo Alto, California-based company has yet to develop a business model — McCue is contemplating running full-page ads and allowing publishers to charge subscriptions to their Flipboard-rendered content — Flipboard has already raised $60 million in venture capital from Kleiner Perkins, Index Ventures, and others.

One can certainly see what some of the excitement is about. Thanks to the work of company’s 40-odd employees, Flipboard is a slick product. Nevertheless, when I asked McCue earlier this week if he knows how many people use the application on a daily basis, he answered, “Yes, I do,” laughed politely, then offered some metrics that Flipboard prefers disclosing, including that the app has been downloaded 2.8 million times, and that every month, people “flip” between 400 million and 500 million pages.

The numbers suggest some meaningful engagement, but McCue’s confidence in his ability to turn Flipboard into a billion-dollar company seems closely bound to his track record with his investors.

McCue and Index Ventures’ Danny Rimer speak each other’s unspoken language fluently.

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