Govt cans capital gains tax

The Government has rejected a capital gains tax.

Prime Minister Jacinda Ardern made the announcement today.

"The Tax Working Group gave the Government, and the country, an opportunity to look at the fairness of our tax system and debate options for change," she said.

"All parties in the Government entered into this debate with different perspectives and, after significant discussion, we have ultimately been unable to find a consensus. As a result, we will not be introducing a capital gains tax.

"I genuinely believe there are inequities in our tax system that a capital gains tax in some form could have helped to resolve. That's an argument Labour has made as a party since 2011."

Prime Minister Jacinda Ardern announced the rejection of a capital gains tax. Photo: NZME.
Prime Minister Jacinda Ardern announced the rejection of a capital gains tax. Photo: NZME.

The rejection comes after the Tax Working Group (TWG) made close to 100 recommendations in its February report and cost an estimated $2 million to run.

Under the group's proposal, a CGT would cover investment properties, land, shares, business assets and intangible assets like intellectual property.

The Tax Working group report's recommended a CGT would exclude the family home, cars, boats and artwork.

Group chairman Sir Michael Cullen said the CGT would bring in $8 billion over the first five years.

The revenue raised from the CGT would help pay for other initiatives – such as cutting the personal income tax rate and cutting KiwiSaver tax rates for low and middle-income savers.

The TWG also mooted new environmental taxes which would punish companies for polluting.

Group chairman Sir Michael Cullen
Group chairman Sir Michael Cullen
Three members of the group prepared their own 'minority report' – which suggested the amount of extra revenue the tax would collect would be "relatively low".

After the group's report was released, Finance Minister Grant Robertson said it was "highly unlikely" that all of the recommendations would be implemented.

He also said the Government would make its decision as to which of the TWG's recommendations the Government would be adopting in April.

National is strongly opposed to any form of a CGT and has vowed to repeal any law the Government puts in place which would give effect to such a tax.

After the Government says which of the TWG's recommendations it will be adopting, officials will get to work on drafting legislation to make it law.

The Government would pass any legislation to implement any policy changes arising from the report before the end of the Parliamentary term.

Robertson had promised no policy measures would come into force until 1 April 2021 – "giving New Zealanders the chance to vote on any decisions made by the Government".

Capital Gains Tax timeline:

2011: The Labour Party, led by Phil Goff, campaigned on implementing a 15% capital gains tax.

2014: The Labour Party, now led now by David Cunliffe, again campaigns on the same CGT policy.

2015: In the May's Budget of this year, then-Prime Minister John Key introduced a bright line-test, which required income tax to be paid on any gains from residential property, if sold within two years – a form of a CGT.

2017: The Labour Party campaigned on setting up a Tax Working Group, which would look into a CGT.

2017: In November, the Tax Working Group was set up and Finance Minister Grant Robertson ruled out any capital gains tax on a family home, or the land under it.

2018: In February, the Government extended the bright-line from two, to five years.

2018: In September, the Tax Working Group released its interim report which provided a bit more detail on its thoughts on a CGT.

2019: In February, the group released its final report which included a recommendation for a CGT.

2019: Today, the Government announced its decision on which of the Tax Working Group's recommendations it was adopting.

 

Comments

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This outfit looks silly now .

Don't see why. Good democracy at work here and a fair & honest PM.
I won't mention some very silly things Simon has been doing lately. You'd prefer that???

Agreed, it's good that governments look at issues like tax reform from time to time. Whether you are for or against a CGT, the discussions need to be had.

Not a sign of weakness in making a decision like this.

Triage funding now, because of less tax take. Social services and health as priorities.

Alternately, proactive pruning: no public money to Americas' Cup, or WCR. No Royal tours. An end to corporate welfare and public money to private education.

Rent control unless landlords show some restraint.

The PM has been corrected / I remember all the talk also. what have we as real life examples rents going up/ kiwi build a flop/ power price up/ no industry/ less work/ economy slumping/ new Zealand needs action we get talk/

I enjoy reading comments on this site and learning off others. That gets ruined when someone makes mere political statements for the sheer heck of it. In a coalition cabinet the majority decided no CGT. That happens in a democracy. The PM has moved on. Sh has not been "corrected". Thats silly talk. Rents have not gone up as much as they did 5 years ago. Kiwi build is a start. My power has been static but I get a huge winter subsidy so for many of us they have plummeted. Industry & employment has improved. The economy showing a surplus after a decade of borrowing 90 billion. Any other facts you need made aware of?

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