The Tax Working Group has reached a consensus on introducing a capital gains tax, but it is not supported by all members of the working group, chairman Sir Michael Cullen has revealed.
“We have got to the point where we have a central package around the extension of capital income tax which is supported by a clear majority of the 10-person working group,” he said. . .
I am not opposed to a CGT per se, but to be fair and efficient it must be comprehensive and replace other taxes. This one is likely to fail on both of those counts.
If it’s not comprehensive it will be expensive to administer and full of loopholes making it ripe for avoidance.
If it doesn’t replace other taxes it will be placing an even greater burden on individuals and businesses and act as an even stronger hand brake on productivity.
Cullen said the working group had discussed an alternative option of an inheritance tax, despite an instruction from Finance Minister Grant Robertson that should be off the table.
“We are not supposed to be looking at inheritance taxes but a majority of my colleagues on the tax working group appear to have a found a partial way around that,” he said. . .
National finance spokesperson Amy Adams says:
“The Government already takes about $50,000 a year in tax from the average New Zealand household and has worked quickly to increase that burden with more taxes on everything from fuel to residential property.
“A Capital Gains Tax will see New Zealanders pay more tax on their small businesses, baches and investments and are known to be very difficult and expensive to apply. . .
“National believes extra taxes that hit New Zealanders in the back pocket are wrong. If the Government cut down on its wasteful and poorly target expenditure we wouldn’t need any more tax. National are committed to repealing any capital gains tax brought in by this Government.”
On top of a CGT, there’s also the threat of a death tax by stealth:
If the Tax Working Group recommends an inheritance tax in all-but-name, the Government should declare it dead-on-arrival, says the New Zealand Taxpayers’ Union in response to comments made by Sir Michael Cullen in Wellington today.
Taxpayers’ Union spokesman Louis Houlbrooke says, “The Government ruled an inheritance tax out of scope in the Tax Working Group’s Terms of Reference, but Sir Michael Cullen says a majority of the Group has found a way to include it. Warping a capital gains tax to implement a death tax by stealth would be a betrayal of those terms.”
“Taxpayers were told the role of the Working Group was to modernise the tax system. It’s actual task appears to be preparing the country for an ideological tax grab.”
One of the TGW’s aims was to make the tax system fairer.
A CTG which isn’t comprehensive and a death tax by stealth will do the opposite.
But perhaps the mention of the death tax is merely a diversion to take attention away from the CTG.