$5b extra cost with CGT

BusinessNZ has worked out the proposed capital gains tax would impose an extra $5 billion on the economy :

BusinessNZ has released an analysis of additional costs to the economy that would accompany the direct costs of New Zealand’s proposed capital gains tax.

It shows compliance costs of $1.6 billion, administrative costs of $210 million and deadweight costs of $1.5 – $4.2 billion, over five years.-

BusinessNZ Chief Executive Kirk Hope said the Tax Working Group’s report did not include compliance, administrative or deadweight costs, and these needed to be made explicit to enable public debate about costs before the Government made its decision on a capital gains tax.

Goodness me, how surprising.  The people proposing a tax based on an ideological view of fairness didn’t include the costs.

Compliance costs include Valuation Day requirements for all business assets to gain a valuation to enable the imposition of the capital gains tax.

Administrative costs are IRD’s costs of collecting the tax.

Deadweight costs are the costs of reduced economic output resulting from changes in supply and demand caused by the imposition of a tax. . . 

Those who want the tax keep repeating the same theoretical argument about fairness.

Those opposing it keep finding real, practical reasons why it isn’t fair, will add costs and sabotage the economy.

There’s more on this at BusinessNZ

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