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Sowell says

February 28, 2019


What’s fair?

February 28, 2019

Definitions of fair include: treating people equally without favouritism or discrimination and: without cheating or trying to achieve unjust advantage.

By either of these definitions attempting to make the tax system fairer is doomed. To take a lot more from some people than from others in very similar circumstances is not fair.

There’s rarely a tax the left doesn’t like and it is particularly enamoured of capital gains tax.

A CGT might be fair in theory but as one of the three dissenters to the Tax working Group’s recommendations, Robin Oliver, said, he’s against it in practice.

There’s a strong argument for taxing capital gains, as you put it, in theory, the problem is the practicality and of making it work. . .

Kathryn Ryan asked him if, all things being equal and as a tax expert would it be good to do it and her replied:

In the actuality of what you have to do to get such a tax in place, no.

Oliver is a former deputy head of Inland Revenue, former Treasury advisor and an expert on the tax system whose views should be taken seriously.

He gave several examples in the interview of how the CGT as recommended would not only not be fair but would lead to perverse consequences including making it more attractive for foreigners to invest in New Zealand and for New Zealanders to invest overseas, and for people to hold on to assets and businesses when without the tax they would be better to sell them; and that it would have made little difference to the housing boom.

He also said that the current law on the bright line test has low compliance and we should make current rules work before starting to think of highly punitive  ones.

That would be fair.

 


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