Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


UPDATE: No capital gains tax while Ardern leader

UPDATE: No capital gains tax while Ardern leader

(Updates and recasts throughout)

By Paul McBeth

April 17 (BusinessDesk) - Prime Minister Jacinda Ardern says the public has spoken and she won't introduce a capital gains tax while she leads the Labour Party.

The Labour-led coalition wasn't able to reach an agreement on whether to adopt a capital gains tax in response to the Michael Cullen-led working group's report, and have ditched the idea altogether.

Ardern told reporters in Wellington she still believes a capital gains tax could make the system fairer, but hasn't been able to secure a public mandate to introduce such a regime after campaigning on the issue since 2011.

"The Labour Party has now campaigned on this for three elections. It's time to accept that not only has a government that reflects the majority of New Zealanders not been able to find support for this proposal, feedback suggests there is also a lack of mandate amongst New Zealanders for such a tax also," she said.

The coalition government has been sitting on the report since February, but hasn't been able to find common ground, with New Zealand First and the Green Party at odds with their senior partner over how far such a regime should extend.

Ardern said the coalition partners discussed a range of options, but didn't want a watered down version that didn't achieve its goals and couldn't reach a consensus.

"I have a very solid relationship with both parties in this government - every single day we debate issues where we have different perspectives, the majority of the time we have consensus, from time to time we do not, it does not affect the health of our relationship."

Labour didn't extract support for a different policy, with Ardern saying that's not how the coalition operates: "We debate the merits of an issue case by case and we have done so here."

The group itself couldn't agree on how far the net should be cast in taxing capital gains. A minority including Business NZ chief Kirk Hope, former Inland Revenue deputy commissioner Robin Oliver and former Belly Gully tax partner Joanne Hodge backed a more refined scheme targeting residential rental property.

The majority proposed a broad extension of the capital gains tax regime, capturing all businesses, commercial land and buildings, and farms. To counter the increased tax, the report recommended lowering tax rates in the lower income thresholds.

The capital gains element of the report has captured the public's attention, although the work was much broader than simply addressing how capital is or isn't taxed.

Ardern said there are other ways to make the tax system fairer, and the government's wider response to the Tax Working Group's report has already started in some areas, such as the work on how to target multinational companies and other directives to cut business compliance costs, support start-ups, and more stringently enforce existing tax law.

Finance Minister Grant Robertson and Revenue Minister Stuart Nash outlined the government's response to the rest of the Tax Working Group's report, although neither joined Ardern in fronting the press gallery.

The response will include a direction to the Productivity Commission to include vacant land taxes in its local government funding and financing inquiry, and to prioritise work on ways to encourage investment in significant infrastructure projects.

A refreshed policy work programme will be released in the middle of the year.

A summary of the responses shows the government has also put a high priority on including the group's recommendation to consider restoring the depreciation deductions on buildings in relation to seismic strengthening work.

It also wants officials to consider adding the recommendation on ways to encourage savings by low-income earnings as part of the broader KiwiSaver programme.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Law Commission: Resist Rushing To New “Deepfake” Law

Artificial intelligence techniques can create massive volumes of fake audio, images and video that is incredibly convincing and near-impossible to detect... While it is tempting to respond with new law, the study finds that the long list of current legislation covering the issues may be sufficient. More>>


'Contrary To US Interests': US Lockout Sees Android Ditch Huawei

Effective May 16, 2019, the Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) by adding Huawei Technologies Co., Ltd. (Huawei) to the Entity List. More>>


Real Estate: Auckland House Price Deflation Accelerates

The decline in Auckland house prices is starting to accelerate as the number of house sales plummet, not just in Auckland but in most parts of the country. More>>


'Wellbeing Budget': Grant Robertson Pre-Budget Speech

There has been a fair amount of attention in the media here and internationally on this year’s budget – our country’s first Wellbeing Budget. Enough for me to be invited to the recent Spring Meetings of the World Bank and International Monetary Fund, to talk about our approach... More>>