Revenue neutrality a no-brainer for a fair capital gains tax
18 JANUARY 2019
FOR IMMEDIATE RELEASE
The Tax Working Group’s expected recommendation to cut income tax to offset the burden of capital gains tax is a no-brainer if the new tax is to be fair to New Zealanders, says the New Zealand Taxpayers’ Union.
“Revenue neutrality is essential for anyone to consider a capital gains tax to be fair,” says Taxpayers’ Union spokesman Louis Houlbrooke. “In fact it is one of the five criteria we will be releasing in a discussion document next week covering other necessities for a fair capital gains tax.”
“We are, however, surprised that the Group is looking at tax relief at the very low end. The economic advice is that a tax-free threshold might not be the most efficient use of revenue. Tax cuts spur economic growth when they affect earners’ marginal decisions, making it more attractive to upskill or work harder. Very few people earn less than $14,000, so cuts to the bottom tax rate are unlikely to significantly impact economic growth.”