FEBRUARY 21 2019
Capital gains tax proposal one of the most aggressive and unfair in the world
The Tax Working Group’s decision to propose one of the most aggressive and unfair capital gains taxes in the world should see the whole policy scrapped, says the New Zealand Taxpayers’ Union.
Taxpayers’ Union Executive Director Jordan Williams says, “The Working Group had the opportunity to propose a fair capital gains tax. Instead, they have opted for an aggressive unfair tax, which applies at taxpayers’ full marginal tax rates, and even taxes inflationary gains.”
“Even though the Government explicitly ruled out the family home from a capital gains tax, properties larger than 4500 square meters will be subject to it. The Working Group is sending a clear message to regional New Zealand that their lifestyle blocks, farms, and semi-rural properties matter less than Wellington and Auckland penthouses and townhouses, even though they probably cost about the same when purchased. “
“The measures to ensure revenue neutrality are a cynical mess. The Working Group fails to ensure revenue neutrality beyond five years, when capital gains tax revenue is expected to go through the roof. The medium-to-long term effect is a blatant revenue grab.”
“While the Working Group supports adjusting the bottom tax threshold, they propose coupling this with a hike to the second tax rate from 17.5% to 20.5% to increase ‘progressivity'. From an economic incentive perspective, this is a terrible move. Even though some taxpayers will receive a small tax cut, middle-income earners would face a higher marginal tax rate on additional earnings, which reduces the incentive to take on more hours, skill-up, or take-on extra responsibility at work.”
“We could have supported a capital gains tax, if it was fair and reasonable. But overall, these proposals are on the extreme end and are anything but fair.”