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Dr Cullen’s CGT history paints Govt into a corner

26 MARCH 2019

Dr Michael Cullen’s historical insistence that a capital gains tax should apply to all asset classes (i.e. have no exemptions) paints the current Government into a corner, says the New Zealand Taxpayers’ Union.

Taxpayers' Union spokesman Louis Houlbrooke says, “A capital gains tax that includes exemptions will distort New Zealanders’ investment behaviour. In the case of the current proposal, investors would shift money away from productive assets like shares, and into the assets with a tax exemption – namely the ‘family home’.”

“Dr Cullen certainly understands this, if his previous comments are anything to go by. In 2007 he made the point three times in one week. The obvious reason he now proposes a tax with a family home exemption is because that’s what he's required to argue for.”

“The Government is now painted into corner where it must choose between implementing a flawed, distortionary tax, or breaking its promise and taxing the family home. There’s only one way out of this corner: the Government should reject the capital gains tax proposal entirely.”

Dr Cullen on capital gains taxes:

19 June 2007:
The Government is not working on a capital gains tax. To take the logic of Mr Oliver, it would have to be a generalised capital gains tax across all asset classes, and the Government has no intention of introducing such a regime.

20 June 2007:
One of the problems with a capital gains tax—apart from the fact that if it were done, it should apply to all asset classes—is that countries overseas that have capital gains taxes have significant inflation in house prices on occasion.

21 June 2007:
I think it is fair to say that, if one was looking at a capital gains tax, which I am certainly not, it would apply to all asset classes.


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