CGT decision: The opportunity cost of a lost opportunity
Today’s announcement by Prime Minister Jacinda Ardern that the coalition government has completely ruled out all options for a capital gains tax for the foreseeable future is a lost opportunity for lasting tax reform says the Public Service Association (PSA).
"This is a sad outcome for all of those New Zealanders who still hold to the valid belief that a capital gains tax would make a huge difference to bringing some genuine fairness to our out-of-step tax system", say PSA national secretaries Glenn Barclay and Kerry Davies.
"It is extremely disappointing that the conclusion was reached that there is no appetite for implementing some form of capital gains tax. That was certainly not the opinion of the majority of the Tax Working Group, nor a number of New Zealand’s leading economists, nor a large cross-section of community interests and ordinary citizens who were gaining a voice through networks such as Tax Justice Aotearoa New Zealand.
"The concerning legacy of this decision is that it represents an opportunity cost in terms of limiting the tax revenue base that New Zealand needs to meet future demands to sustain and grow necessary services.
"Given the government’s lack of ability to take truly bold action on tax reform and the current unwillingness to break the shackles of current Budget Responsibility Rules the PSA is anxious to see what this year’s Budget will deliver to underpin how to cover the costs of meeting the wellbeing needs of all New Zealanders - most especially those who are struggling to make ends meet and do not have the luxury of untaxed capital gains.
"While today’s announcement has promised that more targeted measures will be taken to advance more fairness in the tax system, it is difficult to see what can in any way replace what could have been achieved by having the courage to introduce a capital gains tax. Instead today's decision just leaves the way open for persistent wealth inequality in New Zealand to go unchecked".