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Fed Farmers is just plain wrong on CGT

Fed Farmers is just plain wrong on CGT

Federated Farmers has deliberately played politics with Labour’s capital gains tax by delaying the release of an incorrect report they have had since June to just a week before the election, says Labour’s Finance spokesperson David Parker.

“It’s clear that this is an orchestrated attack. Federated Farmers sat on their June report and released it at the same time as National’s attack on our CGT.
“Federated Farmers is just plain wrong. Yesterday I wrote to NZIER showing errors in the report. Further errors have been identified by BERL overnight. Federated Farmers should admit their errors and print a correction.
The report they rely on has two fundamental errors.

· The report asserts that based on the Australian CGT (which has a different headline rate) the CGT revenue estimates for New Zealand are too high. This is incorrect because, in Australia individuals and small businesses are taxed on just half the capital gain. In New Zealand the whole gain (from the date of introduction) is taxed at the lower 15% rate.

· The report mistakenly underestimates capital gains because it does not properly calculate all realised gains after the date of introduction. It wrongly focuses on the gain in the year of sale.

“Our capital gains tax policy was costed by BERL and the numbers have stood on their merit for four years. BERL's assumptions were themselves more conservative than in Treasury estimates prepared for the Tax Working Group.
“This is another flimsy political attack that we have been able to knock over in less than a day.

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“The incorrect attacks on the CGT from National and its friends are orchestrated and wrong. Labour’s CGT never applies to a family home. Neither is it an inheritance tax.

“National is flinging mud hoping that it sticks.

“The truth is New Zealand needs a CGT – for a stronger economy and for fairness.
“A CGT will clamp down on property speculators and encourage capital towards productive investment that lifts productivity, wages and exports.

“It also ensures New Zealanders pay fair tax, no matter how they make their incomes. It will also improve home ownership rates, as it has in Australia relative to New Zealand.

“A capital gains tax is the right thing for New Zealanders. It’s time to look past the scaremongering and attacks,” says David Parker.

ends

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