New Zealand might have been expecting a capital gains tax to be announced today but the full suite of taxes proposed by the Tax Working Group would threaten the very viability of large swathes of the NZ economy, National’s Finance Spokesperson Amy Adams says.
“The new taxes proposed today will create a compliance mine field, massive distortions in the market and weaken our international competiveness at the very time the Government acknowledges the international economic risks are growing,
The proposal from the Government’s handpicked Tax Working Group doesn’t line us up with other countries as has been claimed, instead it would impose one of the most onerous capital taxation regimes in the world with 100% of the gain taxed at full marginal rates, limited relief for capital losses, no inflation adjustment and limited rollover relief.
“The Capital Gains Tax proposed by Sir Michael Cullen and the Tax Working Group will hit every small business owner, KiwiSaver account, farm, family bach, lifestyle block and investment in New Zealand. It will act as a massive disincentive to save, invest or build a productive business.
“There is nothing fair about saying owners of baches and lifestyle blocks will face a tougher CGT than corporates.
“It would add significant complexity to our relatively simple tax system, likely exempt Iwi assets, require all eligible assets to be re-valued within five years and further drain New Zealand’s already shallow capital markets.
“New Zealand doesn’t need a Capital Gains Tax and the Government has to date failed to confirm this would be a revenue neutral package. The CGT alone would raise an additional $32 billion over ten years and there is no evidence any offset will be of the same magnitude.
“On top of the Capital Gains Tax, other new and increased taxes, include a vacant residential land tax, a water tax, a fertiliser tax, an environmental footprint tax, a natural capital enhancement tax, extending the waste tax.
“It is quite simple, a country can’t tax itself to prosperity.
“New Zealanders already pay enough tax and National believes if you want New Zealanders to succeed on the world stage the tax burden should be reduced, not increased.
“National has promised to repeal the Capital Gains Tax, index tax thresholds to inflation, repeal the Regional Fuel Tax and not introduce any new taxes in our first term. Our full tax package will be released closer to next year’s election.
“The longer the Government dithers over its response to this report, the more our economy will be hurt by the fear and uncertainty these recommendations will rightly cause.”