Australian CGT case study for New Zealand
New Zealanders worried about Labour’s capital gains tax only need to look across the ditch to see what could be coming our way if Labour is elected, National's Campaign Chair Simeon Brown says.
“National’s economic plan has started to bring more New Zealanders home, with a 14 per cent increase in Kiwis returning to New Zealand in the last year.
“New Zealand’s lack of a capital gains tax is a real competitive advantage over Australia, but Labour’s plans to introduce one would remove that advantage and undo our progress.
“Labour’s spending and tax plans would sink the housing market and reverse our economic recovery just as it is gaining momentum. Australia provides a useful example of what can happen when a capital gains tax expands.
“In recent months, the Australian Government surprised property owners with a number of changes to its capital gains tax that had been explicitly denied at the previous election. It has removed the capital gains tax discount, introduced a 30 per cent minimum tax on capital gains, and from next July will tax future gains on assets bought before 1985, which have been exempt for 40 years.
“These changes have coincided with a cooler Australian housing market. House values have fallen every month since the Budget and are now down 5.2 per cent from their peak, while house sales in September were down 21 per cent on a year earlier.
“Chris Hipkins needs to find the money to pay for $18 billion of unfunded policies. He’ll do that by expanding his capital gains tax as soon as he’s elected, and by introducing the rest of the nine new taxes his coalition partners are proposing. That will sink New Zealand’s housing market and undo our entire economic recovery.
“Even under Labour’s current proposal, its capital gains tax would hit the wider housing market. Taxing business property and rentals would not stay contained to those assets. It would reduce what investors are prepared to pay, force some landlords to sell, discourage new rental supply, and put upward pressure on rents.
“A small business owner looking to sell their premises, a mum and dad investor with one rental, or a first-home buyer relying on confidence in the market all get caught up in the same downturn. When prices fall in one part of the property market, residential homeowners feel it too.
“After a tough few years, New Zealand’s economy is turning the corner. Growth is forecast to hit 2.6 per cent next year, ahead of Australia’s 1.6 per cent, with 220,000 new jobs expected over the next four years and unemployment falling from 5.6 to 4.3 per cent. Those forecasts are based on National’s plan continuing.
“This election will be tight and New Zealanders have a clear choice between sticking with the plan that is working and giving it three more years to bed in, or going backwards with Labour and undoing three years of progress.
“National will spend sensibly, get debt down and grow the economy, with no new taxes. The alternative is a Labour coalition that would hit hardworking Kiwis with nine new taxes and drive up debt to pay for its spending addiction.
