‘Let’s debate the Capital Gains Tax,’ says Prime Minister
Prime Minister Jacinda Ardern has reassured New Zealanders that she is listening to people's concerns about a proposed capital gains tax, and no decisions have been made yet.
She was speaking at her post-cabinet press conference on Monday, February 25, where she called out the opposition for making “inflammatory statements” about the Tax Working Group's (TWG's) recommendations released last Thursday on Capital gains Tax.
Ms Ardern although stopped short of naming, but was quite clearly referring to a statement made by National leader Simon Bridges. "The notion that it's an attack on the Kiwi way of life, which I think is quite a broad, sweeping statement," Ms Ardern affirmed.
Earlier Mr Bridges had taken to Twitter to the proposed tax "an assault on the Kiwi way of life", adding that he will "fight it every step of the way".
Categorically dismissing Mr Bridges’ comments, Ms Ardern said, "Let's debate the actual report rather than simply making things up."
The Tax Working Group had released its proposals on Thursday which included taxing land, farms and most shares and business assets, including KiwiSaver, the baches, excluding the family home.
The political supporters of Capital Gains Tax see it absolutely necessary for the issue of fairness and egalitarianism, whereas opponents see it as a government’s tax-grab on people’s money.
In the light of the ongoing public debate, that would continue to animate public imagination up till until next elections, it would be helpful to see different arguments around the Capital Gains Tax.
What’s the fuss about?
The Tax Working Group is proposing CGT at the highest income-earners tax rate, which is 33 per cent for most causing uneasy in many quarters.
Governments all around the world tax their citizens mostly for key reasons of raising revenue to finance government spending, to manage aggregate demand, to help meet the government's economic objectives, and last but not the least to change the distribution of income and wealth.
Indeed, the Labour government’s current push for CGT is not much driven by fiscal motives as it is for the motives of fairness and egalitarianism. The TWG has itself stated that the outcome will be “revenue-neutral,” - that is, matched by corresponding cuts in income tax.
However, the idea of taxing Capital Gains is not altogether new.
Previously, Labour Party had twice toyed with the idea of going to elections with CGT on the table in general elections in 2011 and 2014. Even in 2017 the newly anointed Labour leader Jacinda Ardern had sought to bring back the CGT on the agenda, before being coaxed for leaving it off-the-table for 2017 just a week before voting.
Meanwhile, the John Key led National government had introduced a form of capital gain tax (Bright-line Test) for Residential Land that requires income tax to be paid on any gains from residential property that was sold within two years of purchase. This government had increased the period to five years.
Expert opinion is divided
Like everywhere else in life, opinions are divided, especially those of the experts and commentators. While several economists and academicians argue that NZ is already very late in comparison to its peers in Europe, North Atlantic and trans-Tasman in having a CGT in place.
Several home-based experts argue that the idea of having a comprehensive system of taxing all capital gains will have more debilitating, than enabling effect on overall New Zealand economy and society. Above all, the idea of taxing capital gains might trifle the spirit of saving and investing that forms the backbone of building capital – so critical for social and economic progress.
Expectedly, Opposition will try to blow it out of proportion, and the government will be keen to underplay when talking about the merits of introducing capital gains tax.
Public opinion, if a Newshub Reid-Research poll (February 19) is accurate to capture the mood of Kiwi voters, has found the majority of voters do not want Capital Gain Tax.
54 per cent had said no, and 14 per cent didn’t know, with 32 per cent saying yes for a CGT.
However, this would be inconsequential as rarely would there be overwhelming acceptance for new taxation suggested by any government. So governments and political parties all around the world act on their convictions and self-professed values.
How’s the political courage?
Many pundits are wondering if the Labour Party would have the much-needed political courage to walk the nation through Capital Gains Tax in the 2020 elections.
Based on the current political direction and milieu, it seems that there is a lot of conviction and admiration for the CGT, especially in Prime Minister Jacinda Ardern, to put it on the table for 2020 elections.
The scale of the housing crisis and growing generation of renters, who primarily are shaping the current political environment, is looking for a Robinhood type tax, regardless of the fact if they will actually reap any benefit from that tax-revenue.
Prime Minister Jacinda Ardern has reassured New Zealanders that she is listening to people's concerns about a proposed capital gains tax, and no decisions have been made yet.
She was speaking at her post-cabinet press conference on Monday, February 25, where she called out the opposition for making...
Prime Minister Jacinda Ardern has reassured New Zealanders that she is listening to people's concerns about a proposed capital gains tax, and no decisions have been made yet.
She was speaking at her post-cabinet press conference on Monday, February 25, where she called out the opposition for making “inflammatory statements” about the Tax Working Group's (TWG's) recommendations released last Thursday on Capital gains Tax.
Ms Ardern although stopped short of naming, but was quite clearly referring to a statement made by National leader Simon Bridges. "The notion that it's an attack on the Kiwi way of life, which I think is quite a broad, sweeping statement," Ms Ardern affirmed.
Earlier Mr Bridges had taken to Twitter to the proposed tax "an assault on the Kiwi way of life", adding that he will "fight it every step of the way".
Categorically dismissing Mr Bridges’ comments, Ms Ardern said, "Let's debate the actual report rather than simply making things up."
The Tax Working Group had released its proposals on Thursday which included taxing land, farms and most shares and business assets, including KiwiSaver, the baches, excluding the family home.
The political supporters of Capital Gains Tax see it absolutely necessary for the issue of fairness and egalitarianism, whereas opponents see it as a government’s tax-grab on people’s money.
In the light of the ongoing public debate, that would continue to animate public imagination up till until next elections, it would be helpful to see different arguments around the Capital Gains Tax.
What’s the fuss about?
The Tax Working Group is proposing CGT at the highest income-earners tax rate, which is 33 per cent for most causing uneasy in many quarters.
Governments all around the world tax their citizens mostly for key reasons of raising revenue to finance government spending, to manage aggregate demand, to help meet the government's economic objectives, and last but not the least to change the distribution of income and wealth.
Indeed, the Labour government’s current push for CGT is not much driven by fiscal motives as it is for the motives of fairness and egalitarianism. The TWG has itself stated that the outcome will be “revenue-neutral,” - that is, matched by corresponding cuts in income tax.
However, the idea of taxing Capital Gains is not altogether new.
Previously, Labour Party had twice toyed with the idea of going to elections with CGT on the table in general elections in 2011 and 2014. Even in 2017 the newly anointed Labour leader Jacinda Ardern had sought to bring back the CGT on the agenda, before being coaxed for leaving it off-the-table for 2017 just a week before voting.
Meanwhile, the John Key led National government had introduced a form of capital gain tax (Bright-line Test) for Residential Land that requires income tax to be paid on any gains from residential property that was sold within two years of purchase. This government had increased the period to five years.
Expert opinion is divided
Like everywhere else in life, opinions are divided, especially those of the experts and commentators. While several economists and academicians argue that NZ is already very late in comparison to its peers in Europe, North Atlantic and trans-Tasman in having a CGT in place.
Several home-based experts argue that the idea of having a comprehensive system of taxing all capital gains will have more debilitating, than enabling effect on overall New Zealand economy and society. Above all, the idea of taxing capital gains might trifle the spirit of saving and investing that forms the backbone of building capital – so critical for social and economic progress.
Expectedly, Opposition will try to blow it out of proportion, and the government will be keen to underplay when talking about the merits of introducing capital gains tax.
Public opinion, if a Newshub Reid-Research poll (February 19) is accurate to capture the mood of Kiwi voters, has found the majority of voters do not want Capital Gain Tax.
54 per cent had said no, and 14 per cent didn’t know, with 32 per cent saying yes for a CGT.
However, this would be inconsequential as rarely would there be overwhelming acceptance for new taxation suggested by any government. So governments and political parties all around the world act on their convictions and self-professed values.
How’s the political courage?
Many pundits are wondering if the Labour Party would have the much-needed political courage to walk the nation through Capital Gains Tax in the 2020 elections.
Based on the current political direction and milieu, it seems that there is a lot of conviction and admiration for the CGT, especially in Prime Minister Jacinda Ardern, to put it on the table for 2020 elections.
The scale of the housing crisis and growing generation of renters, who primarily are shaping the current political environment, is looking for a Robinhood type tax, regardless of the fact if they will actually reap any benefit from that tax-revenue.
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