Copyright thestandard
Labour’s Capital Gains Tax policy has been released in a less than optimal manner. Details were leaked to Radio New Zealand and rather than have RNZ broadcast the details a hurried press release was issued. And Chris Hipkins cancelled his morning interview with Radio New Zealand which allowed them to invite Nicola Willis onto Morning Report and continuously assert that the policy was something that it was not. The tax itself is somewhat minimalist and not too different from what we had previously with an extended bright line test. If enacted a targeted capital gains tax will be paid on the profit made after 1 July 2027 when a commercial property or residential property excluding the family home is sold. The family home, farms, KiwiSaver, shares, business assets, inheritances, and personal items will be exempt. Nine out of 10 New Zealanders won’t pay tax on the property they own, and everyone will get three free visits a year to the doctor. I don’t understand why farms should be exempt. They are after all akin to commercial premises and to tax one and not the other will invite distortions. Public shares should be subject to a capital gains tax. The calculation is easy and the details easily available. Kiwisaver may be somewhat more complex and probably influenced the decision not to tax shares but the calculation should have been done. And we need an inheritance tax. Wealth has flown to the top ever since inheritance taxes were abolished back in the 1980s. Business assets were more difficult to calculate but this was not insurmountable. And there is no sign of a wealth tax. The effect on the redistribution of wealth will be very modest. I expect more than a few members will be grumpy. It will be interesting to see how this develops.
