Few topics have provoked as much concern and critical comment from my Hamilton West constituents in recent times as the possible new taxes currently under consideration by the Labour / New Zealand First / Greens government.
Of many new taxes their Tax Working Group is recommending, it’s the extensive Capital Gains Tax (CGT) that is of greatest concern. The CGT will make it harder for first home buyers, driving up rents and making it more difficult to save.
It will encourage our businesses to move overseas and saddle us with one of the most onerous capital taxation regimes in the world.
Some argue that a CGT might improve the outlook for aspiring first home buyers, but property speculation is already taxed and even the Working Group concluded that a CGT won’t help with housing affordability or high house prices. On the contrary, it is likely to result in higher costs for those who are renting – the direct opposite of one of the Government’s prime objectives in setting up the group.
The Government’s tax proposals are an unjustified attack on New Zealand households, farmers and businesses who are working hard to get ahead and save for retirement.
They don’t primarily target the wealthiest Kiwis. They’ll hit middle NZ the hardest. For example, their CGT would exempt capital gains on non-productive assets like expensive homes and art collections while taxing small businesses and rental properties.
I know many Hamilton business owners, who provide employment and the foundations of much of our city’s prosperity, are very concerned about the negative effects of a CGT, which is a tax on innovators and entrepreneurs and will hurt our small businesses and start-ups.
The country as a whole will suffer if our tax regime encourages people to invest more in their own home to avoid CGT instead of investing in a rental property or a business. A CGT does nothing for the economy or productivity and it doesn’t create more fairness.
We need to increase investment and savings in NZ, but these recommendations will encourage Kiwis to pull their money out of investments or assets that attract tax and put it into the family home, or offshore investments, damaging our economy and job creation. Taxing people again on savings they’ve already paid tax on and have chosen to invest rather than spend is unfair and sends poor signals to responsible savers.
Complicating our simple tax system will massively increase compliance costs, undermine our capital markets and hurt our international competitiveness
National believes New Zealanders should get to keep more of what they earn, not face higher and higher taxes to fund wasteful Government spending, and we will fight the Government’s proposed tax grab every step of the way.