Capital gains tax an 'assault on the Kiwi way of life', says Simon Bridges
Source: https://www.stuff.co.nz/news/110764343/-

2019-02-24 02:36:20

National leader Simon Bridges says the recommendations from the Government's tax working group amount to an "assault on the Kiwi way of life".

Bridges pledged to fight it every step of the way, saying the proposed changes are motivated by "envy and ideology" rather than fairness. His party has promised to repeal any changes if elected in 2020.

The tax working group, chaired by former Labour finance minister Sir Michael Cullen, has recommended the Government introduce a new broad-based capital gains tax (CGT) on rental properties, land, businesses, and shares, paid at the income tax rate. The family home would be excluded.

This would raise roughly $8.3 billion over the next five years, but that could be ploughed back into the hands of taxpayers through a suggested income tax cut, and another tax break for KiwiSaver accounts. This would deliver a tax cut between $420 and $595 a year for almost all taxpayers. Even though this could be offset by the CGT, the taxpayer would have to pay if they sold an asset during that year.

Cullen suggested most Kiwis would not be greatly affected, as 84 per cent of the taxable property was owned by the top 20 per cent of households.

The Government has not formally responded yet, and has been very cautious about ruling in or out any of the proposals.

Bridges said the National Party would fight any of it being enacted, as it would hit the "squeezed middle".

"It will kill off aspiration. This won't actually get the wealthy. They can always restructure their affairs with tax advisors and accountants. It's the squeezed middle who cop it in the guts," Bridges said.

"All Kiwis regardless of income aspire, and they actually want to get a nest egg together. I worry about those who earn $50,000, $60,000, $70,000 or $80,000 a year.

"Everyone wants to get into housing. It's not the wealthy that get into small business."

Bridges also argued that the "onerous" new tax would hurt the wider economy and raise rents.

"This is unfair. It's hugely onerous. It's a monster tax grab. And it's at a time when the economy already faces huge uncertainty, this has the danger of stalling it," Bridges said.

"I think there is a broad consensus among economists that CGTs raise rents."

The Tax Working Group itself does warn that a CGT could lead to a "small upward pressure on rents and downward pressure on house prices".

He rubbished the idea that the tax would be "revenue neutral" over a long period, even with the proposed personal tax cuts that could go alongside the CGT.

"Grant Robertson and Jacinda Ardern want more money for the Beehive," Bridges said.

"Pigs will fly when this is fiscally neutral."

"Clearly there is some tax relief items there that we will have a look at the detail on. But none of those are going to make up for the $32b over the next decade that is being swiped out of Kiwis pockets."

POTENTIAL TO TEAR COALITION APART

Any changes will need to go through Cabinet before being passed - a Cabinet that features NZ First leader Winston Peters, who has long opposed CGTs.

Meanwhile, the Green Party is very pro-CGT, with co-leader James Shaw saying the Government doesn't deserve to be re-elected if it doesn't implement it.

Bridges said the two opposing points of view could tear the coalition apart.

"Winston Peters said farmers won't face any problems. That's a CGT that James Shaw couldn't sign up to in good conscience," Bridges said.

He said if farms were exempted it would naturally drive investment to the primary sector and activity there that Shaw - as Climate Change Minister - would not be happy with.

"If you start exempting, as Winston Peters has said, farms and so on, James Shaw could not sign up to that."

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