Winston Peters and Simon Bridges both claim credit for killing CGT

2019-04-17 04:49:59

National leader Simon Bridges and NZ First leader Winston Peters are both claiming credit for killing the capital gains tax.

Prime Minister Jacinda Ardern announced on Wednesday that the Government would not be implementing the recommendation of their own tax working group - a broad-based CGT that would bring the tax on profits from investments into line with profits from income.

Ardern said that while she still personally believed that a CGT was the right decision the country clearly did not, so no party she led would campaign or implement one.

Ardern pointed to a lack of public support for the decision, noting Labour had campaigned on some version of a CGT for three elections in a row and had never won a public mandate.

But a TVNZ poll in February found that more people supported a CGT than not when it was paired with an income tax cut - one of the proposals from the working group.

Ardern made clear in her comments that the coalition itself was not able to reach a consensus on this, however, and given the Greens' strong support for a CGT it was clear NZ First were the party that stopped it.

Peters himself put out a tweet celebrating the move, saying "We've heard, listened, and acted: No Capital Gains Tax."

He told media that he went into the process with an open mind but had not been convinced of the merits of a CGT, and didn't think the public had either.

"There wasn't sufficient agreement in the country," Peters said.

"We said at the very beginning that there was not going to be an explosion in the accountancy or valuation professions."

Peters said the "absolute complexity" drove him away from the CGT, and that he had never seen an overseas example where the CGT had fulfilled its actual purpose.

He also said it would be unfair to those forced into the housing market during the fourth Labour Government in the 1980s to pull the rug out from under them.

"Bear in mind this. There are a whole lot of people in the housing market, pushed there by the jungle created by the Lange Government," Peters said.

"The experience from that jungle is that people thought 'I won't go into the sharemarket that's so irresponsible, I'll go into the housing market.' Having done that and sending people those signals in our view it would be wrong to start hammering them for that decision being forced on them by irresponsible neoliberal politicians."

He rejected any notion that he had too much political power.

"Politics and coalitions are difficult to operate. This has been the most successful coalition in an unexpected way, it's not a matter of being happy or who won or who lost."


Bridges said his party's campaigning had "embarrassed" the Government into the backdown.

"Ultimately National has had a relentless opposition to this, to the point where some have criticised us for it. It's a big win for National, it's a big win for New Zealanders," Bridges said.

"National supporters will feel really good. We've embarrassed the Government out of a capital gains tax."

He said his party's opposition had stopped NZ First "quietly" allowing the tax through.

"If it was up for NZ First they would have let this go through to the keeper, if it had all gone quietly," Bridges said.

He said the economy had suffered from the uncertainty over the tax.

"The New Zealand economy has suffered while the Government has had a public discussion about a policy they couldn't agree on. Put simply, this is political and economic mismanagement," Bridges said.

"In the Government's so-called year of delivery, they've dropped their flagship tax policy."

Peters rejected giving any credit to Bridges, who he said had basically no credibility as leader.

"Mr Bridges from day one has been barking up any old tree."


Confidence and supply partner the Greens have been forced to swallow another 'dead rat'.

Co-leader James Shaw expressed the "disappointment" of the party and said had conveyed this to the Prime Minister when she phoned to tell him last week.

"We're disappointed that the Tax Working Group's unanimous recommendation to implement a capital gains tax on investment properties isn't going ahead.

In February, during the commencement debate as Parliament opened for 2019, he questioned whether the Government "deserved" to be re-elected if it did not implement CGT.

When asked if he resiled from those comments, he said he didn't - but said the Government did deserve to be re-elected.

"I absolutely believe that New Zealand's tax system does need to be fairer and progressive … when I said that I was making a call for bold action and when you look at what this Government is doing on climate change … we are a bold Government. I absolutely believe we deserve to be re-elected.

Every coalition Government had difficult decisions to make and no one party got everything all its way, he said.

"Today is one of those days."

He did not agree that NZ First held too much power in the coalition.

"It requires all three parties to agree on anything for any decision to go forward."

He conceded that MMP made it easier to stop a change than implement one however.

When asked if he thought it was Bridges or Peters who killed the CGT, Shaw replied: "Well, Winston Peters is in Government, Simon Bridges is not."

There were many recommendations yet to explore, he said.

The Green Party would continue to work with Labour to make New Zealand's tax system fair, more progressive, and to advance other proposals in the Tax Working Group, report such as pollution pricing, he said.

The party has long called for a capital gains tax as a way to level the playing field for hard working New Zealanders who have struggled to get ahead, he said.

"Taxing income from capital the same way we tax income from work would reduce the wealth gap, fix the housing crisis and build a more productive, high-wage economy."

Generations of New Zealanders locked out of the property ladder shouldn't be left in an unfair position for life, he said.


ACT Leader David Seymour said taxpayers would be relieved at the news the Government had "backed down", he said.

"But the uncertainty created by the Government will have done real harm to the economy.

"The Tax Working Group process has put small business owners, farmers, KiwiSavers, and others through months of anxiety."

"This decision shows just how similar the Labour and National parties are, particularly on tax. Labour campaigns from the left, and National from the right, but both ultimately govern from the centre. The end result is a heavier tax burden for New Zealanders."

Since 2015, Labour and National had been able to agree on a 'bright-line test' capital gains tax, with the only disagreement being over the time period to which it should apply, he said.

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