Government must be bold enough to bring in capital gains tax, Green leader James Shaw says

2019-02-12 03:08:50

Green Party co-leader James Shaw has pushed out the boat on a capital gains tax (CGT), asking whether the Government "deserves" to be re-elected if it doesn't implement one.

Shaw was speaking at the commencement debate as Parliament opened for 2019, in which party leaders lay out their plans for the year ahead.

In his speech, Shaw laid out his case for a CGT which would tax gains on capital (such as the profit made when selling a house) similarly to the way income from work is taxed.

"The Green Party have long been calling for this fundamental imbalance to be addressed. Every expert group in living memory has agreed with us. But no government has been bold enough to actually do it," Shaw said.

"If we want to reduce the wealth gap, to fix the housing crisis and to build a more productive, high-wage economy, we need to tax income from capital the same way as we tax income from work."

Shaw rubbished discussion of whether such a tax would be politically palatable, saying it was needed.

"The last question we should be asking ourselves is, 'can we be re-elected if we do this?' The only question we should be asking ourselves is, 'do we deserve to be re-elected if we don't?'"

He said the current tax situation - where gains made on investments such as property or a business is tax-free while income from work is taxed - was making inequality worse.

The Government has implemented a Labour Party policy of putting the question of a CGT to a tax working group, which has now delivered its report back - although it is not yet public.

The group, chaired by former Labour Finance Minister Michael Cullen, was asked to consider a CGT that excluded gains on the family home.

Labour MPs have promised that any changes made as a result of the group's recommendations would not go into effect until after the next election, meaning voters would have a chance to reject them.

The Greens have long-campaigned on a capital gains tax which excludes the family home.

The interim report from the working group suggested that other exemptions would also be in effect. It's understood art, boats, and jewellery will be exempted.

Profits from the sale of shares, businesses, land, baches, and investment properties could all be routinely subject to tax from 2021, however.

It's understood one of the options would be revenue-neutral, meaning a corresponding income tax cut would mean no more total tax is paid.

NZ First would need to sign off on any CGT.

The party's leader Winston Peters has campaigned against such a tax as recently as 2017.

National leader Simon Bridges made a point of quoting Peters on the matter during his commencement speech.

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