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Phil Goff - Source: ONE News -
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One of country's leading tax experts says New Zealand has fallen behind the rest of the developed world when it comes to implementing capital gains tax.
Professor Craig Elliffe from the University of Auckland's business school told TV ONE's Breakfast the tax was introduced in the US 100 years ago, the UK 50 years ago and Australia 30 years ago.
He said New Zealand has been looking at the tax since the 1960s but despite a series of positive reports "it seems to have floundered on the problem about the amount of revenue it would collect and the problems of implementation."
The call comes ahead of the release of Labour's much talked about financial package that will centre on taxing the profit people make on property sales, share trading, and businesses.
The tax excludes family homes.
It will also signal its intention to raise the top tax rate, creating a new threshold at well above $100,000.
Elliffe said the best pro-capital gains tax argument he had heard was about equity and fairness.
"No one has explained to me why someone on $100,000 a year and paying $25,000 on tax should be the same position as someone who makes a $100,000 capital profit and pays no tax at all."
However he did warn the anticipated 15% tax could mean a decline in the supply of houses, with more people opting to own rather than rent.
Elliffe added that the complexity of the tax means the "devil is in the detail" when its proposed implementation and design plans are announced.
However, in spite of Elliffe's optimism, ONE News revealed yesterday that Labour's in-house polling reveals that its capital gains tax is unpopular.
Labour polled 750 voters, asking them to rate the tax from 1 to 5, where 1 was strongly approve and 5 was strongly disapprove.
Almost a third, 31%, or respondents said they strongly oppose the idea.
There were 21% in the middle, with 17% strongly approving and 14% approving, an overall approval rate of 31%
Political debate ramps up
Labour's policy looks likely to pit the capital gains tax against National's asset sales and Phil Goff's upbeat about his plans for the economy.
He says it will allow Labour to pay down debt and leave almost
80% of taxpayers better off with a tax holiday on the first
$5,000
they earn.
He says it will also allow the Government to keep its assets.
A poll on tvnz.co.nz showed an even 50/50 split from people asked whether they thought National's state assets sales or Labour's capital gains tax was the best way to reduce the country's debt.
The topic sparked heated debate on Breakfast's Political Young Guns segment this morning.
National MP Simon Bridges told the show the policy would dampen growth in New Zealand.
"It comes down to do people want more tax? I don't think they do.
"And do they want an aspirational New Zealand where people can get ahead, and can earn more, and can be more, and can have growth - or do they want to dampen it in this way?" he asked.
Labour MP Jacinda Ardern responded with questions of her own.
"I would add: Do we want a productive economy in New Zealand and to be able to buy homes in New Zealand?"
She said the country faced a "stark decision".
"New Zealanders will need to decide come the election whether or not they back Labour's bold tax policy or whether they back.. selling our assets."
But Bridges said the policy would not work.
"We'll see today whether this is an exemption-riddled capital gains tax or a comprehensive one. Either way it's bad.
"If it's exemption-riddled it won't achieve the kind of things Jacinda's talking about. If it's comprehensive it will be incredibly hard on the system and also it will be incredibly unpopular."
Labour's tax policy is expected to be released at 3pm today.
What do you think of Capital Gains Tax vs state asset sales? Have your say on the messageboard below.
Add a Comment:
Post new commentjackhead said on 2011-07-17 @ 07:15 NZDT: Report abusive post
When Labour was last in power, we had billion dollar surpluses, for quite a few years. Where did the money go?? Now we, as a country, have to borrow to pay our debt. Always tax the rich... great, dumb... They are smart enough to avoid these things, that is why they are rich!. Us bottom feeders need to get of our rear ends and work smarter. Labour has been dishing out the dole for years and not much has improved for those receiving it. Time for a new REAL PLAN. National dont sell the assets!!
Chch Chris said on 2011-07-15 @ 17:49 NZDT: Report abusive post
If my investment property increases at the same rate as CPI, does that mean I am going to be taxed a CGT on inflation? The other question I have is: If my property loses value can I claim this lost and other costs associated with maintaining the property against my income tax?
kingfmly said on 2011-07-15 @ 14:59 NZDT: Report abusive post
Does everyone forget that it was the Labour Party that brought in GST to be the BIG saver of paying to much tax with out an election mandate to do it. Brought in after they were elected. And then sold off key Govt assets. WHO would TRUST THEM with a Capital Gains Tax, and not to change the rules once they were re-elected to be the Govt. IF THEY EVER will be....
Graeme Berryman said on 2011-07-15 @ 13:17 NZDT: Report abusive post
I take it that Valuation Day after introduction of the tax is to be the equivalent of the 1086 Doomsday date enshrined in English history. No account has been made for the insidious effect of inflation or that in USA interest payments on a mortgage are tax deductable, or the rampant import of low cost funds from overseas to generate excessive profits for the Australian dominated Bank market here in NZ
William Jobson said on 2011-07-15 @ 13:17 NZDT: Report abusive post
CGT is clearly needed to switch investment away from speculative ventures and into production. With some 20 finance companies having gone into receivership as a result of speculative ventures whilst their high flying founders have silted away money off shore or into family trusts it is clearly time for a change of emphasis. Labour accordingly has clearly got it right as we can no longer afford to support these tax dodging high fliers at our expense.