D-day for capital gains tax advice

Robertson says they don’t expect to make wholesale changes

The Tax Working Group will today unveil its highly anticipated final report and its recommendation on a capital gains tax. National Leader Simon Bridges said he expected to see a “big, hairychested” capital gains tax (CGT).

But Finance Minister Grant Robertson has been at pains to point out that any CGT would not apply to the family home or the land under it.

“Nothing is predetermined, and we are not expecting to make wholesale changes to the New Zealand system, but it is important that we make sure New Zealanders pay their fair share,” he said in the House yesterday.

Ministers have stayed tight-lipped on the report’s details, but Deputy Prime Minister Winston Peters has suggested farmers should be exempt.

Speaking to The Country, Peters said there was “no way a CGT would have any effect on them [farmers] at all”.

“I can’t imagine any capital gains tax, anywhere in the world, would apply to the farming community because farming is about permanence, the long-haul and intergenerational investment. A CGT is about shortterm

speculation.” Peters and New Zealand First hold the balance of power in the capital gains tax debate.

It has been Labour policy to impose a CGT for the past three elections and the Greens have supported this tax for almost 20 years. NZ First has opposed it in the past.

Robertson has also said increases to income tax and GST are off limits and an inheritance tax has also been ruled out.

A Newshub/Reid Research poll shows that 54 per cent of New Zealanders would not support a decision to impose a CGT.

Just 32 per cent of New Zealanders would support a CGT, with 14 per cent saying they were unsure.

The Tax Working Group’s chairman, Sir Michael Cullen, has said a clear majority of the group supported an extension of the current CGT regime. At the moment, the bright-line test means someone is liable to pay tax if they sell certain residential property within five years of buying it.

In the Tax Working Group’s interim report released in September, Cullen said the group would not be recommending a reduction in the company tax rate.

It also ruled out wealth and land taxes.

It was, however, considering vacant land and empty house taxes.

In the past, Robertson has asked Cullen to come up with a “revenue neutral” tax package — whereby the tax the Government receives would be offset by tax cuts.