Ardern flexible on CGT proposal

Prime Minister Jacinda Ardern concedes that she must remain flexible on the proposed capital gains tax, because of the constraints of leading a coalition government.

Ardern told Stuff that while New Zealand’s current tax system is ‘‘fantastic’’ in its simplicity, ‘‘debate is healthy’’.

The Government has organised a tax working group to consider New Zealand’s options on tax changes.

But when the coalition government – made up of Labour, the Green Party and NZ First – shares its report with the public in April, all three parties must support its conclusions.

Speaking to Susie Ferguson on Radio New Zealand’s Morning Report, Ardern conceded that presiding over a coalition government meant she would need to be flexible about the proposed tax.

‘‘My role now is consensus on the back of the working group report to determine what all the parties will support and then presenting that to the public in April.’’

Ardern told Stuff the tax working group saw the country’s absence of CGT as an issue. ‘‘It is something worth having a debate about.’’

She also denounced false statements about the proposed tax.

‘‘I’ve heard some statements that are actually totally misleading, that imply somehow it’s retrospective. It’s not.

‘‘That it’s on accrual? It’s buying large? It’s not. And that it’s a double tax – it’s a death tax – all of these things that doesn’t actually enhance the debate.

‘‘Let’s debate what was there in the report.’’

She said she did not want the family home to be included in the proposed tax. And to the people who thought it should be considered, ‘‘that’s for them’’. Jacinda Ardern

Ardern pushed back on the suggestion that employing the tax would hinder New Zealand’s economic growth.

‘‘When it comes to this idea of having impact on productivity, one of the problems we’ve had is that we have continued to have different treatment of income in our system which hasn’t necessarily encouraged investment in the productive economy,’’ she said.

‘‘People have invested in housing when actually we need them to invest in other parts economy.’’

Countries that have introduced a CGT, such as South Africa and Canada, saw their growth rates improve in the fiveyear period following the change, Ardern said.

The concerns of New Zealand farmers and small businessowners were ‘‘top of mind’’.

She told Radio New Zealand that the Government had asked the tax working group to find ways to redistribute revenue of our brought in by the tax backto the taxpayer.

‘‘The vast majority of people would end up being better off,’’ she said.

‘‘We did ask the tax working group to do that so we could consider an entire package; one that, yes, might generate more revenue, but one that would put revenue back out to New Zealanders as well.’’

New Zealand is an ‘‘anomaly’’, because Belgium and New Zealand are the only two countries in the OECD without the tax, she said.

‘‘That will be because other jurisdictions have looked at the fairness and equity of their system and treated income as income, whereas we haven’t done that.’’

The release of the Government’s report in April would be followed by another round of consultation.

‘‘Any changes won’t come into effect until after the next election.’’

‘‘My role now is consensus . . . to determine what all the parties will support and then presenting that to the public in April.’’