NZ First: Keep tax simple
NZ First leader Winston Peters has said the party would not support tax changes that resulted in an ‘‘explosion of the valuation and accounting professions’’.
The Tax Working Group set up by the Government to consider changes to the tax system recommended last month that capital gains on investment properties, second homes, businesses and shares should be taxed from the date a capital gains tax came in, including on assets that people already owned.
Peters’ statement is likely to be viewed as significant and could be taken to imply NZ First might only support a narrow tax change that excluded assets that were hard to value, such as privately-owned businesses.
However, it could also suggest NZ First would only support the taxation of assets that were acquired after a capital gains tax was introduced – an approach known as ‘‘grandparenting’’ that has lower compliance costs.
Grandparenting would avoid the red tape of a ‘‘valuation day’’ from which all taxable assets would need to be valued for tax purposes.
However, the Tax Working Group rejected the idea in part because it would give people an incentive to hang on to assets they already owned for no good reason other than to minimise tax.
Grandparenting would also mean revenues from a CGT would take much longer to build up, reducing the Government’s ability to offer touted benefits from a CGT such as income tax cuts or new incentives for KiwiSaver.
Despite that, EY tax expert Paul Dunne forecast in November that a final decision between a ‘‘valuation day’’ and grandparenting might come down to politics.
He noted Australia changed tack and adopted grandparenting, against the advice of experts, when it introduced a capital gains tax because of what he described as political considerations.
‘‘You do wonder given the timeframes and the challenges of getting quality legislation whether we might see something similar where you might see grandparenting for a while,’’ he said then.
Peters was not explicit about what NZ First might support but said ‘‘tax policy needs to be simple and we will keep it that way’’.
‘‘The scaremongering about houses, boats, art works and exemptions for Maori, and the myriad other fake trails thrown up by our desperate opponents doesn’t divert New Zealand First from two key points about the report.
‘‘First, we want to hear from New Zealanders their views on tax reform. Second, having listened to the public, we will work with our coalition partner to fashion simple tax policies that will work,’’ he said.