CGT angst blamed on bad property tactics

Sir Michael Cullen says that although he once called a capital gains tax ‘‘socially unacceptable and economically unnecessary’’, he has since changed his mind.

The chairman of the Tax Working Group has been leading the charge for a capital gains tax. The working group last month issued a report saying the Government should introduce a tax on capital gains from almost all investment classes.

Cullen said there were problems of fairness in the current system.

‘‘New Zealanders earning just salary and wages are taxed on their full income but we have several situations where you can earn income from gains on assets and not be taxed at all.’’

That is a very different stance from that he took in 2000, as Labour finance minister.

Then, when the Organisation for Economic Co-operation and Development said New Zealand should introduce a capital gains tax to boost investment and savings, he rejected the suggestion outright.

Media reported at the time that he said the recommendation was ‘‘extreme, socially unacceptable and economically unnecessary’’.

‘‘Basically it is political suicide in New Zealand,’’ his spokesperson was quoted as saying.

Cullen said yesterday that things had changed since then.

‘‘But it does make clear that I was not appointed to chair the Tax Working Group as a lifelong proponent of a capital gains tax.’’

He pointed to a quote from economist John Maynard Keynes: ‘‘When the facts change, I change my mind. What do you do, sir?’’

Cullen said: ‘‘And, on balance, I have.’’