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A third of National voters favour Labour's CGT over National's asset sales, half support the SOE sell-down; RBNZ CGT view is for comprehensive tax
A third of National Party voters would favour a capital gains tax over partial asset sales, while just over half supported their party’s policy to sell down government stakes in five state owned enterprises, according to a TV3 Reid Research poll.
Over 80% of Labour voters were in favour of their party’s capital gains tax policy over asset sales, slightly below support shown by Green Party voters for an introduction of the tax, which has been their party's policy since 2003.
Meanwhile, in completely separate comments, the Reserve Bank of New Zealand has indicated that if a capital gains tax were to be introduced, it should include owner-occupied housing - something missing from the Labour party's tax policy.
Capital gains tax vs asset sales
An integral part of this year's general election is expected to involve the 'capital-gains-tax-versus-asset-sales' debate, with Labour, National, and the media, positioning the policies as alternatives to one-another in efforts to reduce government debt and get the governments books back to surplus within the next three to four years.
The cornerstone of Labour’s recently announced economic policy was a 15% capital gains tax on most assets other than the family home, which would be in place by April 1, 2013, if Labour was in a position to form a government after the November 26 election.
Labour’s policy, together with making the first NZ$5,000 of income tax-free, a new 39% top personal tax rate on incomes over NZ$150,000 and removal of GST on fresh fruit and vegetables, would mean government would have to borrow more debt than the current track in the short-term, but, according to Labour, net government debt would hit zero before the current budget plan.
The National Party is proposing to sell up to 49% stakes in Solid Energy, Mighty River Power, Genesis Energy and Meridian Energy, as well as a further sell-down of the government’s holdings in Air New Zealand.
The government booked the NZ$5-7 billion expected proceeds from the sales, which would occur within a 3-5 year timeframe following the election, in its 2011 Budget debt and surplus tracks.
'Dissent within the ranks?'
Released tonight, the TV3 poll of 1,000 voters asked if they preferred Labour’s capital gains tax policy, National’s mixed-ownership model, or neither, as ways for the government to increase its income or reduce its debt.
Results showed 31.9% of the 476 National-aligned voters polled favoured the capital gains tax option, versus 51.5% who said they preferred National’s ‘mixed-ownership’ asset sales model.
A further 11.8% of National voters polled chose neither, while 4.8% said they did not know.
The poll comes on the heels of the National Party's annual conference in Wellington a week and a half ago, at which Finance Minister Bill English fielded questions from members who questioned the policy, saying they were concerned shares would end up in the hands of foreign investors. Watch English's response to those questions here.
Of the 254 Labour supporters polled, 83.5% said they would favour the capital gains tax option, while 6.7% favoured the mixed-ownership model. A further 8.3% said neither, while 1.6% said they did not know.
Green Party voters were out in front in terms of support for a more comprehensive capital gains tax than the status quo, with 84.1% of the 82 Green-aligned voters saying they favoured that option. Eleven per cent favoured the mixed-ownership policy, 3.7% said neither and 1.2% said they did not know.
That left 105 undecided voters, 54.3% of which indicated support for the capital gains tax, 13.3% for mixed-ownership, 21% said neither, and 11.4% said they did not know.
'Should be comprehensive'
Meanwhile the Reserve Bank of New Zealand, in a submission released this week to the Productivity Commision's investigation into housing affordability, indicated its position on a capital gains tax would be that it include owner-occupied housing - something not within the scope of Labour's policy.
"One tax issue that periodically receives considerable attention is capital gains taxation. Houses bought by investors with the intention to resell are already, in principle, caught by the income tax net, but New Zealand does not have a general capital gains tax," the Reserve Bank says in its submission.
"The Reserve Bank has never taken a stance on the general merits or otherwise of capital gains taxes. We have fairly consistently noted (including in the Supplementary Stabilisation Instruments report (Blackmore et al 2006) and the 2007 submission to the Commerce Committee) that there is little evidence internationally that countries with capital gains taxes have experienced less marked cycles in house prices," it says.
"In the 2007 document, we noted that, in practice, capital gains taxes are only levied on realised gains (rather than accruals), which creates additional distortions and that capital gains taxes usually largely exclude owner‐occupied houses, even though unleveraged owner‐occupied housing is the most lightly taxed component of the housing stock.
"We summed up that “capital gains taxes are common internationally but are hard to design and implement in a way that works well”. To avoid establishing new distortions, any capital gains tax should only tax real capital gains and needs to treat gains and losses relatively symmetrically," the Reserve Bank says.