Government taking 'measured' approach as coalition partners seek consensus on Tax Working Group's findings; Winston Peters sticks to the script

Government taking 'measured' approach as coalition partners seek consensus on Tax Working Group's findings; Winston Peters sticks to the script

The Government has been quick off the bat to allay fears the release of the Tax Working Group’s (TWG) report would spark a major overhaul of the tax system.

It said, in the opening line of the press release it sent out on the report, that it would respond to it in a “measured” way, and that it was “highly unlikely” all the recommendations would be implemented.

Finance Minister Grant Robertson expanded on this comment when talking to media, saying: “Given the breadth of the recommendations that are here, it is unlikely that all of them will be able to be implemented.

"I’m not picking out a specific part of that at this point, it’s just clear when you’ve got a report of this nature, that covers this much ground, it’s unlikely that will happen.”

Revenue Minister Stuart Nash went on to say: “The overall findings confirm that there is no need for a major overhaul of the system.

“Our response will preserve the key principles of our existing broad-based low-rate tax system. In the words of the Prime Minister, we will not throw the baby out with the bathwater.”

However, asked whether Nash and Robertson were brave enough to implement changes they were spooked by in the last election, Robertson said, “I don’t get spooked that easily.”

While Labour and the Greens have in the past been supportive of a capital gains tax, NZ First has opposed it.

The Greens in a statement on the report reiterated that it had "long-held" policies of taxing income from capital more fairly and a greater use of ecological taxes.

"It is great to see the Tax Working Group’s Report focus on both of these issues,” it said.

NZ First didn't release a statement. When pressed by media on the Party's position on extending the taxation of capital, Leader Winston Peters was resolute he was going to "stick to the script". 

“We’re going to read the report, take serious advice on what tax experts and others think of that, and more importantly, consult the business and working end of town. And when we’ve known what the people have said, we’ll make a decision by the end of April," he said. 

Quizzed on comments he reportedly made this week, assuring farmers they wouldn't be affected by a capital gains tax, Peters said: “I can reassure the farming community and regional New Zealand that we’re not going to have them panicked by the media with rumour and malice… We’re going to ensure that they get their voice heard…”

Robertson made it clear he wouldn’t rule in or out carving out exemptions for agriculture.

He said NZ First was engaging “very constructively” as the three parties that form the government seek consensus on how to move forward.

He said the Government had had “preliminary discussions at a political level” with Peters on the report.

“They’ve been very very general at a level of principle. Now we’re in a position to work through the detail.”

Robertson stressed the Government would honour the terms of the Coalition Agreement as it considered how to translate some of the TWG's findings into legislation.

Robertson didn't commit to providing more funding for the Inland Revenue, despite the TWG raising the following concerns: 

"If the Government decides to proceed, it is crucial that Inland Revenue is fully resourced and has the capability to develop and implement the new tax. The policy and legislative processes must also include thorough consultation with a diverse range of voices, using both formal and informal channels.

"The Group also notes that the Government’s stated timeframes for implementing tax reform will be challenging. The Government will need to ensure additional resources are available for implementation if these timeframes are to be achieved."

The Government will report back in full on the TWG’s findings in April.

It had committed to passing legislation to implement policy changes arising from the report before the end of the Parliamentary term. However no policy measures will come into force until April 1 2021, meaning people will be able to vote on any decisions the Government makes on tax. 

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It's impossible to talk to anyone at IR or to get them to respond to letters already. The "more for less" mantra ain't working.

It's a dogs dinner. Just introduce stamp duty rather than create more accountants and valuers jobs.


Yes, the compliance costs will be much lower.

And, based on the UK experience, a stamp duty would raise more revenue.

In fy 2017/18 CGT raised ~GBP8 billion, while stamp duty raised ~GBP9 billion.

Nthing the stamp duty; a surgical strike on property that can be varied (even made negative for FHBs if you so desire) that doesn't take out small business sales and Kiwisaver as collateral. Then again, that would actually address the problem, rather than making a hugely complicated farce to make a political statement about wealth.

A land tax would be even better in terms of compliance and revenue stability without the worker mobility drawback

Stamp duties are terrible - advantaging wealthy and large corporates rentiers who are in the position to buy once and hold forever. They seriously reduce mobility as people can't afford to sell and buy in same market - so you end up with lots of economically inactive older people in middle of cities that effectively places huge additional pressure on commuting infrastructure. The only rationalisation for them is that it is easiest for govt to snatch money at time of sale of a major asset.

Land tax is super simple with low compliance costs, and promotes efficient use of land (motivating economically inactive to move out of more expensive inner city houses making them available for workers and reducing transport woes) and sensible prices for property. And it casts a wide net to effectively catch the most affluent.

You can zero rate a stamp duty for first home buyers. All of the things you've suggested will apply to land taxes, except they hit asset rich but cash poor people the hardest. Given our low wages and high house prices, this is a lot of people. You're also moving elderly people away from things like hospitals, which are in central locations for a reason, and away from their family. Good luck with that.

Also, who values land? Even in affluent areas, steep land costs more to develop than flat land. Will there be discounts for people who incurred higher construction costs to make efficient use of land? I mean, this is super simple, right?

"Not all of the measures will be implemented" - correction.. .none of them will be implemented. There is no way McSmiley face can walk into the next election pushing any of these proposals with a hope of winning.

Absolute political suicide.. but this is the problem.... how does McSmiley Face say thanks for your hard work TWG but we have decided to completely ignore all of your recommendations.

Complete an utter waste of time... would have preferred another flag vote than pay these muppets to mull over tax that cant be implemented and they couldn't even agree on the end proposals.

The strategy will be to become pregnant just prior to the election campaign and in so doing distract half of the electorate who would rather talk about babies than taxes

That or a wedding to keep people distracted.

It’s only words and words are all we have to keep your minds at bay. This is a talker government. So was the last one as well. Apologies folks I voted for MMP. How stupid. Thought it would improve things. Complete opposite. What a sorry lot of MPs & governments we have had as a consequence. Still, let’s have more tax. Then we can have more cycle lanes and river statues than any other country on this planet. Wow. What priorities are there otherwise for the ordinary simple tax paying citizen who doesn’t know how lucky they are.

They'll dial it back to landlord CGT only. Everyone hates landlords.

CGT and draconian new tenancy rules will fix the Landlord problem - there wont be any, so at least the tenancy tribunal can be disbanded and some cash saved.

McSmiley, Billy Bunter, and Twatford. What a combination. Perhaps after 2020 they could tour as the three stooges.

Aucklanders rentvesters who were locked out of their own housing market by Chinese rent seeking capital now own property in Hamilton, Tauranga, Rotorua, Taupo etc. Long term I see the CGT doing two things, pulling money back to Auckland, and pushing people out of Auckland as they pivot to home ownership to avoid the tax.

They sure do. Wonder what they will do when there is a further exodus and rents go parabolic?

Rents going parabolic? Dream on. Landlords can only exit if somebody buys the house.. and that someone is likely to be an ex-renter household. House removed from the rental pool, one family removed from the renter's pool. Oh, and between the ( rubbish) kiwibuild houses, and the SHA/state house building housing supply is going to be increasing faster than demand anyway.

But keep your fantasy going, it amuses me.

..Perhaps he is talking about a 'sad' parabola?

Nah, he's not daft enough to think prices will go to zero.

...How about we are at a point to the left of the y-axis on the 'happy' parabola?

Did you notice the squadron of Pigs with Lipstick fly over your place dropping leaflets offering Kiwicrap flat pack sheds that qualify for houses under the COLL new housing standards legislation.

Still a few spruikers bullish on rents it seems. They will disappear when the sun sets, along with the property rental wings of real estate companies.

At the end of the day this is a tax on peoples savings for the future pure and simple. Sorry Stuart apart from repeating rehearsed catch phrases you looked like a stunned mullet not really sure you added anything.

Just another nail in the coffin of the engine of the economy, SMEs, and another chapter in our continued economic decline. More taxes and bureaucratic empires being built at the expense of the productive economy. I thought that an ever expanding welfare state was supposed to improve our “well being”. All the evidence out there points in the opposite direction...

In the 90's a swag of planners in govt and semi gov jobs rubbed their hands, resigned to set up private practices to do reports needed to hand to govt and semi govt entities by developers in the wake of the Res Management Act, supposedly designed to speed things up. now its the turn for bean counters.

Big mistake was the restrictions put on the working group. Should have let them look at every option- so were they worried if they got free reign they would have come up with a TOP type tax suggestion?

Nah gotta keep it simple and somewhat palatable.
The overwhelming majority of people have the capacity of BHSL to digest tax policy.

Ya don't want to be in the business of selling logic to morons.

TOPs tax is simple. Watch this cgt turn into a bunch of complex exemptions ably exploited by tax professionals. The bleating and misinformation that has started already is hurting my ears. The radio and tv will be off for the weekend!

TOP's policy is economists trying to solve a problem without the constraints of reality.

Ya gotta admit, though...That is better than bureaucrats and lawyers designing tax policy with the arbitrary constraints of ideology.

Maybe you should check out how the ex-Deputy IRD Commissioner voted on the Report. I think you'll be pleasantly surprised.

My bet is that it doesn't get across the line, very controversal policy. Landlords will simply put up the rents on their rentals.

And how long do they stay empty before the landlord decides some income is better than none?

This will greatly increase the level of complexity of the tax system and even more so,once Winston demands more exemptions. It will be wonderful for lawyers and accountants and the tax avoidance industry.

Initially,I felt that I could support CGT,but not this. Does anyone know how it would affect PIEs?

I,m sure Megan Woods hope it will increase pies and give her strength should she need to make a trip to
79 Corinthian Drive
in early March.

Not a very politically correct comment but what if Maori who claim a $45 billion economy paid their share of tax? Surely this would reduce the amount needed by doing this CGT. Not forgetting Google etc.

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