It's dead.
The Government will not introduce a Capital Gains Tax having failed to reach a consensus, with coalition partner NZ First opposing the move.
Prime Minister Jacinda Ardern said on Wednesday that she still believed there were inequities in the tax system that a Capital Gains Tax could have helped to resolve but it was clear many New Zealanders did not believe in a CGT. She's now ruled out a CGT under her leadership in future.
“All parties in the Government entered into this debate with different perspectives and, after significant discussion, we have ultimately been unable to find a consensus."
This is the Government's detailed response to the recommendations of the Tax Working Group.
NZ First, long seen as the sticking point for the Government to get a CGT through, was quick with its own statement.
“There is already an effective capital gains tax through the Bright Line test brought in by the last National Government and New Zealand First’s view is that there is neither a compelling rationale nor mandate to institute a comprehensive capital gains tax regime,” NZ First leader and Deputy Prime Minister Winston Peters said.
National Leader Simon Bridges said after 18 months of waiting and a $2 million tax working group, "National’s relentless opposition" to a CGT had forced the Government to back down, but he said there were a range of taxes on the table and said Labour could not be trusted on tax.
“While the Government has backed down on a Capital Gains Tax, there are still a range of taxes on the table. They include a vacant land tax, an agricultural tax and a waste tax.
“Prime Minister Jacinda Ardern says she personally still wants a Capital Gains Tax and that our tax system is unfair. New Zealanders simply can’t trust Labour when it comes to tax," Bridges said.
This is the announcement from Prime Minister Jacinda Ardern:
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern announced today.
“The Tax Working Group gave the Government, and the country, an opportunity to look at the fairness of our tax system and debate options for change,” Jacinda Ardern said.
“All parties in the Government entered into this debate with different perspectives and, after significant discussion, we have ultimately been unable to find a consensus. As a result, we will not be introducing a capital gains tax.
“I genuinely believe there are inequities in our tax system that a capital gains tax in some form could have helped to resolve. That’s an argument Labour has made as a party since 2011.
“However after almost a decade campaigning on it, and after forming a government that represented the majority of New Zealanders, we have been unable to build a mandate for a capital gains tax. While I have believed in a CGT, it’s clear many New Zealanders do not. That is why I am also ruling out a capital gains tax under my leadership in the future.
“The Tax Working Group was a valuable exercise that has delivered some useful suggestions well beyond just the debate on CGT, and I want to thank the Group for its work. In fact the majority of recommendations will either be investigated further or have formed part of our work programme.
“There are other things that can be done to improve the fairness of our tax system. As such the Coalition Government has agreed to tighten rules around land speculation and work on ways to counter land banking.
“Work will also continue to cut red tape for business and crack down on multi-nationals avoiding paying their fair share of tax in New Zealand. We have already made changes to address base erosion and profit shifting, and we will shortly release a discussion document on options for introducing a digital services tax.
“My job now is to focus on the things we can and are doing to improve the wellbeing of all New Zealanders.
“The Coalition Government is addressing the long-term challenges New Zealanders face such as mental health, climate change and child poverty and responding to the March 15 terrorist attack and keeping New Zealanders safe. Those challenges will be my priorities for the remainder of this term,” Jacinda Ardern said.
This is the statement from Finance Minister Grant Robertson and Revenue Minister Stuart Nash:
The Coalition Government today released its response to the recommendations of the independent Tax Working Group report.
The report found that on the whole New Zealand’s tax system was working well, but made a number of recommendations to improve fairness, balance and structure.
The Government is not adopting any of the recommendations on capital gains taxation and has agreed no further work is necessary on that aspect of the report.
“The final report covered all aspects of the tax system, and a number of the recommendations will now be considered for inclusion in the Government’s Tax Policy Work Programme,” Grant Robertson said.
“That includes exploring options for targeting land speculation and land banking.
“We intend to direct the Productivity Commission to include vacant land taxes within its inquiry into local government funding and financing,” Grant Robertson said.
“Officials have been directed to prioritise work on the TWG’s recommendations on ways to encourage investment in significant infrastructure projects and improve the integrity of the tax system to crack down on tax dodgers,” Stuart Nash said.
A refreshed tax policy work programme will be released mid-year.
The Coalition Government reiterated it will not introduce resource rentals for water or a fertiliser tax in this term of Parliament.
Other priorities for the Government this year include progressing legislation for research and development tax incentives; GST on low-value goods from offshore suppliers; a discussion document on a digital services tax, and further work to ensure multinationals pay their fair share of tax.
Grant Robertson and Stuart Nash thanked the Tax Working Group members for their work.
This is an announcement from NZ First:
New Zealand First Leader Winston Peters has welcomed Cabinet’s decision not to implement an extension of capital gains taxation, following the Prime Minister’s statement in response to the Tax Working Group Report.
“This decision provides certainty to taxpayers and businesses. We in New Zealand First wanted first and foremost for New Zealanders to have time to discuss and debate the contents of the report,” stated Mr Peters.
“During that time we have listened very carefully to the public.
“There is already an effective capital gains tax through the Bright Line test brought in by the last National Government and New Zealand First’s view is that there is neither a compelling rationale nor mandate to institute a comprehensive capital gains tax regime,” said Mr Peters.
“We also welcome the announcement that the coalition government will be urgently exploring options with the Inland Revenue Commissioner, in concert with central and local government, for taxing vacant land held by land bankers and reviewing the current rules for taxing land speculators. Tightening these rules was a priority for New Zealand First.
“Current tax policy, rigorously enforced by an Inland Revenue Department properly resourced will by itself 1) improve the administration of existing tax policy, and 2) target those multi-nationals not paying their fair share of tax,” Mr Peters said.
This is the statement from National Leader Simon Bridges:
After 18 months of waiting and a $2 million tax working group, National’s relentless opposition to a Capital Gains Tax has forced the Government to back down, Leader of the Opposition Simon Bridges says.
“While the Government has backed down on a Capital Gains Tax, there are still a range of taxes on the table. They include a vacant land tax, an agricultural tax and a waste tax.
“Prime Minister Jacinda Ardern says she personally still wants a Capital Gains Tax and that our tax system is unfair. New Zealanders simply can’t trust Labour when it comes to tax.
“The New Zealand economy has suffered while the Government has had a public discussion about a policy they couldn’t agree on. Put simply, this is political and economic mismanagement.
“Investment has completely slowed down while business owners worry what the future looked like. That has made New Zealanders worse off.
“Our economy was growing at four per cent two years ago – it’s rapidly heading down to two per cent. They have no economic plan to speak of at all because the Government has sapped the confidence out of small business owners and mum and dad investors.
“In the Government’s so called year of delivery, they’ve dropped their flagship tax policy.
“The big question remains, what are they doing to encourage the economy to grow?
“Unlike the Government, National has a plan when it comes to the economy. We won’t introduce any new taxes in our first term and we will index tax brackets to inflation. National believes Kiwis deserve to keep more of what they earn.”
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