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March 4, 2019 | by  | in News |
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The Capital Gains Tax, and Other Things for Hosking to Yell About

The recent report of the Tax Working Group has caused a stir, especially with the suggestion of a capital gains tax.

The Tax Working Group was asked by the government to look at whether our current tax system is fair and balanced. In their Future of Tax report, the Group effectively concluded ‘no’; due to the way we tax capital gains and natural capital.

The biggest public debate so far has been around introducing a capital gains tax, which taxes the rise in value of assets such as property.

For example, if you were to buy a second property for $500,000 and sell it for $750,000, under the current system that $250,000 gain is untaxed. Under the new proposal, the $250,000 would be taxed as part of your income.

The Group also recommended using environmental taxes as a way to make sure individuals and businesses are charged for their impact on the ecosystem. It is hoped that this will shift behaviours and help New Zealand to transition to a more sustainable economy.

Naturally, the proposal has been criticised. Simon Bridges, National Party Leader, has called the recommendations “an assault on the Kiwi way of life”.

Much of the criticism so far has centred on concerns about over-complicating the tax system. This may became significant in the debate, as New Zealand has a relatively simple system compared to other countries.

Labour’s government partner New Zealand First, who have long opposed a capital gains tax, are taking a cautious approach to the proposals, seeking their own advice on the implications of any new taxes.

The Green Party welcomed the Group’s report, as it aligns with much of their economic platform.

The government is considering the Group’s proposals for a final decision in April.

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