The Government canned a capital gains tax yesterday after the coalition parties failed to reach consensus on it, but Prime Minister Jacinda Ardern said the coalition had agreed to tighten rules around land speculation and work on ways to counter landbanking.
Ms Ardern said: “Work will also continue to cut red tape for business and crack down on multinationals avoiding paying their fair share of tax in New Zealand. We have already made changes to address base erosion & profit shifting, and we will shortly release a discussion document on options for introducing a digital services tax.”
Although the Labour Party has worked at introducing a capital gains tax for 8 years, Ms Ardern said her party still couldn’t secure a mandate for it.
“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.
“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.”
Bridges: National was “front & centre” of opposition
Among those claiming credit for forcing the Government backdown, National Party leader Simon Bridges praised party members for their role. In a message to members he said: “Today, Jacinda Ardern has finally released her Labour-led Government’s response to imposing a capital gains tax on hard-working New Zealanders. It’s a humiliating backdown.
“After campaigning on a capital gains tax for 3 elections and making it a cornerstone of Labour’s election policy in 2017, Jacinda Ardern has finally come to the realisation that the New Zealand public don’t want it, and she doesn’t even have the support of her own Government to deliver it.
“Thanks to the incredible support of members & supporters like you, National has been front & centre of exposing how such a punitive tax would hurt Kiwis, their families & our economy.”
Taxpayers Union says campaign blitz worked
Taxpayers Union executive director Jordan Williams said: “All up, more than 5000 New Zealanders used our tool at www.AxeThisTax.nz to bombard Jacinda Ardern & Winston Peters with messages telling them to scrap this unfair, complex & costly tax. In addition, our efforts last year ensured that the vast majority of submissions to the Tax Working Group resisted Michael Cullen’s efforts. Today’s announcement showed that it worked.”
Peters: No compelling rationale or mandate
NZ First leader Winston Peters said: “This decision will provide more certainty to New Zealanders, and because the last National Government already brought in a capital gains tax through the bright line test, NZ First’s view is that there is neither a compelling rationale nor mandate to institute a comprehensive capital gains tax regime.
“Current tax policy, rigorously enforced by an Inland Revenue Department properly resourced, will by itself:
- improve the administration of existing tax policy, and
- target those multinationals not paying their fair share of tax.
“We also welcome the announcement that the coalition government will be urgently exploring options with the Inland Revenue commissioner, in concert with central & local government, for taxing vacant land held by landbankers and reviewing the current rules for taxing land speculators. Tightening these rules was a priority for NZ First.”
Attribution: Government release.