The Government this afternoon announced their response to the Tax Working Group’s final recommendations (which effectively recommended a comprehensive Capital Gains Tax).
The Government have ruled out introducing a Capital Gains Tax regime.
Jacinda stated that under her leadership she will no longer campaign for or mandate a CGT. The reason for this is because they cannot gain consensus with the other parties. She said they would only pursue a CGT if they were able to gain consensus with the other parties.
While she supports it personally and thinks it fair, she said that they haven’t been successful in implementing CGT in 2011, 2014 and 2017, and that it is now time to accept that they can’t gain the consensus they want in Government. She also acknowledged that the majority of New Zealanders don't believe in it. For those reasons, she says it is time to accept that this is something that her Government will not be able to deliver.
Instead, the Government will be focusing on:
- Targeting multinationals and others not paying their fair share of tax
- Cutting business compliance
- Providing a boost to NZ start-up businesses
- Better enforcement of the existing tax rules
- Targeting of land bankers and property speculators (she repeated this point twice)
We are surprised by the Government’s response, as like most other New Zealanders, we were resigned to at least a watered down version of the Tax Working Group’s proposals. Considering the outcome, it certainly hasn’t been a cheap exercise (costs are expected to come in at $2M, with $1.6M spent to date), but it is no doubt welcome news.