Source: Tax Justice Aotearoa (TJA)
Tax Justice Aotearoa (TJA) and the Better Taxes for a Better Future Campaign have expressed their disappointment with the narrow Capital Gains Tax Labour announced this morning, describing it as ‘unambitious’ at a time that calls for more, but welcomed Labour’s commitment to a CGT.
“Tax Justice Aotearoa and the Better Taxes campaign, along with numerous public opinion polls and expert commentators, have supported a CGT because it has the promise to deliver real benefits for New Zealand”, says Glenn Barclay, Tax Justice Aotearoa and Better Taxes spokesperson. “But it really has to be as comprehensive as possible to deliver long-term and meaningful change. Labour’s policy represents a first step, but it doesn’t yet look like it will deliver on the potential benefits to New Zealanders of a comprehensive CGT.”
“We have a good understanding of the challenges facing the country and both the Treasury and Inland Revenue have recently produced reports that demonstrate that we will have trouble addressing these challenges unless we raise substantially more tax revenue,” says Glenn Barclay. “In light of all of this we can only describe Labour’s policy as ‘unambitious’.”
“Labour’s policy should help provide some balance to the property market and it is good to see them prioritising GP visits with the limited funds that this tax is likely to generate, but much more is needed to address other issues in the health system, including staffing and capital investment. And while health is a major issue facing the country, we also need to better fund our education system, respond effectively to climate change, address poverty and inequality, and more to meet the needs of our ageing population”, says Glenn Barclay.
In 2023 IRD conducted research that demonstrated that the wealthiest 311 families in New Zealand had an effective tax rate of 9.4% compared to just over 20% for the average New Zealander. Untaxed income from capital gains was a big part of the ultra wealthy families’ low tax rate This tax policy will have only the lightest impact on addressing that discrepancy.
“This policy will still leave us as an outlier internationally, where most countries in the OECD have a comprehensive CGT. A comprehensive CGT is a common sense way to gather resources we need, address inequality in our tax system and improve housing affordability. We think that Labour should go further so it can deliver for New Zealanders,” says Glenn Barclay.
“The policy does represent a small step towards a fairer tax system and give us something to build on, including supplementing the CGT with other tax changes that would improve outcomes for New Zealanders,” says Glenn Barclay.
