Source: Tax Justice Aotearoa (TJA)
Tax Justice Aotearoa (TJA) and the Better Taxes for a Better Future Campaign is calling on the Labour Party to go for the best, most comprehensive version of a tax on the income from capital gains (CGT), as an essential part of a better tax system.
“Tax Justice Aotearoa (TJA), along with numerous public opinion polls and expert commentators support a CGT because it has the promise to deliver real benefits for New Zealand”, says Glenn Barclay, Tax Justice Aotearoa spokesperson. ” We will support Labour and any political party that commits to a CGT that will deliver on that promise”.
A CGT has the potential to generate significant revenue to fund our hospitals, schools and transport networks. It would make our tax system fairer. It could also help rebalance our economy to encourage productive investments, and discourage property speculation that drives up housing prices. But TJA warns that a CGT will only deliver for New Zealand if it is as comprehensive as possible.
“A majority of New Zealanders support some form of capital gains tax because they realise our current tax system is broken, it is not generating the revenue we need to maintain our health system and critical infrastructure, it provides a giant loophole for the wealthy to avoid paying their fair share of taxes, and it is not supporting a productive economy”, says Glenn Barclay.
“But they don’t support a CGT for the sake of it. They support a CGT that will address these issues and deliver long-term benefits to New Zealanders. So it is important that we get the CGT settings right, and that it is accompanied by other tax changes.”
“Thomas Coughlan’s recent article in the NZ Herald suggests the Labour Party will opt for a CGT, but that it will not be comprehensive and there might be exemptions that would dramatically lower the revenue the new tax would gather,” says Glenn Barclay.
“The article suggests it would raise barely 39% of a broad CGT’s revenue. This would be wholly inadequate to meet the challenges we face in healthcare, education, climate change and infrastructure, and would barely move the dial on wealth inequality and the housing market.”
While it is not clear if this accurately represents Labour’s current thinking, TJA is taking this opportunity to set out the settings required for a CGT that has that can deliver for New Zealanders:
The CGT needs to be as comprehensive as possible, covering all forms of significant assets, but with an exemption for the principal family home.
It should apply to individuals, companies and trusts that own assets.
It should be payable when the asset is sold or transferred.
Income from capital gains should be taxed like any other source of income to mitigate the risk of tax avoidance which will happen if lower tax rates apply, because wealthier people are more likely to own assets which make taxable capital gains.
“We acknowledge that committing to a proper CGT requires political determination, but this is what this moment calls for: a time when New Zealanders are increasingly uncertain about their futures and those of their children”, says Glenn Barclay.
“We hope that Labour will step up and show the necessary leadership to put a proper CGT before voters in the 2026 Election. Polling indicates that the majority of New Zealanders would get behind them and vote for a CGT that will deliver real benefits.”
The Better Taxes for a Better Future campaign is calling for a tax system that grows revenue and ensures that those who can afford it contribute more to our collective good. A comprehensive CGT is an essential part of a better tax system and would bring us into line with the vast majority of other countries who already have a CGT.