Sam Morgan’s helpful admission that he effectively pays no tax is the reason why the Key Government needs to roll out a comprehensive capital gains tax on Budget day, the Green Party said today.
“It’s not fair to expect income-earning New Zealander’s to carry a disproportionate share of the tax burden while some of New Zealand’s wealthiest individuals pay none,” said Green Party Co-Leader Russel Norman.
“A comprehensive tax on all capital gains except for the family home is the fairest way to restore some balance to our tax system.”
Treasury and the Inland Revenue Department have estimated that an additional $4.5 billion could be raised from a comprehensive capital gains tax (CGT) with an exclusion for owner-occupied housing.
“The additional $4.5 billion the Government could raise from a capital gains tax would broaden the tax base and enhance its resilience. Additional tax revenues could be used to ease the tax burden on low income earners, lower debt levels, and enhance public services,” said Dr Norman.
“New Zealand is not a highly taxed country by OECD standards and we currently have too many loopholes in our tax system allowing people to structure their affairs in a way that avoids paying tax. Reducing the top tax rate to align with the company and trust rate is not the most effective way to deal with the issue. A comprehensive capital gains tax is a better, fairer way forward.
“Nearly every other country in the OECD has a capital gains tax. Australia has one. America has one. It’s time we closed the loopholes and encourage productive investment rather than tax avoidance behaviour.
“To paraphrase American billionaire Warren Buffett, a tax system riddled with loopholes, where millionaires pay less tax than their secretaries, invites disrespect and undermines voluntary compliance,” Dr Norman said.
“It’s time to fix our tax system, Mr English.”
Link to the IRD/Treasury’s revenue estimations from a CGT [pp46-47]: