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The Government has abandoned plans to impose a capital gains tax recommended by the Tax Working Group in February, and Prime Minister Jacinda Ardern has ruled out a capital gains tax under her leadership, saying that no consensus was able to be reached within the Government. Greenlion believe the correct decision has been made.
The Tax Working Group, chaired by Sir Michael Cullen, recommended a broad-based tax on capital gains from rental homes, second homes, business assets, land and shares, in February. According to the Government, 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, but after significant discussion they were unable to find consensus.
Co-leader Winston Peters welcomed what he described as Cabinet's decision not to implement more taxes on capital gains. "This decision provides certainty to taxpayers and businesses," he said. "New Zealand First's view is that there is neither a compelling rationale nor mandate to institute a comprehensive capital gains tax regime."
BusinessNZ chief executive Kirk Hope said a CGT would have hit businesses hard, reducing funds available for investment and job growth and increasing their compliance burden. "Our members have been very clear that they did not see the justification for an expensive new tax that would have reduced the competitiveness of the New Zealand business sector for no discernible gain."
Opposition leader, Simon Bridges said the Government had dropped its "flagship tax policy", and “after 18 months of waiting and a $2 million tax working group, National's relentless opposition to a capital gains tax has forced the Government to back down," he said. "The New Zealand economy has suffered while the Government has had a public discussion about a policy they couldn't agree on."
A capital gains tax would push up house prices as well as significantly increasing rents, according to economic modelling commissioned for the Tax Working Group. This inconvenient finding was included deep within one of 40 "background papers"released alongside the Tax Working Group's interim report last week.
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