Earlier this year, the government’s Tax Working Group (TWG) recommended introducing a broad-based capital gains tax, a move that will affect a huge number of Kiwis. Here’s why the proposed Capital Gains Tax (Capital Gain Tax) isn’t right for New Zealand.
- Over 2 million New Zealanders have KiwiSaver and a Capital Gain Tax would affect at least 40 percent of the population, not just the 4 percent claimed by Jacinda Ardern.
- There are over 500,000 businesses in New Zealand, 360,000 of those are small businesses. They will be affected too.
- If the home office is claimed under your business expenses (something that most self-employed people do), your own home would also become subject to tax.
- Currently, the proposal excludes family homes, but we cannot guarantee that 10 to 20 years down the track, the Government won’t re-evaluate this.
- Property investors are already paying large taxes with a five-year bright-line test in place.
While tax fairness is important, evaluating behavioural responses is also critical in the decision-making process. Kiwis are already weak when it comes to investments, and a Capital Gain Tax would only create more fear and further discourage those looking at investing. This is a factor the government must take into consideration.