21 February 2019
A minority view on the Tax Working Group does not favour the Group’s recommendations on capital gains tax.
Group members BusinessNZ Chief Executive Kirk Hope, former Bell Gully tax partner Joanne Hodge and former IRD Deputy Commissioner Robin Oliver do not recommend that the Tax Working Group’s proposed capital gains rules should be implemented.
Their view is that administration and other costs would outweigh the revenues that could be gained from a broad-based capital gains tax as proposed, and it would not significantly reduce over-investment in housing or increase tax fairness.
The minority view considers that a more limited capital gains tax could be appropriate if focused on rented residential property where most revenue could be raised.
The minority view group does not support a capital gains tax on business assets, saying this could discourage investment and innovation and tend to lock businesses into current asset holdings. Concerns with the ‘valuation day’ approach include its vulnerability to conflicting valuations of assets.
The minority group disagrees with taxing both shares and business assets on the grounds that this would create double taxation, penalising New Zealanders owning shares in New Zealand, and making overall taxation on investment less consistent.
The minority group recommends retaining New Zealand’s current relatively simple and efficient tax system while amending some specific current rules and better enforcing others.
Kirk Hope | Chief Executive | BusinessNZ | www.businessnz.org.nz