Tax working group report dumped

The Government will not proceed with a Capital Gains Tax (CGT), not even on rental housing. Instead it will focus on measures targeting land bankers and speculators. 

Neither will it advance the environmental taxes proposed by the Tax Working Group (TWG). 

Such a comprehensive rejection of a commissioned report by a Government is unusual but, in this case, not surprising. 

Quite apart from the issue of whether a broad CGT is right for New Zealand from a pure tax policy perspective, media coverage and public reaction since the TWG’s final recommendations were released have confirmed political reality – a broad CGT just won’t fly with enough voters.   

The Government’s more detailed responses to the TWG recommendations is available here.  This shows that high priority items for inclusion on Inland Revenue’s tax policy work programme include tax measures addressing seismic strengthening and encouraging investment in nationally significant infrastructure projects. 

Where to from here? 

The Prime Minister has confirmed that Labour will not pursue a CGT while she remains leader.  This puts the idea out of contention for the immediate future – even if Labour and the Greens were able to form a government without New Zealand First.   

There must be a question over the merits of committing such significant resources to the TWG on a matter that was realistically always going to face significant political challenges.  Hopefully the work will have value in the longer term.

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Tax working group report too big to succeed  

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