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
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
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.