NZ government abandons capital gains tax proposal

23 Apr 2019

mortgageThe New Zealand government has revealed it would not go ahead with proposed plans of implementing a capital gains tax.

The Prime Minister of New Zealand, Jacinda Ardern, announced that lack of public support had led to this decision, while confirming that the introduction of a capital gains tax (CGT) will not take place under her leadership.

As Mortgage Business reports, Ms Ardern had campaigned strongly for its introduction, referring to it as a fair alternative for New Zealand’s taxation system. The Tax Working Group had recommended the CGT, which covered assets including residential rental homes, investment properties, land and buildings, business assets, intangible property and shares.

Ms Ardern said, “I genuinely believe there are inequities in our tax system that a capital gains tax in some form could have helped to resolve. That’s an argument Labour has made as a party since 2011.

“After almost a decade campaigning on it, and after forming a government that represented the majority of New Zealanders, we have been unable to build a mandate for a capital gains tax,” she went on to say.

“While I have believed in a CGT, it’s clear many New Zealanders do not. That is why I am also ruling out a capital gains tax under my leadership in the future.”

Ms Ardern instead suggested that other measures could be used to deal with inequities in the tax system, saying: “As such, the Coalition government has agreed to tighten rules around land speculation and work on ways to counter land banking.”

Despite the government abandoning capital gains tax, Finance Minister Grant Robertson said that the Tax Working Group’s other recommended steps could be taken into account for its tax policy work programme.

“We intend to direct the Productivity Commission to include vacant land taxes within its inquiry into local government funding and financing,” Mr Robertson said.