Anticipating the release of the Tax Working Group’s report, Point of Order on Tuesday said the question of a capital gains tax being endorsed by the government is whether the concept can be sold to NZ First. Its leader, Winston Peters, in the past has been vocal in his opposition to a broad-based capital gains tax.
Early yesterday, a few hours ahead of the report’s release, the NZ Herald echoed our thinking.
Whatever Sir Michael Cullen recommends in his final Tax Working Group report today may be off the table if Labour can’t get New Zealand First and Winston Peters’ support for it.
Peters has made it clear in the past he is not a fan of a capital gains tax.
Just before the 2017 election, he told TVNZ’s Q&A that a capital gains tax was “off the table.”
“The two factors are – it doesn’t work and the second thing is there is no fairness if you haven’t got capital losses as well.”
Meanwhile Peters had been assuring farmers that a capital gains tax would not affect farmers because they are all about “the long haul,” when it comes to property.
He told The Country’s Jamie Mackay that farmers are about “permanence,” and a commitment to rural life.
“Farmers don’t buy farms to speculate … they buy farms for a lifestyle … they buy to stay there, they’re part of the province … they don’t buy a farm and flick it tomorrow.”
Moreover, whether or not the Government goes ahead with a capital gains tax would be decided after consultation with “the New Zealand people from Invercargill to Kaitaia.”
While formal consultations have yet to take place, the government was given a strong whiff of farmers’ opposition in a press statement headed Feds: Put capital gains tax back in the kennel.
They describe a capital gains tax is “a mangy dog” that will add unacceptably high costs and complexity.
“There is nothing in the Tax Working Group’s final report, released today, that persuades us otherwise,” Feds Vice-President and Commerce spokesperson Andrew Hoggard says.
“A CGT would make our well-regarded tax system more complex, it will impose hefty costs, both in compliance for taxpayers and in administration for Inland Revenue, and it will do little or nothing to ease the housing crisis.”
The Feds proceeded to note that even the members of the working group could not agree on the best way forward – three of them decided a tax on capital gains should only apply to the sale of residential rental properties and the other eight recommended it should be broadened to also include land and buildings, assets, intangible property and shares.
“Federated Farmers believes that the majority on the tax working group have badly under-estimated the complexity and compliance costs of what they’re proposing, and over-estimated the returns.”
What the Prime Minister thinks of the report can be heard here, when she addressed media after its release.
More fun, however, was to listen to Winston Peters, speaking on behalf of the Prime Minister, at Question Time in Parliament.
What Peters (speaking for the PM) has to say about Peters (leader of NZ First) is a treat. Here’s the Hansard account:
Hon PAULA BENNETT (Deputy Leader—National) to the Prime Minister: Does she stand by all her Government’s statements, policies, and actions?
Rt Hon WINSTON PETERS (Deputy Prime Minister) on behalf of the Prime Minister: Yes.
Hon Paula Bennett: Does she agree with comments by the Rt Hon Winston Peters in regards to capital gains tax that, “They won’t work in this country. They won’t work in any other country. They never have worked.”?
Rt Hon WINSTON PETERS: On behalf of the Prime Minister, the responsibility of the Prime Minister is for comments made by Ministers when they were Ministers, not beforehand. And, on behalf of the Prime Minister, I should not have to tell that member that.
Hon Paula Bennett: Does she agree with comments by the Rt Hon Winston Peters that, “You can’t possibly go into an election saying, ‘My tax policy will decided by a committee.’ “?
Rt Hon WINSTON PETERS: On behalf of the Prime Minister, for the second time now, I am not responsible for comments made by members of Parliament before they held a ministerial warrant under my premiership. That’s the substance of the matter and whether she agrees or not here’s the fine point about a democratic constitutional Government: that is, we’re going to consult with the people of this country in the next two weeks. [Interruption] I tell you what we can trust: somebody that hasn’t got a massive vested interest in this case, somebody that hasn’t got a massive vested interest in property, and is not now thinking about the country but just her narrow, selfish, egotistical self.
Speaker Trevor Mallard at that point stepped in
… to remind the Deputy Prime Minister that he is speaking as the Prime Minister.
Hon Paula Bennett: No, no, let him go. Does she agree with the comments by the Deputy Prime Minister just yesterday who said, “The farming community, they are in for the long haul and there is no way a capital gains tax would have any effect on them at all.“, when today’s report says it will cost farmers $700 million a year?
Rt Hon WINSTON PETERS: On behalf of the Prime Minister, I have read the Deputy Prime Minister’s comments on the farming show. I know that he comes from a seriously agrarian background and understands the long-term ownership aspirations and inter-generational aspirations of farming families around this country, and not one of them who aspires to that will be affected by any capital gains tax.
Hon Gerry Brownlee: That’s not right. That’s not right. Read it.
Rt Hon WINSTON PETERS: No, I’ve done some work in my time, son, not like you.
SPEAKER: Order! The pair of you.
Hon Paula Bennett: If the Prime Minister is correct in her comments, then why on earth would they be saying that it would cost $700 million a year if a capital gains tax is applied to farms?
Rt Hon WINSTON PETERS: On behalf of the Prime Minister, there is the rub. Who is saying that and what do they mean by “if”? I mean, the criteria would be whether or not this is an expanded tax, and at this point in time it is not. It’s merely a report with a number of options—all 99—and what I’d like to know on behalf of the Prime Minister is: how come they had only four hours to study this and yet had already put out their views before the report came over their desks?
Bennett then took a a different tack and asked if the Prime Minister agrees with the comments by Green Party co-leader James Shaw when he said, “The only question we should be asking ourselves is: do we deserve to be re-elected if we don’t” with regards to implementing a capital gains tax?
Rt Hon WINSTON PETERS: On behalf of the Prime Minister, that is a fact, and I’m glad about that. This is the first fact I’ve heard thus far in question time—that Mr Shaw said that. Mr Shaw’s a visionary Minister and is looking to the full debate and discussion that’s going to take place over the next eight weeks. Why don’t we all show some patience and be prepared to consult with the public of this country, the businesses of the country, rather than give your own narrow venal views.
Newshub-Reid Research suggests the majority of Kiwis is opposed to a capital gains tax:
In our latest Newshub-Reid Research Poll, we asked voters if they’d support the Government imposing a capital gains tax.
- 54 percent said no
- 32 percent said yes
- 14 percent didn’t know
Labour voters are split. 42 percent do not support a CGT, while 44 percent do.
Unsurprisingly most National voters oppose it – 73 percent say no, but 19 percent say yes.
Those responses suggest Peters will do better with the electorate by sticking to NZ First’s position than Shaw by sticking to the Green position.
But as the Homepaddock blog points out, while the proposed capital gains tax has got most of the media attention, there’s more in the Tax Working Group’s report, including the proposal of a water tax that would affect everyone.