The Prime Minister has defended the proposed capital gains tax (CGT) by downplaying concerns raised by the opposition.
In her post-Cabinet press conference on Monday, Jacinda Ardern said she's heard some "quite inflammatory statements" about the Tax Working Group's (TWG's) recommendations released last Thursday, including a CGT.
When asked what those inflammatory statements were, she noted, without naming him, a statement made by National leader Simon Bridges: "The notion that it's an attack on the Kiwi way of life, which I think is quite a broad, sweeping statement."
- Tax Working Group recommends capital gains tax
- Capital gains tax proposal: How it compares to the rest of the world
- 'An attack on the Kiwi way of life': Simon Bridges savages capital gains tax
After the TWG released its recommendations last week, Mr Bridges took to Twitter to call the proposed tax "an assault on the Kiwi way of life", adding that he will "fight it every step of the way".
"National says no to new taxes. We would repeal a capital gains tax, index tax thresholds to the cost of living and let Kiwis keep more of what they earn," the National leader said at the time.
The Prime Minister dismissed Mr Bridges' comments, saying she's heard "incorrect statements" about the tax, including about it being a "double tax... all of which is simply not true".
"Let's debate the actual report rather than simply making things up."
When asked what she thinks the Kiwi way of life is, Ms Ardern said: "I think it's values-based. It's about getting a fair go, and paying your fair share. And I think that's motivated a lot of why we wanted to have this discussion."
The business community is concerned about being doubled taxed, whereby companies would be taxed on both profits made while the company was operating and capital gained when it's sold - this is the theory of a 'double tax'.
But Ms Ardern brushed off concerns around the CGT, noting how the tax experts "highlighted some areas where they felt the system is not fair and not balanced and where the structure could change."
Under the proposed CGT, gains and losses on land improvements would be taxed (except the family home), including shares and business assets. It would not apply to personal items though, like bikes, boats and art.
The CGT would be set at the income-earner's top tax rate, likely to be 33 percent for most people, which Mr Bridges said on Thursday, was "one of the highest rates of capital gains tax in the world".
Ms Ardern said only a small amount of individuals would pay CGT, pointing to Inland Revenue information that says in Australia, only 4.7 percent of individual tax returns in 2015 included capital gains, and over 95 percent of Australians don't pay capital gains tax in any given year.
"It is important to note that the recommendations of the Tax Working Group relate to between only 0.4 percent in year one and 2.5 percent in year five of the Government's overall tax base over five years, and still only 4 percent of the tax base after 10 years."
New Zealand already has a variation on a CGT. The Taxation (Bright-line Test for Residential Land) Bill requires income tax to be paid on any gains from residential property that was sold within five years of purchase.
Introducing a broad CGT will not be an easy sell for the Prime Minister. She scrapped Labour's capital gains policy a week before the 2017 election in the face of immense criticism and attack ads from the National Party.
The Government will give its official response to the TWG's recommendations in April, after the public has had the opportunity to debate the issue.
Newshub.
