New Zealand business leaders urge action on deficit, capital gains tax
NEW Zealand business leaders want the government to explore ways of reducing the nation’s structural budget deficit, which could include a tax on capital gains.
More than three-quarters of senior executives and directors surveyed by The New Zealand Herald said that changes are needed to address the deficit, the newspaper reported on Thursday. More than half of respondents who put forward their own suggestions mentioned a capital gains tax, it said.
New Zealand is on outlier among western nations it compares itself to in not having a capital gains tax. Finance Minister Nicola Willis told the Herald’s Mood of the Boardroom event that her National Party does not support the idea, while the main opposition Labour Party has signalled it is open to considering it.
Willis said there are numerous issues to grapple with such as whether a capital gains tax is designed to be revenue neutral or additive, and whether it should apply to the family home or to workers’ pension savings plans. She also asked whether the policy was appropriate at a time when New Zealand needs more capital intensity.
“CGT is one of those things that in theory, lots of people support,” she said. “Once you have to deal with all of those questions, it isn’t as easy an answer as some people think it is at the first blush.”
The previous Labour-led government found the tax difficult to deliver. It ditched plans for a capital gains tax in 2019 because it was too politically risky, and just months before the 2023 election turned its back on a blueprint for a wealth tax.
But Labour finance spokesperson Barbara Edmonds, sharing the stage with Willis, said her party is going through an assessment of its tax policy, adding that discussion on any options should not be discouraged. She said she had been urged privately by some business leaders to press ahead with a capital gains tax.
“But actually this is politics,” she said. “This is going to be a difficult tax to sell, whatever it is.” BLOOMBERG
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