Today’s Tax Working Group report recommendation for a new capital gains tax will not address residential housing affordability but it will penalise business owners and create costly complexity in our tax system, meaning it is fatally flawed, according to Business Central.
“New Zealand’s tax system is envied worldwide. The proposed capital gains tax increases compliance costs without boosting productivity,” says Business Central chief executive John Milford.
“Business Central agrees with the conclusions of the minority view on the Tax Working Group. A capital gains tax is just another cost on business, nothing more.
“A capital gains tax that excludes the family home ends up excluding the majority of New Zealand’s residential property market, drastically weakening its ability to improve housing affordability.
“Far from reducing speculation in the housing market and encouraging investment elsewhere, a capital gains tax will actually hurt businesses even more – by taxing business investment, properties, assets, shares, as well as any sale of a business itself.”
Milford said businesses, exporters and employers will end up shouldering the burden of this proposal which is supposedly aiming to target residential property speculators.
“It is inescapable that SME owners, farmers, and families saving for their retirement will face significant extra costs should this tax go ahead, all of which will lead to lower investment and growth of New Zealand’s economy,” he said.
“Introducing a ‘valuation day’ concept for all assets will be incredibly complicated and lead to significant implementation costs across the economy.
“By the Government’s own criteria, this proposal does not improve the fairness, balance and structure of our tax system. “It is not too late for the Government to stick with New Zealand’s well designed, broad-based tax system.”