Stephen Knight

And so the way I think about it is, well, if we want people to be wealthy,

If we're going to tax wealth creation, you're going to get less wealth creation happening.

And that same tax working group we just mentioned before, they did warn that extending a capital gains tax would both increase the complexity of our tax system and potentially bring in higher compliance costs because it's very easy to tax income, right?

It's very difficult to figure out, well, okay, we're going to tax the capital gain.

That's going to happen when somebody sells their property or when somebody sells their business.

But there are sales costs involved with that.

There are other costs as well.

Okay, are we going to tax inflation as well on top of that?

It just becomes a lot more complex, whereas taxing income is very, very simple.

Now, I think we've already got this issue in New Zealand where our productivity is relatively low.

It's been falling for the last four years.

And now we want to take away some of the gains from investment.

And again, here we're talking about a broad-based capital gains tax.

So this would disincentivize a business owner to buy a new piece of equipment or spend money on a new piece of technology that's going to make

their employees more efficient because, okay, that increase in value of the business, some of that gets taxed away.

So it's another disincentive to investing in that technology.

And I suppose my main point here really around capital gains taxes is somewhat similar to what you were saying around income, is that it changes behavior.

So people will hold on to some of their assets longer than they otherwise would because they don't want to sell it.

They'll take fewer risks.

They'll start fewer business.