Kerre Woodham: Is a capital gains tax simply an issue of fairness?

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Recorded20 Apr 2023

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There's been quite a bit of chat around a report that's due to come out from the IRD that looks at 400 of the wealthiest families and individuals in New Zealand. This morning there was a speculative piece in The Spinoff suggesting that that IRD report could be paving the way for an introduction of a capital gains tax. A tax that Jacinda Ardern promised would be ruled out as long as she was Prime Minister. But she's not the PM anymore. Chris Hipkins is and he has made no such promises. He's also shown a readiness to tear up whatever legacy Jacinda Ardern was hoping to leave and creating his own form of leadership. At the same time as the IRD releases its report, Treasury is releasing a related piece of analysis into the effective tax rate of New Zealanders across income and wealth distributions. Now the Spinoff slant is that capital gains tax should be introduced. They say we're the only country in the OECD in which capital gains, a profit on the sale of investments, is not a significant part of the tax system. So amongst the 38 wealthy member nations of the OECD, we are the only country without capital gains tax. And in this, we’re seen as an outlier in global tax cycle. So it's a speculative piece, it's well written. It's well worth reading. The commentators they use are knowledgeable. And I think they make a case for a capital gains tax fairly clearly. I always found it very odd that Ardern backed away from something that she had held as a lifelong principle, that there should be a capital gains tax. And she gave it up very, very quickly and ruled it out as long as she was leader of the Labour Party. Now is an opportunity for Chris Hipkins as Prime Minister, for David Parker, the revenue Minister who favours a CGT, to introduce one. There is absolutely no reason to think that Chris Hipkins would honour a promise made by somebody else entirely. It was purely personal for Jacinda Ardern to say under her watch, there would be no capital gains tax. He can do what he likes. Should he introduce a CGT? Is it, as the commentators say, simply an issue of fairness? See omnystudio.com/listener for privacy information.

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