New Zealand’s government today responded to the Tax Working Group (TWG) final report recommendations, and the headline is: no capital gains tax (CGT).
The government rejected both the TWG majority’s recommendation to tax most assets (except the family home) and the minority’s recommendation for just residential rental properties to be taxed.
Prime Minister Ardern said that there was no mandate or consensus for a CGT from the parties comprising her government or the general public, and further said that the Labour Party would not campaign in future on a CGT under her leadership. Instead the government will look at other ways to increase fairness in the tax system. However, officials have been directed to look at “land banking” and “land speculators” as a high priority. This will follow the TWG’s recommendation that a tax on vacant land needs to be considered by the Productivity Commission. The prime minister also indicated that there will be a renewed focus on New Zealand tax paid by foreign multinationals. A discussion document on a possible digital services tax is scheduled for a May 2019 release.
As a result of the government’s decision, the packages to recycle CGT revenue (including individual taxpayer and savings tax cuts) suggested by the TWG will not be implemented. The prime minister has stated that Labour’s election tax policy has not yet been decided.
The government also responded to the other 98 recommendations in the TWG Final Report (read details of the recommendations). Broadly, most will continue to be worked on through the “business as usual” Tax Policy Work Programme (an update to be released in June 2019). That most of these have not been confirmed at this stage apparently is a result of the focus on the CGT.
The government’s budget will be delivered on 30 May 2019.
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