Capital Gains Tax - Yes or No?

The Tax Working Group (TWG), established by the Government post the 2017 general election, has released a background paper calling for your views on the state of the current tax system, your thoughts on how the system could be improved and how the tax system needs to adapt to the changing economic world.

The TWG is charged with evaluating the structure, fairness and balance of New Zealand’s tax system and your views are seen as important to the work of the TWG. 

The paper poses a number of questions for submitters.  Questions which could be regarded as ones that are easy to ask but not necessarily easy to answer.

There are big picture questions such as:

• How would you define ‘fairness’ in the context of the tax system?  What would a fair tax system look like?
• Should there be a greater role in the tax system for taxes that intentionally modify behaviour? If so, which behaviours and/or what type of taxes?
• Does the tax system strike the right balance between supporting the productive economy and the speculative economy?

There are more targeted questions which are more likely to capture your attention, particularly given the current focus on housing affordability and the absence of a comprehensive regime for taxing capital gains.

These questions include:

• How and to what extent does the tax system affect housing affordability for owners and renters?
• Should New Zealand introduce a capital gains tax (that excludes the family home)? If so, what features should it have?
• Should New Zealand introduce a land tax (that excludes the family home)?
• What are the main opportunities for effective environmental taxation?
• Should the tax system do more to support small businesses?
• Should the tax system exclude some goods and services from GST?
• Should the tax system encourage saving for retirement?

Submissions are to be made by 30 April 2018. The TWG will then provide an interim report to Government in September 2018 with further opportunities for public comment following the publication of that interim report. 
 

You can download the paper here.