Yesterday morning the Tax Working Group formed to assess the state of the tax regime and recommend appropriate changes, finally delivered its findings. The findings, whose recommendations included a Capital Gains Tax, and a plan to redistribute much of the tax take gained from the C.G.T. in a tax cut, have fulfilled a promise for comprehensive tax reform that was made at the 2017 election.
An announcement that was surely to upset National and A.C.T. did not disappoint in that respect. A.C.T. immediately announced its plan to ditch the C.G.T., labelling it Labours Envy Tax. National was equally unimpressed – somewhat hypocritically for a party that just had nine years to address the issue. That said, they did announce the tightening of rules around the taxation of profit from property sales in 2015.
National and A.C.T. however need to understand that there is more that a C.G.T. covers than just property. It covers the sale of stock, bonds and precious metals as well. The last one has potentially significant value as the value of minerals used in electronics, that are ditched without recovering the metals – especially rare earth elements – is slowly realised.
But is the C.G.T. really that bad? Is it really a tax in an attempt to curb the accumulation of wealth through honest means? Or is it to check the acquisition of property for wealth that one does not honestly have any real use for, but accumulated anyway? I think it is the latter, as no one, except maybe the Greens are suggesting that the family home, the fortress of every New Zealand family able to afford such a place should be taxed and nor should the estate inherited from deceased people.
I have not a problem with millionaires. A millionaire might have been something big in the 1970’s, but now a multi-millionaire or billionaire is more like the new millionaire or multi-millionaire. And if the wealth is the result of starting a business and turning it into a major revenue gathering machine, all I can say is well done. So, this idea that people hate wealth is not true. A better perception is that the left dislike the accumulation of wealth so obscene that it makes up half the total wealth in the world – we are talking about wealth accumulated by only a few dozen people.
And I am not saying a C.G.T. is fool proof either. It is not and – if it get it gets implemented – a range of opportunities will arise for National and A.C.T. to more credibly attack Labour as the C.G.T. is implemented. Whether it is just who is subject to it; how much they pay and so forth are good starting points and there will be others.
But right now when we do not even know if Labour will implement it or any other changes recommended, National and A.C.T. can go suck a lemon and contemplate whilst tasting its bitterness, how a bunch of people more familiar with the N.Z. tax code came to these conclusions.