National response to Tax Working group final report

Simon Bridges set the National tone to the Tax Working Group final report prior to it’s release.

NZ Herald:  National Leader Simon Bridges says a capital gains tax would lead to Kiwis leaving NZ for Australia

Speaking to media this morning, Bridges came out swinging and said such a tax would come at the detriment to middle New Zealand.

“[It would be] a recipe for more people buggering off to Australia.”

Interest.co.nz:  Bridges says a capital gains tax would cause people to leave for Australia (where there is a capital gains tax)

That point was hammered on Twitter as well.

Bridges’ initial response to the release of the report yesterday:

That has also been widely ridiculed.

A Labour friendly report that is likely to be watered down substantially by Winston Peters is not exactly an all out assault.

A prior tweet is closer to the mark:

One distinct possibility is Peters demanding a farm exemption. And possibly a small business exemption. And a hobbled CGT quickly becomes a crippled CGT, if it gets NZ First approval at all.

Regardless of this, National have been hammering the report.

Simon Bridges: More costs as tax monster unleashed

The Tax Working Group has gone much further than a Capital Gains Tax with a raft of new taxes targeting hard-working New Zealanders, National Leader Simon Bridges says.

There are eight new taxes including; an agriculture tax, a tax on empty residential land, a water tax, a fertiliser tax, an environmental footprint tax, a natural capital enhancement tax, a waste levy and a Capital Gains Tax.

“This is an attack on the Kiwi way of life. This would hit every New Zealander with a Kiwi Saver, shares, investment property, a small business, a lifestyle block, a bach or even an empty section,” Mr Bridges says.

“For farmers, who are the backbone of our economy, this is a declaration of war on their businesses and way of life. They would pay to water their stock, feed their crops and even when they sell up for retirement.

“Labour claims this is about fairness, but that’s rubbish. The CGT would apply to small business owners like the local plumber, but not to investors with a multi-million dollar art collection or a super yacht who won’t pay a cent more.

“The TWG has recommended one of the highest rates of Capital Gains Tax in the world. The Government would reap $8.3 billion extra in its first five years from ordinary Kiwis – small business owners, farmers, investors, bach and lifestyle block owners. After 10 years it would be taking $6 billion a year from Kiwis.

“It will lead to boom times for tax lawyers and accountants and even Iwi advisers, given recommendations for exclusions that include Māori land in multiple ownership.

“We believe New Zealanders already pay enough tax and the Government should be looking at tax relief, not taking even more out of the pockets of New Zealand families.

“National says no to new taxes. We would repeal a Capital Gains Tax, index tax thresholds to the cost of living and let Kiwis keep more of what they earn.”

Amy Adams: Massive tax grab will hammer NZ economy

New Zealand might have been expecting a capital gains tax to be announced today but the full suite of taxes proposed by the Tax Working Group would threaten the very viability of large swathes of the NZ economy, National’s Finance Spokesperson Amy Adams says.

“The new taxes proposed today will create a compliance mine field, massive distortions in the market and weaken our international competiveness at the very time the Government acknowledges the international economic risks are growing,

The proposal from the Government’s handpicked Tax Working Group doesn’t line us up with other countries as has been claimed, instead it would impose one of the most onerous capital taxation regimes in the world with 100% of the gain taxed at full marginal rates, limited relief for capital losses, no inflation adjustment and limited rollover relief.

“The Capital Gains Tax proposed by Sir Michael Cullen and the Tax Working Group will hit every small business owner, KiwiSaver account, farm, family bach, lifestyle block and investment in New Zealand. It will act as a massive disincentive to save, invest or build a productive business.

“There is nothing fair about saying owners of baches and lifestyle blocks will face a tougher CGT than corporates.

“It would add significant complexity to our relatively simple tax system, likely exempt Iwi assets, require all eligible assets to be re-valued within five years and further drain New Zealand’s already shallow capital markets.

“New Zealand doesn’t need a Capital Gains Tax and the Government has to date failed to confirm this would be a revenue neutral package. The CGT alone would raise an additional $32 billion over ten years and there is no evidence any offset will be of the same magnitude.

“On top of the Capital Gains Tax, other new and increased taxes, include a vacant residential land tax, a water tax, a fertiliser tax, an environmental footprint tax, a natural capital enhancement tax, extending the waste tax.

“It is quite simple, a country can’t tax itself to prosperity.

“New Zealanders already pay enough tax and National believes if you want New Zealanders to succeed on the world stage the tax burden should be reduced, not increased.

“National has promised to repeal the Capital Gains Tax, index tax thresholds to inflation, repeal the Regional Fuel Tax and not introduce any new taxes in our first term. Our full tax package will be released closer to next year’s election.

“The longer the Government dithers over its response to this report, the more our economy will be hurt by the fear and uncertainty these recommendations will rightly cause.”

Labour will likely have predicted and prepared for this sort of over reaction.

And what Labour ends up getting NZ First to agree to is likely to take much of the sting out of these attacks.