Capital Gains Tax lightning rod means significant other recommendations ignored


Nau te rourou, naku te rourou, ka ora ai te iwi

With your contribution, and mine, the people will prosper

The Tax Working Group’s final report has been out for a week now. Even after all that time, the politicians seem to have forgotten that Capital Gains Tax was just one recommendation in more than 100 made. So bent have they been on attacking/defending the recommendations, that the media coverage has been dominated by National Party leader Simon Bridges, A.C.T. Party leader David Seymour on the attack, Prime Minister Jacinda Ardern and Treasurer Grant Robertson on the defence. But what about the other 100+ recommendations?

This report, to be clear is not a compulsory check list of things that the Government needs to do. They are just recommendations based on a nation wide attempt in 2018 to gather from the public what would make a fairer and more just taxation system, that included a two month public consultation.

Those recommendations covered:

  1. Capital gains and wealth
  2. Environmental and ecological outcomes
  3. Taxation of businesses
  4. International tax
  5. Retirement savings
  6. Personal income tax
  7. Future of work
  8. Integrity of the tax system
  9. Administration of the tax system
  10. Charities
  11. G.S.T. and financial transaction taxes
  12. Corrective taxes
  13. Housing

I shall cover in the next few paragraphs a selection of recommendations from #2-13 – due to the heavy coverage elsewhere, there shall be none on Capital Gains Tax.

Environmental taxation is a regulatory tool that can be used as an incentive or disincentive in order to achieve certain environmental outcomes. The T.W.G. recommendations cover greenhouse gases, water abstraction and pollution, solid waste and transport. Interestingly, it does not appear to cover air pollution, despite aerial dispersal of dioxins and so forth being a significant issue.

Retirement savings are a constant concern, particularly for lower income earners who have to work longer in many instances in order to afford retirement. The recommendations include refunding the employers superannuation contribution tax for those earning less than $48,000; increasing the member tax credit from $0.50 to $0.75 for every $1 of contribution.

G.S.T. had concerns raised about it by the public. These were acknowledged by the T.W.G., but drew the conclusions that the existing rate should not be lowered on the grounds that the reduced rate would not target as lower income earners as welfare transfers or personal income tax changes (lower and middle income earners). Nor does the report recommend the removal of G.S.T. of certain items such as food and drink.

Housing is an area that one might have expected to come under C.G.T. However, this concerns residential land. There were two recommendations pertaining to vacant residential land. One was to recommend that the Productivity Commission inquiry considers a tax on residential land. The second was that vacant residential land be a local tax rather than a national tax.

This article is just a very brief look at a few of the range of taxation concern areas that were addressed by the T.W.G. – and which the politicians ignored, quite surprisingly given that several addressed some of the wealth that they were arguing over.

 

 

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