Capital Gains Tax would hurt Māori and Pacific entrepreneurs

Business leader John Fiso warns a capital gains tax would put a brake on the economic aspirations of Māori and Pacific people.

“The greatest opportunities for disadvantaged minority groups to improve their lives lie in the private sector”, he says. “However, those who work hard to build their own businesses or to acquire assets to support their families would be penalised by a capital gains tax.”

“A capital gains tax rewards being a beneficiary and those on low wages and, therefore, disincentives opportunities for good ideas, hard work and innovation.

“Does New Zealand really want less business investment, less entrepreneurship, less investment in shares, less saving, less intellectual property creation, and less wealth creation?

“The underpinning principle should be: ‘let’s encourage real progress and real aspirations’, not ‘how can I get an extra $16 a week from a tax cut from CGT,” says Mr Fiso.

While supporters of the Tax Working Group’s recommendations say they are “fair”, Mr Fiso argues the opposite is true.

“Wealth is created by accumulation over years and, in many cases, generations. Just when Māori and Pasifika are finally in a position to accumulate wealth, a capital gains tax is proposed,” says Mr Fiso.

Māori Iwi Authorities are currently taxed at a preferential rate of 17.5% and the Tax Working Group in its final report has recommended this be extended to all subsidiaries - essentially businesses and property they acquire. The report has also said that tax treatment of transactions relating to collectively owned Māori assets is yet to be determined.

However, the Pacific population are the fastest growing group of young in New Zealand and the poorest (2016 StatsNZ report) with median wealth of $12,000, 12 times lower than European and four times lower than Māori. Unemployment rates are also high.

“I am concerned that a CGT will discourage this population from pursuing education and creating employment through setting up their own businesses, enabling them to then employ family members and support them, without direct help from the state.

“The last thing we need is our young thinking low wages and reliance on state are okay - it is not good for the economy and it is not good for Pacific communities.”

Mr Fiso, who is of Samoan descent, is a respected educator and successful entrepreneur, who now heads the Fiso Investment Group, which recently rescued the insolvent Porirua Health Services and is pursuing social investment partnerships.

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