BusinessNZ has released an analysis of additional costs to the economy that would accompany the direct costs of New
Zealand’s proposed capital gains tax.
It shows compliance costs of $1.6 billion, administrative costs of $210 million and deadweight costs of $1.5 - $4.2
billion, over five years.-
BusinessNZ Chief Executive Kirk Hope said the Tax Working Group’s report did not include compliance, administrative or
deadweight costs, and these needed to be made explicit to enable public debate about costs before the Government made
its decision on a capital gains tax.
Compliance costs include Valuation Day requirements for all business assets to gain a valuation to enable the imposition
of the capital gains tax.
Administrative costs are IRD’s costs of collecting the tax.
Deadweight costs are the costs of reduced economic output resulting from changes in supply and demand caused by the
imposition of a tax.
Mr Hope said the additional costs, possibly around $5 billion over five years, would add substantially to the economic
impact of the proposed tax, and indicated the severe impact on business if it was introduced.
-BusinessNZ’s analysis is indicative, based on previous research and moderate/conservative estimates within a range of
assumptions, in the absence of firm figures in the Tax Working Group’s report.
ENDS