UPDATE: No capital gains tax while Ardern leader
(Updates and recasts throughout)
By Paul McBeth
April 17 (BusinessDesk) - Prime Minister Jacinda Ardern says the public has spoken and she won't introduce a capital
gains tax while she leads the Labour Party.
The Labour-led coalition wasn't able to reach an agreement on whether to adopt a capital gains tax in response to the
Michael Cullen-led working group's report, and have ditched the idea altogether.
Ardern told reporters in Wellington she still believes a capital gains tax could make the system fairer, but hasn't been
able to secure a public mandate to introduce such a regime after campaigning on the issue since 2011.
"The Labour Party has now campaigned on this for three elections. It's time to accept that not only has a government
that reflects the majority of New Zealanders not been able to find support for this proposal, feedback suggests there is
also a lack of mandate amongst New Zealanders for such a tax also," she said.
The coalition government has been sitting on the report since February, but hasn't been able to find common ground, with
New Zealand First and the Green Party at odds with their senior partner over how far such a regime should extend.
Ardern said the coalition partners discussed a range of options, but didn't want a watered down version that didn't
achieve its goals and couldn't reach a consensus.
"I have a very solid relationship with both parties in this government - every single day we debate issues where we have
different perspectives, the majority of the time we have consensus, from time to time we do not, it does not affect the
health of our relationship."
Labour didn't extract support for a different policy, with Ardern saying that's not how the coalition operates: "We
debate the merits of an issue case by case and we have done so here."
The group itself couldn't agree on how far the net should be cast in taxing capital gains. A minority including Business
NZ chief Kirk Hope, former Inland Revenue deputy commissioner Robin Oliver and former Belly Gully tax partner Joanne
Hodge backed a more refined scheme targeting residential rental property.
The majority proposed a broad extension of the capital gains tax regime, capturing all businesses, commercial land and
buildings, and farms. To counter the increased tax, the report recommended lowering tax rates in the lower income
The capital gains element of the report has captured the public's attention, although the work was much broader than
simply addressing how capital is or isn't taxed.
Ardern said there are other ways to make the tax system fairer, and the government's wider response to the Tax Working
Group's report has already started in some areas, such as the work on how to target multinational companies and other
directives to cut business compliance costs, support start-ups, and more stringently enforce existing tax law.
Finance Minister Grant Robertson and Revenue Minister Stuart Nash outlined the government's response to the rest of the
Tax Working Group's report, although neither joined Ardern in fronting the press gallery.
The response will include a direction to the Productivity Commission to include vacant land taxes in its local
government funding and financing inquiry, and to prioritise work on ways to encourage investment in significant
A refreshed policy work programme will be released in the middle of the year.
A summary of the responses shows the government has also put a high priority on including the group's recommendation to
consider restoring the depreciation deductions on buildings in relation to seismic strengthening work.
It also wants officials to consider adding the recommendation on ways to encourage savings by low-income earnings as
part of the broader KiwiSaver programme.