Saturday, April 29, 2023

Jessica Mutch McKay: Hipkins leaves capital gains tax door ajar

The Prime Minister made a politically calculated move this week to leave the door ajar on the issue of a capital gains tax.

Chris Hipkins gave us the first taste of what to expect in the election year Budget this week when he delivered a speech to the business industry in Auckland.

He ruled out a capital gains tax in the Budget, and he’s dampening down expectations behind the scenes.

It came after Inland Revenue released a report into how much tax the super-wealthy paid on their whole income — 9.4% including GST — and Treasury released one on how much tax ordinary New Zealanders paid, which was found to be about 20.2%.

Amid that, importantly, Hipkins isn’t saying a blanket "no" to the politically fraught capital gains policy.

It's fraught because it’s hard to target it precisely, it hurts “mum and dad” investors (which means they probably won’t vote for him) and it adds to the idea of “tax, tax, tax” that Labour is trying to ditch.

In 2019, then-Prime Minister Jacinda Ardern admitted she supported a capital gains tax but said it would never happen under her watch.

Hipkins made a calculated decision not to follow her lead, explaining that he won’t be playing the “rule in, rule out” game. That’s a thought-out political move. It gives him options.

In the meantime though, it also allows rival parties to raise questions about Labour’s tax plan. The parties won’t reveal their policies until closer to the election.

Hipkins also said he’s open to adjusting the tax thresholds, but not right now.

We could see these adjusted to give people a little bit more money in their pocket and if it’s an election promise it could kick in around April 2024.

National is also promising adjustments.

There’s been a lot of talk on tax this week and while the door remains ajar, there will continue to be speculation around a proposed capital gains tax.....The full article is published HERE

Jessica is the 1 NEWS Political Editor, she has previously been a 1 NEWS reporter in Auckland and Europe Correspondent based in London.

1 comment:

Allan said...

The figure of 9.4% is total B.S. It is calculated on a capital gains tax which we don't have (yet). from Unrealised Capital Gains estimated by some bunch of unknown officials. The Orwellian legislation which allowed the IRD to fish for the information on which this "Report" is based was passed Under Urgency to avoid discussion. Although it allows for the IRD to demand information from every taxpayer and their families, it was only used on people on the "Rich List" i.e. it was designed to demonise one small, very specific section of our community, those who are successful.
Robin Oliver, a former IRD official totally trashed the concept of this report in an interview with Sean Plunket.
Is this a taste of the "Brave New World" in store for us if this bunch of Muppets somehow get re-elected.