Capital Gains Tax

[BlackPeter]

Just came across a Comment from Frank Newman on the Tax Working Group report (sorry - don't have it online, but I am sure the copied info is all public).

Interesting to note: 3 of the 11 members of the working group wrote a minority reprot, disagreeing with the findings of the others. Quite brave btw - don't expect them to stay on the Labour working goprup gravy train. They are former Bell Gully tax partner Joanne Hodge, Business NZ chief executive Kirk Hope, and former Inland Revenue deputy commissioner Robin Oliver.

Their main points: the huge compliance cost and significant disruptions to business could not be justified by quite minor increase in tax take.

In their report they state "the costs of extending the tax base clearly exceed the benefits...As additional asset
classes are included in the capital gains tax system, the issues become more complex and there is an
increasing need for exemptions and exceptions which are intended to reduce lock-in impacts and compliance
costs, but can cause the reverse. Including business assets (such as goodwill and other intangible assets) and
shares leads to complexity, high compliance costs and inconsistent rules characteristic of many overseas
capital gains tax systems. The need to value business assets such as goodwill on introduction date is one
illustration. Valuing such property is likely to impose high compliance costs on businesses."

Speaking on Radio New Zealand, Robin Oliver stated the compliance costs to value business assets "will
easily cost over a billion dollars".

Wow. Is there really nothing better we could do with this money than implementing a poorly designed envy tax and crush our economy?

The glaring flaw in the Tax Working Group’s proposal is that Labour promised a CGT would shift capital away from
unproductive assets like housing into productive investment like businesses. The TWG proposal will do exactly the
opposite.

Great stuff Cindy. Just remind me, which problem did you wanted to solve?