Labour to Push for Capital Gains Tax
July 7, 2011 New Zealand Taxation
After years of debates and discussion, New Zealand is seeing a credible chance of instating a capital gains tax, as the Labour Party reveals the levy as a key aspect of its election campaign platform.
Even though the Labour party’s intention to pursue the tax was only revealed on June 6th, there has already been a rising swell of debate in support and opposition of the idea.
If the Labour Party wins the election, it will instate a new capital gains tax. In an effort to protect the country from slow downs to the home-buyers market, the tax will only be levied on second homes and investment properties.
The tax is likely to be levied at 15 percent on the profits made from selling an investment property. Previous estimates by the tax Working Group have indicated that such a tax could raise nearly NZD 4.5 billion per year. The Labour Party is likely to use the revenues to pay for a round of low- and middle-income earner tax cuts, a removal of GST on fruits and vegetables, and exempting the first NZD 5000 of incomes earned from tax liabilities. Some analysts believe that the changes will be complemented with a round of tax rate increases for high-income earners.
The idea was met with almost immediate praise from the Council of Trade Unions (CTU), with Peter Conway, CTU Secretary, saying that “the time has come” for New Zealand to have a capital gains tax. However, he also warned that the tax would not be a “miracle cure” that would address the country’s economic problems, but would help balance the country’s fiscal woes. The current ruling National Party also promptly voiced its disapproval for the capital gains tax idea.
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