Key Speaks Out Agaisnt Capital Gains Tax
July 12, 2011 New Zealand Taxation
Prime Minister John Key has scoffed at the idea of introducing a capital gains tax in New Zealand, calling the move “a dagger through the heart of growth”.
For the last week the New Zealand Labour Party has given strong indication that it will use a capital gains tax as a center point in its general election campaign. An official announcement on the matter is expected on Thursday, but analysts expect the proposed tax to be levied on investment properties, and to be charged at 15 percent of the sale profit.
Since the tax was first hinted at, over the weekend, it has raised significant debates, dividing politicians and industry groups firmly between support and opposition. However, the proponents have already received big name backing, with the Inland Revenue Department, the New Zealand Treasury, the International Monetary Fund, the Organization of Economic Cooperation and Development all saying that the country’s tax base is too narrow, and a capital gains tax would improve the situation.
John Key has responded to the supporters, saying, “…I think we’ve got a tax system that most countries in the world would want to have.” He claimed that New Zealand does not need new taxes, but a greater number of taxpayers, and that the best means to achieve this was to encourage economic growth. The Prime Minister said that a capital gains tax would only serve to stifle New Zealand economic expansion, and discourage investments.
Phil Goff, leader of the Labour Party said that he will continue to remain tight-lipped about the tax until Thursday, but is happy that the idea has spared such wide debate across New Zealand.
Photo by nznationalparty