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A pro Capital Gains Tax hoarding from 2019
A pro Capital Gains Tax hoarding from 2019

SocietyApril 8, 2019

Why we’re shouting about a capital gains tax

A pro Capital Gains Tax hoarding from 2019
A pro Capital Gains Tax hoarding from 2019

A new campaign launches today making the case for a capital gains tax. Tax Justice Aotearoa’s Louise Delany and Paul Barber explain what they’re up to

In the din of the current tax debate, there are voices that have largely gone unheard: hundreds of thousands of ordinary New Zealanders who believe the time is right for a broad capital gains tax to help reduce the persistent gap between rich and poor and a more robust tax system.

Since the release of the Tax Working Group’s final report in February this year, there has been no end of catastrophising from a group of voices who are opposed to the introduction of the tax. We’ve mostly heard from some owners of farms and lifestyle properties and the owner of 80 rental properties in Hawke’s Bay.

But we haven’t heard enough from those New Zealanders who actually support a capital gains tax, despite a recent Horizon Research poll showing more of us actually support it than oppose it.

The overwhelming majority of us don’t own more than one property. For the increasing numbers of us who are struggling to even buy our own home, the idea of the second home for holidaying at the beach or to rent out is unimaginable – a million miles from the reality of how most New Zealanders live.

Most wealth in New Zealand is held by a small group of people, and their opposition to the introduction of a capital gains tax is loud and clear. And – if holding on to wealth is all you care about – entirely understandable.

Meanwhile our tax system has a very large hole in it: the absence of taxes on wealth. That hole makes Aotearoa a great place to be rich. It also makes it a place where there is a persistent and significant gap between rich and poor.

The report of the Tax Working Group is very clear. The absence of a tax on income from capital gains makes our tax system unbalanced and unfair. It means that our tax system performs poorly compared with similar countries in terms of reducing inequality.

Income from capital gain should be treated the same as all other income. The group was unanimous in recommending the introduction of a capital gains tax in some form to redress this imbalance. A tax on income from capital gains is regarded as normal by most countries in the OECD that we compare ourselves to – we need to catch up with the simple principle that all income is liable to tax – whatever the source.

Our pro-CGT campaign arose from a belief that there’s a need to bring balance to the debate we’ve seen following the release of the working group’s report. Our network of community, church and worker organisations has united to give a voice to the hundreds of thousands of New Zealanders who support a capital gains tax and who are deeply concerned by inequality in New Zealand.

Tax Justice Aotearoa New Zealand supports a capital gains tax as an important first step towards broader tax reform. Future steps should include reducing taxes on low to middle income earners, and increasing tax on the highest paid, reducing GST which hurts the poor the most, making multi-national companies pay their fair share, and taxing polluters to protect our environment.

Tax is the contribution we all make to a decent and developed world, with quality public services and infrastructure. Our tax settings should be fair and ensure sufficient revenue to sustain and grow our public services.

We all work hard and those of us who earn our income from wages and salaries pay tax on every cent we earn. The idea that only those who earn their income from wealth work hard is offensive and wrong. And it’s not the kiwi way.

Restoring a balance of fairness by introducing a capital gains tax is the true Kiwi way.

The campaign is funded and supported by the Public Health Association, New Zealand Council of Christian Social Services, Council of Trade Unions, Public Service Association, Hui E! Community Aotearoa, Equality Network, Closing the Gap, Poverty Action Waikato, and UCAN – United Community Action Network

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