And now the hard part; getting Winston to agree to a capital gains tax

: The first Cabinet meeting of the year yesterday minus most of the Auckland Ministers, including Winston Peters, who could not land in Wellington becaue of fog. From left --- Cabinet secretary, Michael Webster; Finance Minister Grant Robertson and the Prime Minister.
 

The Government will get the Tax Working Group report on --- among other thigns – a capital gains tax this Friday.

Prime Minister Jacinda Ardern confirmed yesterday that it was still the government’s intention to bring forward legislation for any tax changes before the end of its current term though those changes would not come into effect until after the enxt election.

But whether it will propose a capital gains tax will now depend on whether it can persuade NZ First to agree.

Ardern and Finance Minister Grant Robertson were coy yesterday on whether they thought they could win that debate.

Meanwhile NZ First Leader, Winston Peters, is not saying much beyond repeating his 2017 assertion that we already had a capital gains tax.

“What i tried to point out then was that we had a cpaital ghaimn tax and that we had had one for a long time,” he told POLITIK last night.

“Now the question is are you talking about broadening it.

“The position of New Zealand First is that we will wait for the report, we will evaluiate it and then we will give our view.”

Robertson n says the government will take some time to digest the report

“This is the point, we are now going to work through what is recommended by the Tax Working Group,” he told a press conference yesterday.

“We will take a look at the packages they are putting forward and see which ones we can get consensus on.

“That is just the reality of government.”

What he appears to be suggesting is that  the government will need a deal with NZ First before it publishes the report in opublic.

One government soruce yesterday suggested that to counter possible NZ First opposition the final deal might have to contain “sweeteners”.

the Government will get the Tax Working Group report on --- among other things – a capital gains tax this Friday.

Prime Minister Jacinda Ardern confirmed yesterday that it was still the government’s intention to bring forward legislation for any tax changes before the end of its current term though those changes would not come into effect until after the next election.

But whether it will propose a capital gains tax will now depend on whether it can persuade NZ First to agree.

Ardern and Finance Minister Grant Robertson were coy yesterday on whether they thought they could win that debate.

Meanwhile, NZ First Leader, Winston Peters, is not saying much beyond repeating his 2017 assertion that we already had a capital gains tax.

“What I tried to point out then was that we had a capital gains tax and that we had had one for a long time," he told POLITIK last night.

“Now the question is are you talking about broadening it.

“The position of New Zealand First is that we will wait for the report, we will evaluate it and then we will give our view.”

Robertson n says the government will take some time to digest the report

“This is the point, we are now going to work through what is recommended by the Tax Working Group,” he told a press conference yesterday.

“We will take a look at the packages they are putting forward and see which ones we can get consensus on.

“That is just the reality of government.”

What he appears to be suggesting is that the government will need a deal with NZ First before it publishes the report in public.

One government source yesterday suggested that to counter possible NZ First opposition the final deal might have to contain “sweeteners”.

Those could come with possibly a higher threshold for the application of any capital gains tax or what might be particularly appealing to NZ First, some limitation on its application to family-owned farms.

Robertson conceded that there had been contact with NZ First on the issue.

“We’ve had some conversations with NZ First, but we are all waiting for the report," he said.

Asked if he was still committed to having a threshold for small business at which capital gains tax would not apply, Robertson simply said that was a detail which would be worked through once the government had the report.

“That is exactly why we need some time when we get it to work through the recommendations.

(In a letter last September to the Tax Working Group Robertson noted that in other jurisdictions there was a tax-free threshold for the application of any potential taxation on the sale of businesses. 

“We invite the Group to consider whether such a threshold would be appropriate in any potential regime," he said. 

The Prime Minister's affirmation that the Government would before the next election bring legislation forward based on the report signals that a compromise will now be needed.

There had been some speculation that if the Government could not get a deal with NZ First, it would drop the proposal to legislate before the election.

But she was adamant yesterday that the legislation would go through Parliament before the election but would not apply till after.

“Nothing has changed,” she said.

However what might have to change will be NZ First’s attitude.

During the last election campaign, he told POLITIK that he was not for an extension of the capital gains tax.

"While we have a capital gains tax now it is not even in the first four considerations of why we have such a distorted, overpriced world exceptional market in housing and in some ways land."

Peters argued that we needed to stop foreigners buying land and put a hold on immigration to reduce pressure on the housing market which he says would be much more effective than imposing a capital gains tax.

But Labour has stopped promoting the tax as something to address the housing shortage and instead now emphasises that it will lead to a fairer taxation system.

In his September letter, Robertson noted the interim report’s finding that New Zealand continued to have a relatively narrow tax base when compared to our OECD peers

And so he asked the Group to consider in their final report “a package or packages which reduces inequality so that New Zealand better reflects the OECD average whilst increasing both fairness across the tax system and housing affordability.”

Implementing tax reform guided by the Tax Working Group is core Labour policy; NZ First will be under enormous pressure to support it.

 

 

 

 

 

 

 

 

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