...people don't like seeing new taxes introduced unless some other tax is being abolished at the same time. Most of the OECD countries have a Capital Gains Tax and New Zealand has actually been notable for not having one. Introducing one would simply bring NZ into line with other counties as given in this list, particularly Australia, of course.
Labour says in return it will cut income tax for most people by $10 a week, and will exempt fruit and vegetables from GST (presumably it won't regard canned fruit and frozen vegetables as being "fresh"?). In both cases people can be excused for asking "is that all?" The present government reduced income tax last year by a similar amount, but as we have seen it fell a long way short of people's increased costs resulting from GST being bumped up at the same time. And as mentioned in a post last year, you can avoid GST on fruit and vegetables now by growing your own / swapping your produce with neighbours who grow other crops.
The Government says accountants will love a CGT and it's certainly true that just as lawyers rub their hands with glee at complex laws, accountants do the same over complex taxes. But it's not something that will affect a lot of people very often, particularly if as in Australia the family home is exempt. During the property boom a lot of people bought investment properties with 100% mortgages, expecting tenants to pay the interest and the capital gain to give them their profit, which until 2007 they invariably got. Making this activity taxable is basic fairness. But the issue arises - if capital gains are taxable, will capital losses be deductible?
As we have mentioned in previous posts there are no good taxes, just less bad ones. Search for "Milton Friedman" on this blog and elsewhere.
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