'Political suicide': Duncan Garner slams Capital Gains Tax proposal

Opinion 30/01/2019

Duncan Garner has called the proposed Capital Gains Tax (CGT) "political suicide" for what would hurt small-scale investors in New Zealand.  

On Wednesday, The AM Show host said his sources have told him Finance Minister Grant Robertson has already received the Tax Working Group's CGT report proposing a broad-based tax with a recommended rate of 33 percent.

"[It] won't hit the elite; instead it will target mum and dad investors," Garner said.

"The little business people right around the country, especially if they own a second home, like a bach, a rental, or they sell a farm, or the plumbing business they have built up over 20 years and risked everything for.

"Now the green-eyed monster wants a lick of their hard slog."

Labelling it "explosive material" that could lead Labour to "self-destruct", Garner said the proposed tax rate of 33 percent was "huge" and "virtually no other capital gains tax around the world is that high".

He claimed a 10 percent CGT was common and that Australia had an 18 percent rate. On a business selling with a capital gain of $200,000, Garner said the seller would pay $66,000 in tax.

"There you go Labour, you can't sell that to the public," he said.

Garner said it was obvious a broad-based CGT was missing from New Zealand's tax system, but that was because every time it has been suggested, Kiwis have said no.

The Tax Working Group was set up by the Labour-led Government to "consider the future of tax" and "improve the fairness, balance and structure of the tax system", according to its website

If they want to have a hope at the next election they will ditch it.

It is chaired by former Labour Finance Minister Sir Michael Cullen, who Garner said can propose the CGT without fear as he no longer needs to worry about losing votes.

Prime Minister Jacinda Ardern scrapped Labour's capital gains policy a week before the 2017 election in the face of immense criticism and attack ads from National.

The prospect of a capital gains tax was poison at the 2014 election too, derailing then-Labour leader David Cunliffe's campaign.

"Labour will surely scale [the proposed CGT] back. If they want to have a hope at the next election they will ditch it. It reeks of political suicide," said Garner.

"Jacinda and Grant desperately want to embrace a CGT to show their Labour roots, but if they want a second term in office this will go in the bin ASAP, and then they can blame Winston."

In the past, New Zealand First Leader Winston Peters, who as a coalition partner would need to approve the tax, has said a CGT doesn't work in New Zealand or in "any country".

"Peters will veto this, thank you Winston. Long live the kingmaker," said Garner.

The AM Show sports presenter Mark Richardson, who styles himself as a "solutions man", said the CGT would hurt the "little person" as if the family home was excluded from the tax, people would stop start investing in them instead of rental properties.

"Why bother buying a rental any longer? So you don't buy a rental, what happens? All of a sudden you have a lack of rental supply. Rents go up, the little person gets hit," said Richardson.

Garner agreed, saying that if no one wants to invest in a business, "no one gets employed".

"Great work Labour, you bunch of socialist twits," said Richardson.

He said he often hears implementing a CGT was about fairness and that Kiwis are meant to accept it with open arms.

"Well I don't want anything to do with this fair world," Richardson said, before noting creating a fair society was the earlier intention in Venezuela - a country which is now struggling with hyperinflation and political turmoil after a series of socialist policies backfired.

"We want a world where if you work hard, you get rewarded, you are able to work the system in your favour. But right now we are hearing that is not a good world.

"The world that this Government wants to promote is one where if you are starting to get ahead they just chop you down and try to bring you back to the pack."

The former cricketer also said he already paid "a horrendous amount of tax of every year".

New Zealand's top personal income tax rate is 33 percent for incomes over $70,000, which, according to trading website Trading Economics, is far lower than many other countries.

Sweden, for example, has a 61.85 percent top tax rate, while Japan's is 55.95 percent. New Zealand, however, does come in above the likes of Poland, Egypt and Brazil. United States has a top personal income tax rate of 37 percent, while Australia's is 45 percent.