David Seymour: Accountants the winners out of capital gains tax

Opinion 21/02/2019

ACT leader David Seymour has claimed there will be only one winner if the Government introduces a comprehensive capital gains tax - the accountancy industry.

The final recommendations from Sir Michael Cullen's tax working group are due out just before lunchtime on Thursday, and is expected to recommend a capital gains tax that excludes the family home.

"All of the people who go to work every day in New Zealand and pay taxes on their wages and their salaries look at somebody who isn't paying tax on income that they get from another source, and they wonder why," Finance Minister Grant Robertson said last year.

It could be offset by a reduction in income tax, such as a tax-free threshold at the bottom.

Mr Seymour told The AM Show on Thursday more Kiwis will be affected than many might think.

"Labour say, 'We're going to stick it to what Michael Cullen calls 'rich pricks'. In reality, this is everybody. It's somebody who has a hairdressing business that they've built up a few hundred grand of goodwill - that's a capital gain that would be taxed.

"Just remember there are 3 million people - almost every adult New Zealander - is now in KiwiSaver, $50 billion worth of assets in KiwiSaver accounts. All that would be taxed by capital gains. This is comprehensive - and it's not just rich pricks, as Michael Cullen likes to say - it's actually everybody who believes in putting something away today to invest for a better tomorrow. If you do that, you end up being double-taxed."

At present, KiwiSaver funds invested in most New Zealand and Australian shares aren't taxed - the rest already is, it's deducted automatically and the top rate is 28 percent - below the top tax rate of 33 percent.

But the tax working group's interim recommendations, released last year, recommended scrapping tax on employers' KiwiSaver contributions and cutting the existing tax rates, which would benefit savers.

Either way, Mr Seymour says complicating the system can't be good, saying we're lucky to enjoy the "third-simplest" tax system in the world.

"You go to Australia or Canada or worst of all the United States, basically everybody has to employ an accountant in order to do their taxes. We don't want that."

He claims the cost to Kiwis would be $4.5 billion a year in accountants' fees.

"We tell children in New Zealand 'save something today, invest something for tomorrow'. The Government is now going to propose putting in place a special tax just to punish that exact behaviour. It is a question of, do we want to be an achieving society that values success, or one that beats up and punishes and double-taxes people who save and invest?"