By David Seymour, ACT Party Leader.
OPINION: The worst kept secret in New Zealand politics is out of the bag. Michael Cullen has told the Government to introduce a capital gains tax and one man is to blame: Winston Peters.
In October 2017, Peters condemned free-market capitalism and assembled a left-wing coalition that is in the process of fundamentally changing our economic system.
Peters’ belief that capitalism is a ‘failed economic experiment’ drove him into the arms of Labour and the Greens.
This is despite capitalism’s record of delivering higher living standards – growing wages, more jobs, better and cheaper consumer products.
NZ First voters will be ruing the day they made Peters queenmaker.
Just consider his record. He’s lied about a political donation. He’s made a false declaration on a superannuation application. And he’s our most expensive citizen if we add up his salary, perks, travel and pork barrel spending since 1978.
Now he’s responsible for an $8 billion capital gains tax bill.
Why should New Zealanders oppose this tax?
A capital gains tax will reduce saving and investment in the productive assets needed to build a strong economy. New Zealand has long struggled with low rates of saving and investment. Why would the Government punish people for putting money in their KiwiSaver or starting a small business? By effectively putting a tax on ambition and success we will get less of it.
Capital accumulation is essential for higher productivity and wages. Workers with access to better tools are more productive and earn more than those who don’t. Taxing capital accumulation will further hurt our lacklustre productivity growth. Yesterday, Stats NZ said our labour productivity growth had fallen for a second straight year.
A CGT won’t solve the housing crisis as some have claimed. Since 1993, construction costs have increased by 212 per cent. By comparison, Auckland sections have increased in price by a whopping 903 per cent. The housing problem is not a tax problem, it is a land use regulation problem.
Capital gains taxes are costly and complex. By one estimate, valuing all capital assets would lead to a collective accountancy bill of $4.5 billion. That means New Zealanders will spend more time and money complying with tax rules and less time being productive.
But a capital gains tax is really about the politics of envy – hurting those who have been successful. ACT doesn’t believe we need a more progressive tax system. According to our Treasury, the top five per cent of adults already pay a third of all income tax, while the bottom 20 per cent pay nothing.
The Government will soon realise that we can have an envy tax, or our country’s success can be the envy of the world, but we can’t have both.
If the Government wants a more equal society, it should back those New Zealanders that struggle – for example by building the best education system in the world – rather than dragging down those who achieve and succeed.
ACT believes it is wrong to idolise envy and punish success. Those are not the values of an achieving society. We should celebrate and encourage success.
Voters looking to Winston Peters to strike down the most radical changes to our tax system in decades are out of luck.
He has made up his mind and thrown his lot in with an ideological government intent on transforming our economic system.
David Seymour is leader of the ACT Party.