Government elected to consider Capital Gains Tax, fix tax system - Greens co-leader James Shaw

News 27/02/2019

Green Party co-leader James Shaw says the Government was elected to fix the tax system - and that means considering a capital gains tax (CGT).

On Thursday, the Tax Working Group recommended introducing a CGT, which would apply to all gains and losses on properties (excluding the family home) as well as shares and business assets. 

While the National Government introduced the bright-line test, essentially a CGT on properties sold within two years of purchase, the current Government extended that to five years.

But Mr Shaw told The AM Show that needed to go further and the Green Party has long said introducing a CGT was fundamental to creating a fairer society.

"We have always believed that it makes sense for people who flip properties for a living to pay tax on that income just the same way that you and I who earn a salary or a wage pay tax on that income," he said.

"Fundamentally, that reform is a long time overdue."

A CGT has always been a major topic of contention for politicians and the public, with a recent Newshub-Reid Research poll showing the majority of Kiwi voters oppose the tax.

But Mr Shaw said he was frustrated with comments from political commentators suggesting that bringing in a CGT could be disastrous for the Government.

"I was getting so pissed off over the summer with all of these people, and all of the space being taken up by the people who said that civilisation was going to collapse... if you have tax reform," he said.

However, even if the Greens support the tax, getting cross-Government approval may be difficult.

New Zealand First leader Winston Peters has consistently opposed the tax. During the 2017 election, he said a CGT was "off the table" and it "won't work in this country".

Labour leader 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.

But, despite that, Mr Shaw reckons it was central to the Government's mandate.

"All of the commentators were saying 'oh look, it is a really hot button thing for the Government, will they be able to get re-elected if they bring in a capital gains tax, or fundamentally reform the tax system so it is fairer?'

"That's what we got elected to do, if you go back to the election campaign, we have got a majority of votes in the house for fairness and transparency and all of those good values in the tax system."

When asked by The AM Show host Duncan Garner whether he believes the Government deserves to be re-elected if it doesn't reform the tax system, Mr Shaw said it was an important question.

"I think that we should be asking ourselves [whether we deserve to be re-elected if the changes aren't made].

"Rather than saying 'can we get away with bringing it in', we should be thinking to ourselves about if we can get away with not changing these things," he said.

Mr Shaw said no decision had been made by the governing parties about what recommendations from the Tax Working Group to implement.

On Monday, Prime Minister Ardern said there needed to be a debate about the recommendations first.

"Let's debate the actual report rather than simply making things up," she said, criticising National leader Simon Bridges' comment that the proposed tax would be an "assault on the Kiwi way of life".

Mr Peter's position also looks like it may be softening, with the politician saying: "When you're presented with a new set of circumstances, then it's wise to actually consider it before confirming your former opinion."

The CGT would be set at the income-earner's top tax rate, likely to be 33 percent for most people, which Mr Bridges claimed on Thursday, was "one of the highest rates of capital gains tax in the world".