Simon Bridges: The CGT is coming for you

Opinion 27/02/2019
Simon Bridges. Photo: Getty.

By Simon Bridges, Leader of the Opposition.

OPINION: If you relied on the Government for guidance on the proposed Capital Gains Tax you could be mistaken for thinking it is about fairness and taxing the rich.

That would be wishful thinking.

Some 1.2 million New Zealanders earn enough to be disqualified from retirement saving incentives. But almost 3 million have a KiwiSaver account and they should be sitting up and paying attention.

Right now, the proposed Capital Gains Tax is aimed squarely at their retirement savings and if the Government loses its nerve and retreats by exempting KiwiSaver from the CGT, there will be an ugly imbalance between shares held by an individual investor or a fund.

There is no way to prevent our tax system, which is one of the simplest globally, becoming a myriad of complications under these recommendations. If this were to be imposed then we’d be right to encourage universities to push out more accountants. They’ll have plenty of work.

Accountants and tax lawyers would be advising clients how to limit their exposure to one of the highest rates of Capital Gains Tax in the world and with no promise that tax breaks would be given in return.

It would allow the Government to reap $8.3 billion extra in its first five years from ordinary Kiwis. Very little escapes its net - small business owners, farmers, investors, bach and lifestyle owners would all be hit.

Even the family home could be carved up for tax purposes, with Inland Revenue taking an interest in your boarders and even your flatmates.

After 10 years, the Government would be taking an extra $6 billion annually from Kiwis.

The Capital Gains Tax will act as a massive disincentive to save, invest or build a productive business. The Government would literally be taxing our prosperity. But we think the tax burden should be reduced, not increased.

There is nothing fair for the small business owner who works hard building up their business, pays tax every single year, who creates jobs and pays wages. The Government would take a third of the nest egg they had intended to live on in retirement when they sell up.

If it’s about fairness, then why is an $8 million home in Auckland exempt, but a $350,000 rental in Whanganui, or the West Coast, or Invercargill, gets hammered with a Capital Gains Tax?

National doesn’t think that’s fair. We see Kiwis every day in our electorates, working hard, scrimping and saving in order to get ahead for themselves and for their families. They’re worried.

You work hard all your life, it’s not right that you’re taxed hard before retirement. That’s not fair, that’s not the Kiwi way.

Simon Bridges is Leader of the Opposition.