Media release: Tax Working Group’s proposed rate of capital gains tax one of the most penal in the world
Wellington (21 February 2019): The Tax Working Group’s report released today proposes a broad-based top rate of 33% capital gains tax (CGT).
The New Zealand Initiative argues in a new policy note, The Pitfalls of CGT, that headline rate would immediately push New Zealand to the top of the international CGT rankings among industrialised economies, just behind Denmark and Finland.
“The proposal is conspicuous by a lack of exemptions and concessions around business investment, so a full rate would arguably qualify New Zealand’s CGT regime as one of the harshest in the world,” said Dr Patrick Carvalho, Research Fellow and author of the note.
“Worse, given New Zealand’s recognisably low-income tax thresholds by international standards, a new CGT would disproportionally hit middle-income earners already struggling to invest for retirement.”
“New Zealand should be cautious about siren calls for a top-ranking CGT. Trying to punch above our weight can sometimes place us in the wrong fight category,” concludes Dr Carvalho.
The Pitfalls of CGT is now available on our website.