Final recommendations from the Tax Working Group will be out on Thursday and industry groups, lobbyists, iwi authorities, financial experts and institutions are gearing up to react.

The group, chaired by former finance minister Sir Michael Cullen, released an interim report last year which said it had “identified a list of asset classes that are not already subject to tax” and that included houses excluding the family home. “Capital gains from these assets would be included in the tax base,” it said.

Dominik Stephens says property is more lightly taxed than other forms of investment. Treasury and the Inland Revenue estimate that property investors pay 29.4 per cent of their after-inflation returns in tax, whereas bank depositors and owners of dividend-paying shares pay 55.7 per cent.

Andrew King, NZ Property Investors Federation executive officer, opposes CGT, claiming property is “taxed more heavily than other assets with a higher marginal effective tax rate because of local government rates.”

It seems all but certain that CGT, excluding the family home will be recommended, but there are plenty of uncertainties around the exact form of it.

SNAPSHOT ON CGT

• Paul Glass, executive chairman of Devon Funds Management: “CGT would add huge complexity to one of the world’s simplest tax systems.”

• Dominick Stephens, Westpac chief economist: “CGT It would improve housing affordability, lead to a higher rate of home ownership, help remove the heavy skew we have towards land-based investments.”

• Andrew King, executive office, NZ Property Investors Federation: Opposes CGT because landlords already pay extra tax via council rates.

• Property Council: “CGT tends to be sub-optimal in terms of their coverage and ability to be a viable and stable revenue source. But there is a strong equity (fairness) rationale for the introduction of a CGT in New Zealand.”

• AMP Capital Investors: “Introduction of a broad-based CGT is the obvious missing component of our tax system.”

• EY: “If the Government has concerns regarding all forms of capital investment, [we recommend] considering a broad-based CGT. One of the key criteria by which we should assess our tax system is through equity and fairness. Our current tax system focuses heavily on taxing income. However, income is not the only or major source of affluence for many New Zealanders.”

• Federated Farmers: 81 per cent of 1393 survey respondents oppose CGT. Farmers would quit the industry, CGT would make work for accountants and lawyers and create issues with inter-generational family farming operations, respondents said.

• DairyNZ: “Introduction of a comprehensive CGT presents significant challenges, both in transition and practical implementation.”

• Craig Stobo, company director: “New Zealand already has a CGT. However, it is not comprehensive and there are concerns about how to consistently enforce it.”

• Waikato Tainui: “Any new asset/wealth taxes, including any CGT or land tax, must exclude all Waikato-Tainui whenua and other taonga and all raupatu and other Tiriti settlement assets including post-settlement right of first refusal assets acquired from the Crown.”

• Taxpayers’ Union: “Taxing capital should be approached with great caution in the specific New Zealand context. New Zealand’s economy suffers from shallow capital markets and allow productivity, contributing towards a low wage environment. A CGT would likely make that worse.”

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