Government announces it will not proceed with CGT

Prime Minister Jacinda Ardern announced that the Coalition Government will not implement the proposed capital gains tax (CGT).

In February, the independent Tax Working Group recommended a tax on capital gains from rental homes, second homes, business assets, land, and shares as a way to improve the fairness, balance, and structure of New Zealand’s tax system.

Read more: Capital gains tax bad for long-term housing affordability

“The Tax Working Group gave the Government, and the country, an opportunity to look at the fairness of our tax system and debate options for change,” said Ardern.

“All parties in the Government entered into this debate with different perspectives and, after significant discussion, we have ultimately been unable to find a consensus. As a result, we will not be introducing a capital gains tax.”

“I genuinely believe there are inequities in our tax system that a capital gains tax in some form could have helped to resolve. That’s an argument Labour has made as a party since 2011.”

“However, after almost a decade campaigning on it, and after forming a government that represented the majority of New Zealanders, we have been unable to build a mandate for a capital gains tax. While I have believed in a CGT, it’s clear many New Zealanders do not. That is why I am also ruling out a capital gains tax under my leadership in the future.”

While the CGT has been scrapped, Finance Minister Grant Robertson said that the report’s other recommendations may be considered. “The final report covered all aspects of the tax system, and a number of the recommendations will now be considered for inclusion in the Government’s Tax Policy Work Programme,” said Robertson.

“That includes exploring options for targeting land speculation and land banking.”

“We intend to direct the Productivity Commission to include vacant land taxes within its inquiry into local government funding and financing.”