Because capital gains taxes don’t seem to have the results overseas claimed they would. Labour, under Helen Clark, wanted one to help make housing more affordable and reduce rents. Yet, Australia have had one since Keating introduced it and they’re still having a housing crisis and rent crisis. Others say that it will help reduce inequality but have First Nations living standards increased compared to other Australians?
There also the point that a Capital Gains Tax is more expensive to collect and administer than the likes of an Inheritance Tax, or PAYE or GST. This means more money would be absorbed by the IRD before it gets to the Treasury.
Think of it this way. A businessman is owed $1,000 each by two customers. A five minute phone call costs the businessman a few dollars of his time to collect the money in full later that day. The second person disputes the account, makes promises to pay and doesn’t, several emails and phone calls later and the businessman takes him to the Disputes Tribunal where he finally agrees to pay it in installments of $20 per week.
Eventually, the businessman receives $1,000 from both people but getting from one has taken a lot more effort and time (and money as while he’s trying to recover the money he can’t earn money from other clients) than the other client.
I also don’t think people realise that a CGT will reduce their KiwiSaver and other managed funds balance as a CGT will impact their returns as a large portion of that is made up from the gain in value in shares…. and that gain will be taxed. At the moment, it’s only things like interest and dividends received which are taxed.
That said, one day a form of tax on wealth (either a wealth tax or CGT) will be introduced. Like I said the other day, both politicians and the public’s greed means it won’t be done what I consider the best way… a combination of inheritance tax and gift duty.
thekaka.substack.com
