Business groups have pushed back against a Capital Gains Tax with a chorus of concerns ranging from the impact on productivity, the destruction of shareholder value, and flow-on to an already slumping property market.

Matt Goodson, managing director of Salt Funds Management, said CGT would have a negative impact on company valuations.

"It will increase companies' cost of capital, which should decrease valuations, and that will be particularly skewed to those companies who retain most of their earnings." "If you retain most of your eanrings, you would expect your share price to go up over time, so you would be taxed on that where you were not taxed previously," Goodson said.

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Shane Solly of Harbour Asset Management said the extension of the bright line test and restrictions on income spreading were already taking the heat out of some of the more speculative elements of residential property investment.

"They have certainly put owner occupiers on a more equal footing to residential property Investors," Solly said.

The introduction of a CGT while leaving the above measures in place would be "draconian."

EY Tax leader David Snell said he thought the prospect of implemention by 2021 looked "hasty."

"The fact the group vote was split three (against) to eight (for) indicates that implementation of a full CGT is going to be incredibly difficult with associated revenue and efficiency gains uncertain."

Greg Haddon, tax partner at Deloitte, said the report raised the possibility whether the government should look at a staged introduction and consider what assets might be perhaps be simpler to start with.

"One of the things we are going to have to work through over time is the complexity," he said. "For example it says it will be taxed on a realised basis. A lot of overseas jurisdictions have massive rules around what is in fact a realisation so that can be very complex."

Mark Peterson, CEO of stock market operator NZX, said it would discourage investment in New Zealand businesses and stunt the growth of the country's capital markets.

The suggested capital gains tax (CGT) would cover assets such as land, shares, investment properties, business assets and intellectual property.

Read more: Tax Working Group recommends capital gains tax: what it means for you

Peterson said New Zealanders were already taxed on income used to acquire shares – and that being taxed twice would be unfair.

"NZX is also concerned about the fairness of the Tax Working Group's recommendations, and the different tax treatment proposed for direct investment compared to managed funds and KiwiSaver, which if implemented, would narrow participation in the New Zealand market," Peterson said.

He said the NZX did not want to see tax settings which would create preferences for offshore investment, adding a strongly performing and efficient capital market requires the broadest possible participation from a wide range of investors.

"Our capital market is a significant part of New Zealand's economy, which needs to keep growing," he said.

"The recommendations outlined today are not fair on New Zealand businesses and may pose risk to economic growth."

Meanwhile, lobby groups wasted no time laying into the report.

Federated Farmers described the capital gains tax proposal as a "mangy dog", that would add unacceptably high costs and complexity to the rural sector.

Andrew King, chief executive of the New Zealand Property Investors Federation, said the recommendations weren't a surprise.

"They were set up to bring in a capital gains tax that wouldn't affect the family home."

But he said the proposals would penalise those who saved and invested and encourage people to either spend their money or put it into the family home.

"Basically it's a disincentive to those who want to save money and invest money - they get punished."

The Employers and Manufacturers Association (EMA) warned that any gains from such a broad-based capital gains tax would be eaten up by administration and other costs, leaving little revenue.

"It's difficult to see any benefits for the business community from implementing the proposed capital gains tax rules, as taxing both shares and business assets appears to be double taxation," EMA chief executive Brett O'Riley.

Peter Newbold, general manager of PGG Wrightson Real Estate, said a capital gains tax would have a minimal impact at the moment because the rural property market was largely static.

He said in general rural property values for most sectors are holding steady, although there was some downward pressure in dairy in some regions.

"If that remains the case, a capital gains tax would have minimal impact on the market," he said.