Organisations, unions react to Government's shutdown of capital gains tax

The government's announcement to ditch plans for a capital gains tax has received mixed reviews by pressure groups, unions, politicians and everyday Kiwis.

Earlier today, Prime Minister Jacinda Ardern confirmed the Government would not go ahead with a capital gains tax - despite it being recommended by the Tax Working Group.

New Zealand Council of Trade Unions (CTU) president Richard Wagstaff said the decision was "hugely disappointing".

"Working people need a fairer New Zealand, a place where we can all thrive. Ensuring that everyone contributes their share is a key part of that," he said.

"A fairer tax system remains part of the solution in building the country we want New Zealand to be.

"This is a clear choice which the government has now failed on. We had hoped for better."

Auckland Action Against Poverty echoed the sentiments, condemning the decision "to not fix our tax system which benefits a wealthy few".

"The Government's refusal to implement bold tax reform to address the growing wealth gap is a disservice to our most vulnerable", said AAPC coordinator Ricardo Menendez March.

"After promising to be a Government of transformation, the Prime Minister's has shown that her Government's approach to tax policy is not that much different from the previous National-led administration."

However, BusinessNZ chief executive Kirk Hope congratulated the Government for its surprise decision.

Hope said the tax would have hit businesses hard, reducing funds available for investment and job growth and increasing their compliance burden.

"Our members have been very clear that they did not see the justification for an expensive new tax that would have reduced the competitiveness of the New Zealand business sector for no discernible gain."

In rejecting a CGT, Ardern turned down a key recommendation from the Tax Working Group - which cost an estimated $2 million to run.

Ardern said the Tax Working Group review had provided an opportunity to debate the tax system.

Business NZ chief executive Kirk Hope. Photo / Supplied

However Labour had been clear that the Government would only proceed if there was a consensus within Cabinet.
She confirmed today a consensus was not reached - and said there was not a mandate for such a tax.
Taxpayers' Union executive director Jordan Williams said taxpayers around the country would feel like they dodged a bullet.

"Small business owners, lifestyle block owners, first-home buyers with flatmates, and other New Zealand taxpayers will be breathing a sigh of relief," he said.

"The Prime Minister admitted her Government lacked a mandate to introduce the tax, because New Zealanders demonstrated that they do not want it.

"She is completely right."

Federated Farmers said the decision meant the coalition was willing to put practical considerations in front of ideology.

Economics spokesperson for the Feds Andrew Hoggard said a CGT would have put a "handbrake" on the progress of smaller businesses.

Federated Farmers spokesperson Andrew Hoggard.

"It's clear the coalition partners have listened to widespread concerns that a CGT has too many downsides, including massive administration costs", he said.

Meanwhile, the Public Service Association (PSA) said today's announcement had ruled out all other options for a CGT in the foreseeable future.

PSA national secretaries Glenn Barclay and Kerry Davies said it was a sad outcome for all Kiwis who hoped a CGT would make the tax system fairer.

"It is extremely disappointing that the conclusion was reached that there is no appetite for implementing some form of capital gains tax," they said.

"While today's announcement has promised that more targeted measures will be taken to advance more fairness in the tax system, it is difficult to see what can in any way replace what could have been achieved by having the courage to introduce a capital gains tax.

"Instead, today's decision just leaves the way open for persistent wealth inequality in New Zealand to go unchecked."

Real Estate Institute of New Zealand boss Bindi Norwell said her industry had held "grave concerns" about the implementation of the tax, which she believed would have pushed up house prices further.

"Those who own lifestyle blocks will no doubt be particularly pleased with today's announcement, as they were one of the few communities facing a capital gains tax on the sale of their own home on land over 4,500 square metres.

"We hope today's announcement will bring more certainty for the real estate industry as feedback from buyers and sellers has been unanimous in their uncertainty ahead of today's announcement."

Leader of the Opposition, Simon Bridges, said National's relentless attack against a CGT forced the Government to back down.

"Prime Minister Jacinda Ardern says she personally still wants a Capital Gains Tax and that our tax system is unfair. New Zealanders simply can't trust Labour when it comes to tax."

The Prime Minister rejected Bridges' claim that it was National that made her Government back away from a CGT.

"Politics is not for the faint heated."

Ardern said she was still proud of commissioning the tax report and said the Government had not shied away from the debate.

A CGT was now off the table at the next election and the decision showed that "this was MMP".