Federated Farmers says tax proposals should be rejected

Andrew Hoggard, Federated Farmers.

Federated Farmers has come out swinging against a capital gains tax and says the Government should reject the majority of the raft of new taxes proposed by the Tax Working Group.

"Small business would pay the costs, large business would spend thousands avoiding the costs and tax advisors and valuers would have a field day," Federated Farmers vice-president Andrew Hoggard said in a statement.

"There is possibly an argument for a capital gains tax aimed at rental properties if there was some sound evidence it would dampen investor speculation and reduce price pressure and first home buyers being out-bid. But even with that, we haven't given the tougher 'bright line' test rules a chance to really kick in.

"On balance a capital gains tax is a bad idea. It's clear that a CGT would do little extra, above what the government is already doing, for housing affordability but would just add an additional layer of costs for businesses, and given it won't even apply to the vast bulk of houses, again how will it solve housing affordability?"

Hoggard asked "Why should the capital gains on a $2 million small farm in Eketahuna be taxed, but a similar valued house in Ponsonby not? Either everyone is in or no one is."

He said National Party estimates on the financial implications might be a bit light because, for instance, "they took a mid-point view on a number of figures".

"For example, a 2018 Landcare report calculated that a charge on methane for a sheep and beef farm could be as high as 123 per cent of their net profits - a nationwide cost in the order of $2 billion and a cost per sheep and beef farm of about $120,000.

"In our view the environmental taxes that have been mooted will be even worse than a capital gains tax."

He said a tax on nitrogen losses would require the use of the Overseer modelling programme - but it had a 20 per cent margin of error.

"How many people would like IRD applying a 20 per cent margin of error to their taxes. Overseer is a fantastic tool for what it was developed for, but it wasn't designed as a tax calculator.

"Also, nitrogen is not the issue in every catchment in this country. Taxing every farmer and grower on nitrogen losses or a tax on nitrogen fertiliser, just takes money away from primary producers that they could spend on the mitigations that are needed for their specific catchment."

The Government will reveal which parts of the working group's plan it will adopt in April.

Finance Minister Grant Robertson said they needed to fix the gaps in the tax system, but were also working in an MMP environment.

That meant they needed to build consensus with the Greens and NZ First.