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Andrew Dickens: Capital gains tax - don't panic yet

Author
Andrew Dickens,
Section
Opinion,
Publish Date
Friday, 22 February 2019, 12:25PM
So my call on the whole thing is that we are being conditioned. Brace yourself for a stronger brightline test.

The most amazing thing about this Tax Working Group report is just how much people want to talk about it. And that’s a good thing because the more we talk about things the more we can understand things and make the right decisions.

Yesterday I opened the lines at one and then for three hours we have a never-ending stream of calls. I tried to change the subject to talk about zoos. But you wouldn’t have a bar of it.

So imagine my surprise this morning as I was walking my dog that person after person came up to me and started talking tax. Do I look like an accountant?

One dog walker used a good word and I warned her I’d use it this afternoon. She said the real reason for the Tax Working Group is for conditioning. To raise the spectre of a big old hairy chested broad and comprehensive Capital Gains tax to scare the bejesus out of us so that come April when the government releases a scaled-down property capital gains tax we’d breathe a sigh of relief.

It’s a theory favoured by many, particularly in the business world.

Of course, a lot of the scrutiny now falls on Winston Peters, who has the ability to boycott any move towards a CGT.  Yesterday Winston got a bit of heat from the farming community after appearing on thecountry.co.nz and telling Rowena Duncum that Farmers would not be hit by a Capital Gains Tax. But then lo and behold out comes a tax on farms apart from the farmhouse and an acre around it.

People said that Winston has been telling mistruths.

Or maybe he isn’t.

It could be that Rowena got herself a scoop and the first indication that NZ First is not going to let a wholesale tax reformation happen. Let’s wait and see. 

So let’s remind ourselves that we already have a capital gains tax with the bright line test for property investors.

Let’s also remind ourselves that this is a suggestion from a group and not concrete government policy.

Let’s also dismiss the idea that the government sent the group back after the interim report with a directive to include a capital gains tax. The interim report had a CGT but also an indication it was going to be hard. The only real difference is that for this report 3 members of the Group have said they’re not in support of a comprehensive CGT but they are in favour of a tax on investment property.

So my call on the whole thing is that we are being conditioned. Brace yourself for a stronger brightline test. And don’t panic yet.

Meanwhile on zoos.  I can’t see them existing in 25 years time.

 

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