Sir Michael Cullen says a capital gains tax is inevitable

Author
Newstalk ZB,
Section
Audio,
Publish Date
Friday, 22 February 2019, 8:20a.m.
Sir Michael Cullen. Photo / Doug Sherring.

Tax Working Group chairman Sir Michael Cullen says sooner or later the capital gains tax has to happen.

The Tax Working Group has recommended the Government implement a capital gains tax, estimated to raise $8 billion over five years.

It would cover assets such as land, shares, investment properties, business assets and intellectual property.

The family home, however, would be exempt – as would cars, boats and art.

Sir Michael Cullen told Mike Hosking New Zealand has one of the flattest tax systems in the developed world.

"Somewhere along the spectrum, we need to begin the journey that almost every other developed economy has been on and that has become just an accepted part of their taxation system."

Cullen says local and international data on the topic shows the progressive role of a capital gains tax very clearly.

He said this doesn't need to be approached in a "take it or leave it" manner.

"At one end, you have got the rental homes, where clearly the capital gains tax is a very high portion of the total income. Through to holiday homes, through to land and buildings in general. Then you get to the more awkward parts which are things like equities and then the active business, goodwill part where I think there are much sticker problems to resolve."

When asked about the people in the Tax Working Group who don't agree with him, Cullen said there is a range of views within the group.

Right the way through this process I have been saying that intelligent people can have intelligent discussions and arrive at different conclusions."

"There are rational arguments both ways and for everybody in the group it was a balanced decision, it's not a laydown, of course you do it or this is the most stupid decision I have seen in taxation."

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