Latest / Best of Business / Jenee Tibshraeny: NZ Herald Wellington business editor on whether the capital gains tax can work

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Jenee Tibshraeny: NZ Herald Wellington business editor on whether the capital gains tax can work · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk zed B.
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  Speaker 1: iHeartRadio either do for see Alan.
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  Speaker 2: Chris Hipkins is pushing back at the government and his
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  Speaker 2: own potential coalition partners on the issue of the capital
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  Speaker 2: gains tax. Government hates it, Greens want Labor to go
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  Speaker 2: much further.
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  Speaker 3: This is the policy that we are campaigning on and
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  Speaker 3: this is the policy that we will implement if we
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  Speaker 3: form government after the next election. Because I'm not a
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  Speaker 3: complete pushover like Christopher Luxen, I don't think the smaller
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  Speaker 3: parties should call all of the shots. I've been very
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  Speaker 3: very clear under a Labor government, I will be the
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  Speaker 3: Prime Minister. Barbara Edmonds will be the Minister of Finance.
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  Speaker 3: That is not up for negotiation.
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  Speaker 2: Genatib Trainey is The Herald's Wellington Business editor with us.
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  Speaker 2: Hello Jenney, Hi Heather. Okay, so you have an interesting
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  Speaker 2: take on this, which is you don't have a problem
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  Speaker 2: with the CGT part. You have a problem with the
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  Speaker 2: three free doctors visits part.
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  Speaker 4: Why Yeah, exactly. I think if you read some of
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  Speaker 4: the work that Treasury has been putting out there, it's
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  Speaker 4: really worried about the costs sociated with our aging population.
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  Speaker 4: You know, these costs are meant to soar and the
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  Speaker 4: tax take is not meant to increase, you know, at
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  Speaker 4: the same rate as the expenses. So Treasury illustrates this
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  Speaker 4: in a recent report it did. It said that if
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  Speaker 4: for the government solely relied on tax to meet the
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  Speaker 4: cost pressures that are ahead, the average tax rate on
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  Speaker 4: labor income would need to rise from twenty one percent
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  Speaker 4: to thirty two percent of GDP. Or if you solely
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  Speaker 4: rely on increasing GST to meet the costs, that would
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  Speaker 4: need to go up from fifteen to thirty two percent.
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  Speaker 4: So the reality is we don't have enough money to
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  Speaker 4: meet the costs. So then you think, well, how do
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  Speaker 4: you you know, how do you meet these costs. Either
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  Speaker 4: you cut services a lot, you increase the age of
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  Speaker 4: super or you increase the tax base. So you just
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  Speaker 4: instead of taxing people who go to work more, you
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  Speaker 4: just diversify who you tax. And a capital gains tax
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  Speaker 4: is a widely recognized way of doing that. You know,
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  Speaker 4: people do, It's done all around the world. A bunch
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  Speaker 4: of business leaders think it's a good idea, IMF so on.
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  Speaker 4: So of all the different options, none of them are great,
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  Speaker 4: but that one doesn't seem like a bad one.
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  Speaker 3: Yeah.
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  Speaker 2: So basically the idea is you need more, you need
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  Speaker 2: more revenue. You don't need to go blowing it on
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  Speaker 2: something that people can afford to pay for them. Many
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  Speaker 2: people can afford to it. And this is arguably the
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  Speaker 2: same problem with the Future Fund, isn't it. They bring
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  Speaker 2: the money in or they get the money and then
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  Speaker 2: just squander it on something we don't need.
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  Speaker 4: Well, that's the thing, And you know, I think for
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  Speaker 4: a lot of people, they are smart enough they can
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  Speaker 4: see the future that we're looking at. And I mean
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  Speaker 4: it's not great, but something needs to be done. But
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  Speaker 4: the thing that is galling is when labor proposes to
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  Speaker 4: spend money in an untargeted way. So of course I'd
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  Speaker 4: like to go to the GP three times a year
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  Speaker 4: for free, but I can afford to go to the GP, thankfully,
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  Speaker 4: and I do go. So actually to spend money on
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  Speaker 4: me going to the GP is a waste of money.
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  Speaker 4: I'd rather that be spent on other people who can't
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  Speaker 4: afford it, getting top of the finances.
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  Speaker 2: What about if you see this from a different perspective,
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  Speaker 2: which is this is not actually the thing that's supposed
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  Speaker 2: to bring the reaven you and this is the trojan horse, right,
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  Speaker 2: it starts them off. They sell it to the public with, hey,
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  Speaker 2: this is what you get for us introducing a CGT.
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  Speaker 2: So it's a nice little bait and switch, and then
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  Speaker 2: after that you can start making it more comprehensive. Comprehensive
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  Speaker 2: and that is how you pay for everything.
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  Speaker 4: Yeah, now, like I mean, that's a good point. What
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  Speaker 4: they've proposed here by keeping it just on property sydent
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  Speaker 4: types of property, is that the revenue generation is not
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  Speaker 4: going to be huge. It's not going to save New
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  Speaker 4: Zealand from this doom and gloom that Treasury talks about.
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  Speaker 4: But I don't think we can assume that label would
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  Speaker 4: go further with the taxing. You know at the end
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  Speaker 4: of the day that there would be an uproar and
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  Speaker 4: you can't entirely pull the rug out from beneath people
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  Speaker 4: who invest in property. There's nothing wrong with doing that.
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  Speaker 4: We need landlords and I would hope that it wouldn't
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  Speaker 4: overkill things. And for example, the way it could do
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  Speaker 4: that is if it again stopped allowing investors, prevented them
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  Speaker 4: from deducting interest as an expenseful tax. Start to ask previously,
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  Speaker 4: did do you know what they're doing there? Well, they
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  Speaker 4: haven't said, so we asked and they sort of kept
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  Speaker 4: it open. So, you know, it's pretty crucial for investors
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  Speaker 4: that they can deduct their interest as an expense. It's
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  Speaker 4: a very large expense. It helps with cash flow, you know.
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  Speaker 4: It's one thing introducing a capital gains text. I think
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  Speaker 4: that's fine, but removing the ability to deduct interest as
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  Speaker 4: an expense would be a step too far. And I
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  Speaker 4: don't know why they didn't just stamp that out when
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  Speaker 4: they announced the policy.
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  Speaker 3: Interesting.
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  Speaker 2: Hey, thanks very much, Jane. As always, Jane Tibcharany, the
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  Speaker 2: heralds Wellington Business Editor. Here the labor have a poverty mindset.
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