• March 15, 2019
TOP's Geoff Simmons says the CGT as it is proposed stops short. Photo: supplied
The Labour-led government's proposed capital gains tax won’t raise enough revenue to have a significant impact on inequality or house prices, according to The Opportunities Party leader Geoff Simmons.
“It doesn’t go far enough and isn’t smart enough,” says Mr Simmons. “This won’t reduce inequality - mathematically it just can’t.
“The family home is the biggest tax loophole we have in the country, and because of [the tax working group’s] terms of reference they couldn’t do anything about it.”
The proposed exemption on the family home more than halves the taxable assets because 63 per cent of houses in New Zealand are owner-occupied.
Mr Simmons says the owner-occupier exemption is part of a wider trend of Labour policy providing middle class welfare.
“Just like tertiary fees, just like Kiwi-build. Labour is only interested in the middle class, not the people who are really struggling,” he says.
A tax expert and the Labour MP for New Lynn, Deborah Russell, agrees inequality and the housing crisis is a “huge intergenerational issue” that risks recreating a modern-day gentry.
“We’ve enabled a whole lot of people to build up a huge amount of wealth and it does mean that young people are somewhat locked out.
"Unless they’ve got parents who they are going to inherit from, so I think is problematic because we are recreating the landed gentry. The families who have got wealth can pass it on, and families who don’t."
While she recognises that capital gains tax won’t fix the problem itself, it is a step in the right direction.
“It should have the effect of redistributing some income. So, if you put the capital gains tax in, you can do some of those other tax things, like a tax break,” she says.
Ms Russell says taxing capital gains will slow down investors in the residential market, leaving more homes available for first-home buyers.
“I don’t think it will particularly lower house prices, but I think it will slow down the increase,” she says.
“The population pressures still remain. I think that is what drives housing prices more than CGTs or the rents or anything.”
Mr Simmons says the policy is too half-hearted.
“If you don’t have exemptions, you actually raise a lot of money and can afford to really do something about inequality.”