8 Apr 2019

Bridges says CGT will affect up to 570,000 businesses

9:09 am on 8 April 2019

The National Party says as many as 570,000 businesses will be caught by a capital gains tax if it goes ahead.

Simon Bridges.

National Party leader Simon Bridges believes the coalition will definitely be introducing a capital gains tax. Photo: RNZ / Rebekah Parsons-King

It says small businesses make up 97 percent of the business sector but the government is ignoring the damage they'd suffer.

A capital gains tax on businesses, farms and second homes were among recommendations by the Tax Working Group, headed by Sir Michael Cullen. The Government's response to the group's report is expected some time this month.

National Party leader Simon Bridges told Morning Report today: "The Tax Working Group and indeed the prime minister would give the impression here that a capital gains tax really just applies to this other group, this very small group of the very wealthy and my point here is that's not true...

"The other point that's very important is ... we know from an MYOB survey last week that 67 percent of these 570,000-odd businesses, they dislike this."

Mr Bridges claimed the prospect of paying a capital gains tax if they sold their business was "hanging over them" and had a "very palpable effect on their decision to get up and go, to get out of bed every morning, to work weekends, to reinvest ... to make themselves more productive...

"Is it any wonder at the moment when you have got this out there, that the economy is weakening and business confidence is again plummeting?"

When challenged if he really believed that was the cause over international trade tensions and other issues, Mr Bridges said: "That's the prime minister's position, this is all international what is happening in New Zealand.

"But if you go and look at the Aussie budget and the treasury there's position on the global economy, actually if you look as recently as this month at what our treasury is saying, they are saying around the world, yep, there's risks out there but we are talking 3 to 4 percent growth globally and in terms of our major trading partners in Australia and New Zealand you're looking at more like 3.5 and 4 percent."

Mr Bridges was asked if the fact that New Zealand's economy was growing faster than Australia's "destroyed his point".

He said no.

"My point is simply this: There's headwinds coming internationally but right now it would be foolhardy to deny that that lack in business sentiment that the Reserve Bank is picking up on, that all of the banking surveys are picking up on, isn't fuelled by a real sense of lack of certainty and lack of confidence in the economy from capital gains tax [and] industrial law changes, you know, these various policies that the government is in some cases applying, in some cases isn't sure what it's doing on."

He believed that the coalition would definitely introduce the CGT.

"My view is even if they pull back it will be a trojan horse for things to come."

On the other side of the issue, a group called Tax Justice Aotearoa is launching its lobby for a CGT at Parliament today.

It says most New Zealanders supported a CGT.

The group says it is trying to gather support for a fairer tax system and as well as a CGT, it wants the system to focus on all wealth as income.

Tax Justice Aotearoa spokesperson Paul Barber said: "What we'd really like you people to be listening to today is that message around the fact that we need to see more fairly shared tax in this country, we need to look at way our tax [and] reduces inequality".

"We see that the capital gains tax is a good first step and it's one of the things we need to do and we would like to see people getting involved in that discussion about how to make our tax system fairer, because we think that fairness is really the key way."

He wanted people to share their views on the tax system before a decision on the CGT was made later this month.

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