I have been traveling around the country explaining our capital gains tax policy to individuals and audiences. The messages vary depending upon the audience, however, even those in business ‘get it’ when the economic advantages are explained.
For example, as a country we are approximately $169b in debt, however, about 86% of this is private debt, with the majority invested in the housing market. The value of the investment property market is about $200b, and yet this returned -$500m in revenue to the govt. last year.
Now imagine if a good chunk of this money was invested in the productive economy as opposed to housing i.e. people investing in businesses and companies that created wealth, jobs, foreign exchange etc.
Interest rates would be lower, USD-NZD cross rate lower, people wealthier, more jobs, deeper capital markets and we might have avoided the worst of the finance company collapses.
As it is, the tax incentives around investing in the property market distort this country’s investment profile to such a dangerous extent that we are at risk of losing a good chunk of our manufacturing base.
The CGT is about fairness, tax equity, paying our fair share, but most importantly, it’s about rebalancing the economy towards investment in the productive sector, towards the companies that export, that create wealth, jobs, foreign exchange and that drive this country forward. That requires bold thinking and a vision. And no one from any sector of the community – be it business, or other – believes that selling state assets is the answer.! Only Labour can deliver an economic vision and an alternative to selling our state assets.