Why Labour's capital gains tax fails the fairness test

The New Zealand Taxpayers' Union has today launched its latest report assessing Labour's unfair, unworkable approach to a capital gains tax.

The report, entitled 'Why Labour's capital gains tax fails the fairness test', criticises the policy for taxing inflation, setting up Kiwis who are no better off in real terms for five or six-figure tax bills. 

The policy also lays the groundwork for an administrative nightmare by forcing a valuation day, and overlooks businesses by making no mention whatsoever of same-asset class rollover relief. Small businesses who want to buy a new shop may be stung for hundreds of thousands of dollars, despite not liquidating assets. This will be a disaster for growth, prices and jobs.

Finally, the policy simply won't be able to raise enough money to meet Labour's revenue aims, meaning this capital gains tax will be the thin end of the wedge for more comprehensive capital gains or wealth taxes to meet the shortfall.