Sometime in the 1980’s a television ad appeared on our screens for a non-alcoholic drink called Claytons which had the catch line “The drink your having when you’re not having a drink”.
It wasn’t long before Kiws began referring to a decision that didn’t change anything as a “Clayton’s decision”
I think the MIchael Cullen Tax Review is one of those. The Tax Review you’re having when you’re not having a Tax Review.
A key challenge for the review group was “to assess the structure, fairness, and balance of the tax system” yet while it was specifically asked to look at a capital gains tax (CGT), company tax and environmental taxes it was told not to touch income tax, GST rates or tax on inheritance ( whihc is how most wealth is passed on)
So right from the start it was set up as a Clayton’s review which would ignore taxation methods that could significantly close the gap between the rich and the poor in our country.
So the proposal for a financial transaction tax was given short shift and
Corporate Welfare will continue with companies paying less tax than individuals
As for the two areas the group WERE told to look at….
Yes they have recommended a Capital Gains tax on a wide range of currently untaxed assets such as the sale of land, shares, business assets, intangible assets such as intellectual property but not on the family home, and personal assets However, a holiday home would be taxed on sale.
The capital gain on shares in companies would be taxed but in some circumstances capital losses would also be able to be offset against other income. The capital gain on the sale of a business would be taxed, including the goodwill.
Exemptions from capital gains would be granted for some “life events” such as relationship breakup, death. A family farm passed on to a family member would be covered by a rollover and there would be no tax on the capital gain.However if the family member then sold to a third party the capital gain would be taxed.
As for environmental taxes they have suggest ed changes to the emissions trading scheme to be more like a carbon tax. Dirty taxes on solid waste to reduce volumes to landfills. Taxes on water pollution and water extraction. Tax deductions to encourage conservation. They are recommending a tax on fertiliser use and congestion charges to tackle traffic issues.
How many, if any, of these recommendations will find their way into the various political manifestos come election time is anyone’s guess .
Certainly for those hoping that the Ardern/Ropbertson government would make reducing Inequality in our country a priority ,the FUTURE OF TAX REVIEW is and the way it was,set up is a very great disappointment.
Bryan Bruce is one of NZs most respected documentary makers and public intellectuals who has tirelessly exposed NZs neoliberal economic settings as the main cause for social issues.