Despite some epic dancing on the head of a pin by David Parker, the Federated Farmers commissioned report from NZIER is damning of Labour’s Capital Gains Tax.
A report by the New Zealand Institute of Economic Research (NZIER) reinforces Federated Farmers concerns over the Labour Partyâ€™s proposed Capital Gains Tax (CGT).
â€śThe NZIER say the Labour Partyâ€™s proposed Capital Gains Tax would not be a good addition to New Zealandâ€™s tax mix as it is proposed, we agree,â€ť says Dr William Rolleston, Federated Farmers President.
â€śThe nature of politics will see the Labour Party try to dismiss the NZIER report.Â Yet they must listen to the message because the messenger is credible.
â€śWe commissioned the NZIER to examine Labourâ€™s CGT proposal since it represents a major change to New Zealandâ€™s tax system and has been devoid of critical analysis.
â€śPerhaps the most concerning aspect of the report comes down to the Labour Partyâ€™s revenue assumptions.Â In 2011, the Labour Party estimated a 15 percent capital gains tax would raise $17.5 million in its first year, rising to $3.7 billion by 2026.
â€śThe NZIER tell us these estimates are high, since the revenue potential of its proposed CGT is more likely to be half that sum.Â In fact it may be smaller.Â If this key policy is out by such a margin it asks fundamental questions about the Partyâ€™s shadow budget.
â€śWhatâ€™s more, the Labour Partyâ€™s estimates of CGT revenue were revised up this year.Â The NZIER noting Labourâ€™s â€śâ€¦2014 estimates are less believable than the 2011 estimates.â€ť
â€śLabour also expects to raise at least $1.3 billion from the farming sector but a more realistic estimate is half that sum in 15 yearsâ€™ time.Â NZIER further estimates that the loss in current farm values will be between $2.4 billion and $7.6 billion.Â But this will be a one off hit for farmers.
â€śLower land values mean lower tax revenue too. Â Read more »