The former chair of the government's Tax Working Group says he's disappointed but not surprised that its proposal for a Capital Gains Tax was rejected outright.
Tax Working Group chair Sir Michael Cullen Photo: RNZ / Rebekah Parsons-King
The group recommended wide-ranging changes to the tax system covering second properties including the family bach, land, farms, most shares and business assets.
Tax Working Group chair Sir Michael Cullen told Checkpoint it was always going to be hard to get NZ First and Winston Peters over the line on the Capital Gains Tax.
"They're voting base is much older than the average, more Pākehā than the average - people who actually own capital assets. So it was going to be more difficult for them to deal with the issue," he said.
"I had hope that at least we might have got something like a broad base capital gains on land because that's the largest area of problems in terms of misdirected investment in the country."
Watch the full Checkpoint interview here:
As he understands, NZ First objected to every form of CGT.
"We've got a tax system in New Zealand which is only very moderately redistributed by international standards. CGT would have made the taxes somewhat more redistributive, but not hugely so."
Since the model has been dumped, he said moving forward "people on low to middle incomes will end up paying a somewhat higher tax or we would have less money for social services, new drugs and so on".
The last time such a tax proposal was made was in 1989, but it wasn't as comprehensive back then.
He said he thought this was probably the last chance.
"I think it will be quite some time before people come back to this and if and when we do, probably the demographic factors will be even less in favour of getting support for it because we will have an older population - young people with few assets, older people having accumulated the assets."
Asked if he would ever see a Capital Gains Tax being adopted in this lifetime he said: "No. I don't expect to live to a very old age. Nevertheless, I don't expect to see it."
