ANZ boss Antonia Watson speaking on RNZ's interview show 30 with Guyon Espiner. Photo: RNZ
ANZ boss Antonia Watson might have voiced her support for a capital gains tax (CGT) this week but the heads of New Zealand's other main banks have bowed out of the conversation.
Speaking on RNZ's interview show 30 with Guyon Espiner, Watson said she believed taxing investment properties at the point of sale was fair.
"People are investing in housing for the purpose of getting a capital gain on it. And if that's the purpose of it, why not have that as part of the tax take?"
RNZ asked the chief executives of ASB, Westpac, BNZ and Kiwibank whether they agreed. None were willing to comment.
Infometrics chief executive Brad Olsen said he had been a long-standing proponent of a CGT.
"For the point of taxing all forms of income, rather than being selective about it."
He said a broad-based, low rate tax system had served New Zealand well for a long time.
"The way particularly our GST regime works is highly effective. It seems bizarre that we're more than happy to tax consumption when people spend and people's incomes when they earn, but any gains on capital don't have a comprehensive system."
He said people sometimes made it sound as if a CGT would take away all the gains people could make, instead of a portion as with other income tax.
"The political conversation has been too simplistic. When we talk about CGT it's viewed by many as 'this will raise additional revenue because nothing else will change'."
He said it would be better to implement a CGT while offsetting the impact with reductions in other taxes.
"My area of focus would be if you could look at lowering the company tax rate as part of it, given New Zealand now has a higher company tax rate than the OECD average.
"[A CGT] would mean a bit of tax if you made a gain and sold something, but I struggle to see why that is the bogeyman of the tax ideas. We're so totally fine with taxing people on income they earn from using their time each day - I'm fine with that and I'm fine with them taxing gains on capital."
He said a CGT would be better than a wealth tax, as Labour had previously considered. There were more realistic concerns about "capital flight" with a wealth tax, he said.
Olsen said it seemed that a CGT would eventually happen.
"It's gone from being something that only academics and the odd economist suggest is a good idea to more of the public, senior businesspeople considering that it is a viable option. The conversation has got to shift from a very simplistic 'how do we scramble more tax together' to what should the tax system more broadly look like."
Shamubeel Eaqub. Photo: Supplied
Independent economist Shamubeel Eaqub said it would be important that there was political consensus for a CGT.
"There's no point in trying to pursue such a big policy change if it's not going to be enduring. With a CGT the whole point is that you accumulate tax revenue over a long period of time. If the politics are short-term there is no point. The time is not right yet, but the time is right to have the conversations."
He said he was pleased to see Inland Revenue bring it up as part of its consultation for its long-term briefing.
Eaqub said the country needed to think about how tax could be fair and efficient for the future.
"Inevitably, some tax on income from capital needs to come in - we will run out of young people. The share of people aged 15 to 64 is going to be shrinking forever more and old people cost a lot of money."
He said the conversation should start with defining income.
"The question is what about those people who are... wealthy and selling things, is that income or not?
"People don't think about increases in wealth as income but of course it's income... until you quantify 'this type of income doesn't attract tax and other people earn less money but happen to earn it in a way they pay tax'... We have to solve that problem first. Until you solve that income definition problem it just seem like a tax grab, which it's not. The whole purpose is to make the system broad and comprehensive."
Squirrel chief executive and former chief executive of the Co-operative Bank, David Cunningham, said the conversation about a CGT would not be necessary if the housing market was not dysfunctional.
"Why does it come up? Because people make money investing in property. Why do they do that? Not for the rental yield but for the capital gain... why is there capital gain? We've got he supply and demand for housing mucked up. All the wrong things are happening from a policy perspective."
