Cullen’s terrible tax proposal

The Tax Working Group report is here.

Key points:

• An 8 – 3 majority support a Capitals Gains Tax
• It would be at a rate up to 33%, making it the highest in the world
• There would be no discount for inflation so people would be taxed even if their assets merely increase to keep pace with inflation
• Every business owner and taxable asset owner would have to pay to get a valuation, costing billions of dollars
• The CGT would bring in $8 billion in its first five years but eventually would bring in over $3 billion a year
• The CGT would not just apply to rental properties but also bachs
• The CGT will apply to the land a family home is on, if it is a lifestyle block over 4,500 square metres. This is mainly in provincial NZ so will be a targeted tax on provincial NZ.
• CGT will also apply to the family home if you run any part of your business from home, unless you stop claiming any home expenses off tax. This effectively means an end to claiming a portion of home expenses off tax, if you work at home.
• CGT will apply to your main home, if you have flatmates who pay rent