5 Jun 2009

Govt quashes suggestion of capital gains tax

10:09 am on 5 June 2009

The Government has moved quickly to scotch a suggestion from the Treasury that it consider introducing a capital gains tax.

Prime Minister John Key says he opposes the idea and Finance Minister Bill English has also rejected the proposal.

Treasury boss John Whitehead says he wants to investigate introducing a tax which would see capital gains taxed alongside cash income. Owner-occupied housing would be excluded from such a tax.

Prime Minister John Key has rejected the idea even before a tax working group set up by the Government has begun its deliberations.

Mr English says introducing such a tax is simply not on the Government's agenda.

He says Treasury will not change the Government's mind and he is confident that, over time, tax revenue will pick up as the economy improves and the deficits will close.

Mr English says until then the Government will borrow enough to fill the gap between expenditure and revenue.

Property tax could benefit NZ, says Treasury boss

Mr Whitehead told business group the Institute of Directors on Wednesday that a capital gains tax could help New Zealand emerge from the recession stronger.

He said a tax on a second property could help reduce income tax levels or corporate tax levels.

Mr Whitehead said the changes could be part of a range of moves to simplify the tax system.

Changes to the tax system could also include a a rise in consumption taxes and cuts to personal and company tax rates, he said.