It's Time for a Capital Gains Tax!

We all want thriving schools and early childcare centres, warm and dry homes, and a strong healthcare system. 

We get these vital public services through sharing our resources into a collective pool – this pool is our tax system: we all contribute, so that we can all flourish.

But right now, our public services are crumbling. The combination of successive governments not allocating enough resources to them, while at the same time allowing the wealthy to avoid contributing their fair share, means our public services can't meet our collective needs. As a result we’re struggling to build new hospitals or get new ferries, or hire enough nurses, doctors, teachers and social workers.

IRD research shows that the 311 wealthiest families in Aotearoa effectively pay 9.4% of their overall income in taxes, while the majority of everyday people pay over 20%.(1) This isn’t right.

A capital gains tax is an important pillar of a balanced tax system that ensures everyone contributes a fair share of the income they make to the collective pool. By increasing the resources going back into the pool, we will then be able to allocate more to our public services - our schools, hospitals and more. 

Right now, income from selling assets isn't taxed like our income from salary or wages. This means that a lot of wealthy people who make money from buying and selling assets, like investment properties, don't contribute a fair amount of the profits they make to our collective resource pool.

Buying and selling homes is being treated as a get-rich-quick scheme for people who already have access to wealth. For example, a person can sell a home that they don’t even need to live in and instantly make four times what an average person earns during a year, without paying any tax at all. (2)

This is very different to the vast majority of countries worldwide, including all of those we most frequently compare ourselves to, who already have a capital gains tax in place.(3) We are lagging behind. 

Polling last year showed that a majority of people in Aotearoa are in favour of a capital gains tax - while support continues to grow across different sectors calling for this to change, most recently from ANZ CE Antonia Watson, Mainfreight Founder Bruce Plested and PWC tax partner Sandy Lau.  (4) (5)

It’s time to strengthen our collective pool so we can allocate the resources our  public and community services need to help families and communities flourish!

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