3. Hon JOHN BOSCAWEN (Leader—ACT) Link to this
to the Minister of Finance
How much money would a capital gains tax raise in each year for the next five years?
Hon BILL ENGLISH (Minister of Finance) Link to this
A capital gains tax will not raise money for each of the next 5 years, because, given its complexity, it probably cannot start until 1 April 2014. Based on Treasury’s modelling, a 15 percent capital gains tax that does not apply to existing assets would raise about $1.3 billion in total over 5 financial years. If the policy is applied to assets people already own, it might raise about $2.3 billion in total over 5 financial years—that is, by 2019.
Hon John Boscawen Link to this
How does the revenue from a capital gains tax compare with the cost of spending promises that have been bandied about, such as making the first $5,000 of income tax-free, removing GST from fresh fruit and vegetables, and restoring the research and development tax credit?
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. How does one hypothetical thing compare with something for which the Minister has no responsibility? It cannot possibly be a valid question.
Mr SPEAKERI was thinking along very similar lines. The only thing that stopped me from interrupting the member is that he did not attribute policies to any particular party, and as long as the Minister, when answering, does not attribute policies to any other party, I am prepared to let it go. The Minister has heard what I have said, that he is not responsible for any other party’s policies, but he can comment on hypothetical situations regarding policies as long as he does attribute them to another political party.
I understand that a $5,000 tax-free threshold would cost about $1.3 billion a year, and that is just one of the policies the member listed. But if we stick just to that one, a 15 percent capital gains tax would cover the cost of that particular policy by 2024. In the 12 years up until then the capital gains tax would not cover the cost of just that policy, let alone the others.
Hon Trevor Mallard Link to this
Does he stand by this statement: “The right thing to do would be to have a comprehensive capital gains tax.”, which was said by him this week?
I was referring to the fact that any number of people who are putting forward a theoretically ideal tax position advocate a comprehensive capital gains tax. No one in New Zealand—not even Labour—has indicated that that is what they are going to do. In any case more taxing and more spending will grow the Government, but it will be bad for the economy.
Hon John Boscawen Link to this
Does he agree that the real problem is politicians promising to spend money they do not have, and inventing new taxes to pay for their promises?
That might be a problem. I think the real issues for the economy are to get our people and our capital into productive investment, and the Government has over the last three Budgets taken some very big strides to improve the prospect that New Zealanders can have higher incomes. We have done that by controlling spending and reducing taxes, because increasing spending and increasing taxes got us into this trouble in the first place.
Hon Trevor Mallard Link to this
When the Minister said: “The right thing to do would be to have a comprehensive capital gains tax.”, did he mean that he thinks that that tax should include taxing the family home?