Friday, 22nd February, 2019
Key areas of the Tax Working Group Final Report released today are disappointing, says South Canterbury Chamber of Commerce Chief Executive Wendy Smith.
One of the most important and contentious elements of The Report, aimed at addressing the structure, fairness and balance of the New Zealand tax system, was around capital gains tax.
“The proposed capital gains rules should not be implemented because of the impact on small and medium-sized businesses. “
While the intent behind the changes is balanced, there is little to indicate they would significantly reduce over investment in housing or increase ‘tax fairness’. The proposed changes could potentially discourage much-needed investment in business by locking businesses into current asset holdings.
We recognize it is important for the Government to review our tax system to ensure it is fit for purpose for a changing business environment.
There is concern around the effect for capital markets in a capital constrained economy with a long-term savings deficit- these have been aired by Business New Zealand and the Canterbury Employers Chamber of Commerce. Adding further tax on the savings and investment of those New Zealanders in the middle-income bracket won’t drive the deepening and broadening of the capital base that we need for business investment, which is higher productivity and wages.
“It is vitally important that we remain competitive as a country and do not add further compliance for business and in particular small business, who represent 97% of all businesses in our economy” said Wendy Smith.
The level of consultation around the proposed changes is positive, the Chambers of Commerce will continue to engage on this matter and advocate on behalf of our business community.