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Government abandons capital gains tax plan

Plans to implement a capital gains tax have been dropped, Prime Minister Jacinda Ardern has announced.

After months of debate, the capital gains tax will not go ahead, despite the government's Tax Working Group recommending one, in line with most other countries in the world.

"Consensus has not happened under this government," said Prime Minister Jacinda Ardern.

She said the decision showed how the MMP system worked. 

“All parties in the Government entered into this debate with different perspectives and, after significant discussion, we have ultimately been unable to find a consensus. As a result, we will not be introducing a capital gains tax."

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She said she still believes a capital gains tax would have made a difference but Labour will no longer campaign for it. It was a cornerstone campaign for Labour, which has attempted to deliver it three times.

“I genuinely believe there are inequities in our tax system that a capital gains tax in some form could have helped to resolve. That’s an argument Labour has made as a party since 2011.

“However after almost a decade campaigning on it, and after forming a government that represented the majority of New Zealanders, we have been unable to build a mandate for a capital gains tax. While I have believed in a CGT, it’s clear many New Zealanders do not. That is why I am also ruling out a capital gains tax under my leadership in the future."

She said they would look to other measures to improve the fairness of the tax system.

"As such the Coalition Government has agreed to tighten rules around land speculation and work on ways to counter land banking.

“Work will also continue to cut red tape for business and crack down on multi-nationals avoiding paying their fair share of tax in New Zealand. We have already made changes to address base erosion and profit shifting, and we will shortly release a discussion document on options for introducing a digital services tax."

She also ruled out a water or fertiliser tax.

She said they would focus on the long-term challenges NZ faces, such as mental health, climate change and child poverty and responding to the March 15 terrorist attack and keeping New Zealanders safe. 

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