James Shaw: Capital gains tax key to fixing wealth gap

by RNZ / 15 February, 2019
james shaw

James Shaw said untaxed capital gains was a fundamental reason for the wealth gap in New Zealand. Photo: VNP / Phil Smith

The week before a major tax report is released, Green Party co-leader James Shaw has again challenged his government partners to back a capital gains tax.

The Tax Working Group is due to present its final report to Cabinet ministers on Monday.

Earlier this week, Mr Shaw urged MPs to consider whether the government deserved to be re-elected if it didn't introduce a tax on capital gains.

He told Morning Report today it would be up to voters to decide whether government parties had kept their promises.

"We were elected on a platform of change - really significant change. And all three parties of government campaigned on a platform in particular of cleaning up our rivers and ending child poverty in this country and so on.

"You cannot do that without significant change to the tax system."

The tax system was a cause of the growing wealth gap in New Zealand, he said.

Read more:  Youth mental health is in crisis and NZ is failing to keep up

"Under the current system someone who earns the median wage, about $45,000 a year, over 10 years earns about $450,000 pays about $70,000 in tax.

"Someone who managed to buy a house 10 years ago can sell that for $450,000 - as much as that other person has earned in 10 years and pay no tax on that.

"Fundamentally that is why we have a wealth gap in New Zealand."

"We were elected to address that wealth gap and that involves fundamental reform of the tax system.

"The question is, should we be re-elected if we don't introduce the reforms we have promised. Ultimately that's up to the voters to decide."

When the Tax Working Group group released its interim report, there was no straight capital gains tax or set rate in it. It presented two other options for taxing capital; taxing gain from the sale of assets at roughly the marginal income tax rate and taxing a portion of the value of certain assets, for example rental properties, annually.

Mr Shaw also outlined a case for dropping the government's strict spending and borrowing rules after the next election.

The Greens would not pull out of the so-called Budget Responsibility Rules before 2020 but it was possible they would not campaign on them again, he said.

"Given that we now have the lowest government cost of borrowing in at least a generation, there is an argument that can be made that says given that we have this infrastructure deficit and given that we need a whole new generation of infrastructure ... that now would be a good time to be borrowing to invest in that future."

This article was first published on Radio NZ.

Latest

How to enhance your dining experience – with water
103174 2019-03-22 00:00:00Z Dining

How to enhance your dining experience – with water…

by Metro

A stunning dining experience isn’t just about food and wine. Water plays a big part too.

Read more
Facebook won't give up its insidious practices without a fight
103856 2019-03-22 00:00:00Z Tech

Facebook won't give up its insidious practices wit…

by Peter Griffin

Facebook came under fire for its response to the live-streaming of the Christchurch terror attack, but it's digital nudging that's also concerning.

Read more
In photos: The world unites in solidarity with Christchurch
103800 2019-03-21 15:36:46Z World

In photos: The world unites in solidarity with Chr…

by Lauren Buckeridge

Countries around the world have put on a show of solidarity for the victims of the Christchurch terror attack.

Read more
The tangled path to terrorism
103777 2019-03-21 09:59:55Z Psychology

The tangled path to terrorism

by Marc Wilson

The path that leads people to commit atrocities such as that in Christchurch is twisting and unpredictable, but the journey often begins in childhood.

Read more
If 'This is not New Zealand', let us show it
103768 2019-03-21 09:31:27Z Social issues

If 'This is not New Zealand', let us show it

by The Listener

The little signs among the banks of flowers said, “This is not New Zealand.” They meant, “We thought we were better than this.” We were wrong.

Read more
Extremism is not a mental illness
103785 2019-03-21 00:00:00Z Crime

Extremism is not a mental illness

by The Mental Health Foundation of NZ

Shooting people is not a symptom of a mental illness. White supremacy is not a mental illness.

Read more
PM announces ban on all military-style semi-automatic weapons and assault rifles
103805 2019-03-21 00:00:00Z Crime

PM announces ban on all military-style semi-automa…

by RNZ

Ms Ardern pledged the day after the terrorist massacre that "gun laws will change" and would be announced within 10 days of the attack.

Read more
No mention of right-wing extremist threats in 10 years of GCSB & SIS public docs
103770 2019-03-21 00:00:00Z Politics

No mention of right-wing extremist threats in 10 y…

by Jane Patterson

There is not one specific mention of the threat posed by white supremacists or right-wing nationalism in 10 years of security agency documents.

Read more