PHOTO: Capital Gains Tax. FILE
Now is the time to introduce a capital gains tax as a key measure to ensure everyone contributes fairly to the public and community services we all rely on.
Why is this important?
We all want strong schools and early childcare centers, warm and dry homes, and a robust healthcare system that allows us to live healthy, fulfilling lives.
These essential services are funded through our tax system, a collective pool into which everyone contributes so that we can all thrive. However, right now, our public services are underfunded. Years of insufficient investment, combined with the wealthy avoiding paying their fair share, have left our public services unable to meet our collective needs. We’re facing shortages in hospitals, ferries, nurses, doctors, teachers, and social workers.
Research from the IRD shows that the 311 wealthiest families in Aotearoa pay an effective tax rate of just 9.4% of their total income, while most everyday people pay over 20%. This is deeply unfair.
A capital gains tax would create a more balanced tax system, ensuring that everyone pays a fair portion of their income into the collective pool. By increasing the resources in this pool, we can better fund vital public services like schools and hospitals.
Currently, income from selling assets isn’t taxed the same way income from wages or salaries is. This allows many wealthy individuals, who profit from buying and selling assets such as investment properties, to avoid contributing their fair share of those profits to our collective resources.
The buying and selling of homes has become a get-rich-quick scheme for those already wealthy. For example, someone can sell a property they don’t live in and make four times what the average person earns in a year, without paying any tax on that profit.
This situation sets Aotearoa apart from most other countries, including those we often compare ourselves to, which already have capital gains taxes in place. We are falling behind.
Recent polling shows that the majority of people in Aotearoa support the introduction of a capital gains tax. Notable figures from various sectors, such as ANZ CEO Antonia Watson, Mainfreight founder Bruce Plested, and PWC tax partner Sandy Lau, have also voiced their support for this reform.
It’s time to strengthen our collective pool so we can provide the resources needed for our public and community services to help families and communities thrive.