Ardern hoists the white flag on capital gains tax
New Zealand Prime Minister Jacinda Ardern has dumped one of her cornerstone policies.
New Zealand Prime Minister Jacinda Ardern has dumped one of her cornerstone polices, as a rift in her administration over tax changes put on display the complexities of a coalition government.
Ms Ardern’s Labour Party campaigned on considering a capital gains tax in an effort to reduce property speculation amid rocketing house prices and what it said was unfairness in the tax system.
New Zealand is among only a few members of the 35-nation Organisation for Economic Co-operation and Development that doesn’t have some kind of broad tax on capital gains.
But yesterday, the Prime Minister announced her cabinet could not reach agreement on whether to accept a working group’s earlier proposal to introduce the tax.
“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,” she said in Wellington. “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.”
New Zealand’s government is made up of a coalition of Labour and the populist NZ First Party with support from the left-wing Green Party.
A disagreement between the three means the government would not have the numbers to pass the changes. Polling in recent months has also shown voters to be split on the tax.
Deputy Prime Minister and NZ First leader Winston Peters was firmly opposed to a CGT.
“We discerned at the beginning, but we were happy to see the public’s response, that there wasn’t sufficient agreement in the country,” he said yesterday.
The opposition National Party called the tax an “attack on the Kiwi way of life”, and yesterday tried to take credit for the turnaround by the coalition.
The Green Party had fiercely backed a change and leader James Shaw in February went as far as to ask whether the government “deserved” to be re-elected if it couldn’t get the tax introduced.
Yesterday he described his party’s disappointment.
“Generations of New Zealanders locked out of the property ladder shouldn’t be left in an unfair position for life,” he said.
All three government parties say they’ll continue to work together on other changes. Mr Peters described the coalition as in “very sound health”.
AAP
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