The working group, chaired by former Labour finance minister Sir Michael Cullen on $1062 a day, was funded to the tune of $2 million.
Other group members — Bill Rosenberg, Michelle Redington, Hinerangi Raumati-Tu'ua, Robin Oliver, Nick Malarao, Joanne Hodge, Kirk Hope, Marjan van den Belt, Geof Nightingale and Craig Elliffe — were paid $800 per day.
Under the group's proposal, a capital gains tax would have covered investment properties, land, shares, business assets and intangible assets like intellectual property, but excluded the family home, cars, boats and artwork.
Sir Michael said the tax would bring in $8 billion over the first five years, and the revenue raised could help pay for other initiatives — such as cutting the personal income tax rate and cutting KiwiSaver tax rates for low and middle-income savers.
But on April 17, Ardern announced there was no mandate — and no consensus — for the proposed capital gains tax regime.
"The tax working group gave the Government, and the country, an opportunity to look at the fairness of our tax system and debate options for change," she said. "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."
Ardern said under her leadership, the Government would never again push for a capital gains tax.
"The tax working group was clearly captive and so their recommendations were as expected," said a dairy sector CEO. "Did they really expect NZ First to support what was clearly going to be a capital gains tax recommendation? I think the whole thing was relatively convenient for Labour where they can say the recommendation was clear, but that through MMP, the people have spoken and the support wasn't there."
A considerable number — some 23 per cent — felt the Prime Minister was right to test opinion on what had been a flagship commitment by her during the 2017 general election to setup a working group, and, if a tax was recommended, to introduce legislation before the 2020 election with a start date the following April.
Government credibility loss
A net two-thirds of respondents believed the Government's decision to drop the capital gains tax proposal led to a loss in its own credibility. There was a general view that political management of the issue was poor.
Others noted that it was left to Sir Michael to explain why the capital gains tax was needed. "Their problem is they didn't sell the argument. Instead they left the idea in a vacuum which the opponents filled," said a leading banker.
Some felt the Government's credibility was enhanced by dropping the proposal. "The Government listened to the view of the electorate," said Beca's Greg Lowe. "The public of New Zealand don't want this extra burden."
"The capital gains tax policy did nothing to address the issues it was aiming at. No one is going to support policy that doesn't have positive outcomes."
Noted a lobbyist: "She was never going to get New Zealand First's support for a scheme that hit small businesses and farmers. Anything NZ First would have supported wouldn't have got past Labour's centre-left support base.
"Proposing it hurt their credibility with the business and rural community. Accepting that it was never going to fly and moving on helped Labour's credibility."
