New taxes 'won't make the boat go faster'

BusinessNZ chief executive Phil O'Reilly File photo

Tax proposals announced by the Labour Party won't make the boat go faster, says BusinessNZ.

Labour this afternoon confirmed plans to introduce a 15 per cent tax on capital gains and a top tax rate of 39c in the dollar on income over $150,000 in a bid to swing public opinion ahead of the election.

BusinessNZ Chief Executive Phil O'Reilly said steeper tax on higher income earners would be an incentive to leave New Zealand.

This would erode the tax base, rather than building it up, he said.

Five per cent of New Zealanders paid about a third of all income tax, and bumping up their tax risks would reduce their ranks further and make New Zealand poorer, O'Reilly said.

A capital gains tax as outlined by Labour was unlikely to help the economy either, he said.

"With all the proposed exemptions, it wouldn't raise much revenue.

"And it would create problems of its own. It's the exact opposite of what is widely accepted as the fairest and most efficient system: a broad-based, low-tax policy.

"It would be open to gaming - people would structure their assets to avoid it.

The plan would also be complicated and expensive to enforce, leaving lawyers and accountants as the main beneficiaries of the system, he said.

"What's needed from political parties is not more taxes, but policies to help us to grow the economy - lower taxes, responsible government spending and more sensible labour laws," he said.

- NZ HERALD ONLINE