NZX says capital gains tax would stunt market and economy

NZX chief executive Mark Peterson. Photo/NZ Herald.

Stock market operator NZX has come out against a comprehensive capital gains tax, saying it would discourage investment in New Zealand businesses and stunt the growth of the country's capital markets.

The Tax Working Group earlier recommended the Government implement a capital gains tax - and use the money gained to lower the personal tax rate and to target polluters.

The suggested capital gains tax (CGT) would cover assets such as land, shares, investment properties, business assets and intellectual property.

NZX chief executive Mark Peterson said New Zealanders are already taxed on income used to acquire shares – and that being taxed twice would be unfair.

"NZX is also concerned about the fairness of the Tax Working Group's recommendations, and the different tax treatment proposed for direct investment compared to managed funds and KiwiSaver, which if implemented, would narrow participation in the New Zealand market," Peterson said.

He said the NZX did not want to see tax settings which would create preferences for offshore investment, adding a strongly performing and efficient capital market requires the broadest possible participation from a wide range of investors.

"Our capital market is a significant part of New Zealand's economy, which needs to keep growing," he said.

"The recommendations outlined today are not fair on New Zealand businesses and may pose risk to economic growth."

The Tax Working Group said any gains on the sale of these assets would be added to the seller's overall yearly income and be taxed normally at realisation – meaning a CGT would only take effect when it became law.