"Our members have been very clear that they did not see the justification for an expensive new tax that would have reduced the competitiveness of the New Zealand business sector for no discernible gain," he said in a statement.
BusinessNZ commended much of what is in the report, but in the end it could not support a capital gains tax.
It was clear that NZ First has played a significant role in a capital gains tax not proceeding, he said.
"We feel the process of working group proposals followed by widespread consultation has been successful in delivering a result that the majority of New Zealanders can support.
"With the Government's decision not to proceed with a capital gains tax decision, the benefits of our relatively broad-based, simple and fair tax system have been retained, and New Zealanders' confidence in the tax system strengthened," he said.
Matt Goodson, managing director of Salt Funds, said from an investment point of view the proposed CGT on business assets would have lifted companies cost of capital and therefore lowered company valuations.
"Putting aside wider arguments in terms of equity within the tax system the first pass impact would have been negative, even if phased in over time," he said.
"And within the market would have been more negative for growth companies to retain all or the bulk of their earnings as opposed to those who pay them out in dividends."
Financial markets took only a little notice, although the sharemarket had been surging along in any event.
The NZX 50 index is sitting at record highs, close to reaching the milestone of 10,000 points.
Craigs Investment Partners Mark Lister said it was a bigger change in stance from the Coalition Government than expected.
"Businesses might now be able to stop worrying about a CGT, and this risk is firmly off the table regardless of who forms the next government. That should allow many businesses to refocus on their core operations, which should be supportive for near-term growth."
Federated Farmers said the Government's decision to back down on capital gains tax showed it was willing to "put well-reasoned and practical considerations in front of ideology".
"It's clear the coalition partners have listened to widespread concerns that a capital gains tax has too many downsides, including massive administration costs and the potential to put the handbrake on the progress of small and medium businesses vital to our economy," the Feds economics spokesperson Andrew Hoggard said.
"It seems to us that New Zealand First has been pivotal in this decision, and we appreciate their pragmatism," he said in a statement.
Prime Minister Jacinda Ardern spoke about new measures to tackle land banking and land speculation, which had a much better chance of tackling housing affordability issues rather than capital gains tax.
Hoggard said Federated Farmers was also pleased with the assurance that there would be no resource rental for water or fertiliser tax - at least in this term of Government.
The Employers and Manufacturers Association (EMA) said it was relived that the government has decided not to proceed.
"It wasn't something that was going to meet the objectives of reducing over-investment in housing and increasing tax fairness, and it would have been at a significant cost for SMEs," chief executive Brett O'Riley said.
"Dropping the CGT is one less issue for SMEs to deal with, especially with the volume of change this government is trying to introduce in the workplace."
