Speaking to The Front Page, Robin Oliver, formerly with the IRD and now with Oliver Shaw, said a wealth tax would put us in the realm of Zimbabwe and Venezuela and said high-net-worth individuals like established surgeons would leave the country.
Oliver said it was wrong to think we could meet our future tax needs by taxing 2% of the population.
“That’s not realistic. It’s not credible. If you squeeze those people too much, they’ll just leave. That’s your highly skilled people. That’s your surgeons, that’s your doctors,” he said.
Geof Nightingale, from Geof Nightingale Advisory, told The Front Page Labour was right to have a conversation about tax but said there was “no pot of gold” to be had by squeezing more out of the top 2% of earners through a wealth tax – however he believed Oliver was overstating the ramifications of such a tax.
“I’m not sure we’d have as much capital flight as Robin forecasts, but maybe I’m a Pollyanna,” he said.
However, a capital gains tax could address New Zealand’s “revenue shortfall crisis”, he said.
“Most of the capital gains are earned by people over 65, because at the end of your life you’ve accumulated capital. That’s the same people we’re giving a universal superannuation payment to, so an element of self-funding feels to me to be a sensible thing to consider,” he said.
Oliver fears a capital gains tax would undermine productivity and investment and he would prefer to see the tax take on GST increased.
Nightingale said the problem with raising GST was it could lead to more people taking cash jobs.
“There’s pretty low avoidance of GST in New Zealand, it’s a pretty efficient tax. It gets collected. As the rate goes higher, the incentives to avoid it get stronger,” he said.
Nightingale said the idea of a capital gains tax had been spoken about by successive New Zealand governments for 60 years and there were implications if we continued to sit on our hands when it came discussion around more taxes.
“Our long-term fiscal position is looking pretty dire. If you look at Treasury forecasts, if we change none of the settings by 2060, we’ll be running operating deficits of about 20% of GDP - we just can’t get there.”
Listen to the full episode for more on what the future of tax looks like for New Zealand.
The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. The podcast is presented by Susie Nordqvist, a former presenter and producer for TVNZ and Newshub. She began her career as a newspaper reporter and was a finalist for best newsreader at this year’s NZ Radio & Podcast Awards for her work at Newstalk ZB.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.
