Ian McKelvie: A lot has happened in 18 months

Tax Working Group chairman Sir Michael Cullen outlining the details for their proposed capital gains tax. Photo / Mark Mitchell

Late in 2017, the Government took over an economy which was steadily growing at 3 to 4 per cent, but a year-and-a-half in, it's becoming clear that momentum has been lost with the current Government's bad policies, wasteful spending and more taxes.

There are real warning signs for this Government: ANZ's business confidence survey has dropped to -38 per cent and Westpac's employment confidence surveys shows New Zealand workers are less confident as the Government continues to dismiss the clear evidence that its policies are putting road blocks in front of our innovators and business entrepreneurs.

The proposed Capital Gains Tax is probably the biggest worry of all for the future. At the recent Central Districts Fieldays it was the major topic of conversation with the people I met there.

A tax on hard-working people saving for their retirement, or investors, small business operators or farmers and people living on lifestyle blocks would have to be the most unpopular proposal this Government has come up with.

That's quite apart from talk of other anti-growth policies being talked about: increasing petrol taxes, banning new oil and gas exploration, banning foreign investment and introducing union-friendly workplace "reforms".

We need to think about the practicalities of introducing a Capital Gains Tax. The Tax Working Group recommends small businesses, rental properties, farms and even family baches be subject to Capital Gains Tax on all gains made after April 2021, so eligible assets would need an up-to-date valuation.

A conservative $5 billion cost of those valuations simply adds cost to tax growth.

What some people may have missed is the fact that the Government is not ruling out exempting the family home from any proposed Capital Gains Tax, and won't say, and probably haven't thought through, the question of a home-based business or paying flatmates triggering the tax.

With many successful New Zealand enterprises having started in the garage or on the kitchen table of a family home, I can't think of any greater disincentive to people to get started in a new business. Why penalise people who are prepared to take a risk, start a business or create jobs?

I feel sure that introducing any sort of Capital Gains Tax will do nothing to alleviate our current housing shortage and will actually discourage New Zealanders from investing and saving for the future.

Be assured that National will fight the Government's proposed tax grab every step of the way. If there's a Capital Gains Tax, we will repeal it and we are committed to not introducing any new taxes in our first term.

National believes New Zealanders should keep more of what they earn and firmly believes that they don't need any more ways to be parted from their hard-earned dollars.

A lot has happened in the last 18 months. How the current Government handles the next 18 months will be critical to this country's future.

*Ian McKelvie is the National MP for Rangitikei