The eradication of the capital gains tax harbour will help to lift productive investment say the New Zealand Manufacturers and Exporters Association (NZMEA). A more balanced tax system will see investment flow to the most intrinsically profitable areas of the economy, rather than those that are tax advantaged.
NZMEA Chief Executive John Walley says, "With the tax system as it is now investment in assets is favoured. Assets provide few jobs and no tax revenue to the Government. The same investment in the productive economy provides jobs, export earnings or import substitution, higher incomes and more Government revenue; plus the hope of a balanced current account."
"This table used by Brian Gaynor in an article for the NZ Herald shows the impact the tax free status of property has had. Housing values and associated debt have skyrocketed while the NZX (companies providing jobs and paying their fair share of tax) has remained stagnant."
"A house performs the same function even if its value doubles. A productive business that doubles its investment will lift its productivity and capacity delivering benefits to the broader economy," says Mr Walley.
"The opposition to a Capital Gains Tax is largely from those with clear self interest and the starting point for any interviews on this should be disclosure on whether the interviewee has rental property investments. Few economists would argue that balancing the tax system is a bad thing. The Treasury, the Reserve Bank, the OECD and the IMF have all endorsed a Capital Gains Tax for New Zealand, it is time for it to be introduced."
Take a look at this link to see our reactions to the comments from self-interested parties - <a href="http://www.realeconomy.co.nz/189-capital_gains_tax_objections_a.aspx">http://www.realeconomy.co.nz/189-capital_gains_tax_objections_a.aspx</a>.
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