Tax officials advised the Government 15 months ago that our small companies, start-ups and innovators were better off without a Capital Gains Tax, Leader of the Opposition Simon Bridges says.
"Even before Sir Michael Cullen and others were named to the Tax Working Group in December 2017, Inland Revenue officials told the Government that the absence of a Capital Gains Tax in New Zealand was 'potentially advantageous to start-ups'.
"Not having a Capital Gains Tax is 'advantageous' to every Kiwi willing to give it a go by starting a small business and creating jobs. People who take risks with smart ideas and build something bigger than themselves shouldn't be discouraged.
"Governments should encourage innovators because smart people will take us to a better future. We need people who take risks and stretch themselves because the ones who succeed create more jobs.
"The Government was also told that the lack of a Capital Gains Tax 'indirectly incentivises' people to put more of their own money into a venture because they have the chance of a better return when they sell. That could be somebody who wants to stop working, sell the business and retire.
"But the Government seems to have other plans. A paper prepared for the Tax Working Group last August shows the Government could use a Capital Gains Tax to claw back some of the cost of the R&D tax credit.
"National opposes the Government's proposed tax grab. We will repeal a Capital Gains Tax and we will not introduce any new taxes in our first term. National believes New Zealanders should keep more of what they earn."
14 Dec 2017 – Inland Revenue advice to Minister
Para 13. New Zealand does not have a comprehensive capital gains tax. This indirectly incentivises R&D as when a business ultimately decides to sell its idea, it is not subject to tax.
19 Dec 2017 – Inland Revenue advice to Minister
Para 9: A final point is that there is currently no capital gains tax, which is potentially advantageous to start-ups. This issue, however, is within the terms of reference of the Tax Working Group.
3 Aug 2018 – Advice prepared by Treasury and Inland Revenue to the TWG
Para 99: The proposed introduction of an R&D tax concession will subsidise business R&D that is performed in New Zealand. In this context, an ETCI may help to ensure that the Government shares in the additional returns from R&D as an ETCI would apply to the sale of start-ups or IP that was generated as a result of the R&D subsidy.
