Thursday, 21 February 2019

Envy tax is no path to prosperity

The Government’s proposal to double tax people who save and invest is offensive to New Zealand values, says ACT Leader David Seymour.

“It is wrong to idolise envy and punish success. Those are not the values of an ambitious and prosperous society. ACT believes we should celebrate and encourage achievement.

“A capital gains tax also represents double taxation. The market value of an asset is reduced because prospective owners know they will pay tax on its future income. Taxing the gain in the value of the asset as well means the owner is double taxed.

“This tax will reduce saving and investment in productive assets – the very assets an economy needs to grow and prosper – by double taxing them.

“New Zealand has long struggled with low rates of saving and investment. Why would the Government punish people for putting money aside through their KiwiSaver or starting a small business? By effectively putting a tax on ambition and success we will get less of it.

“Introducing a tax on capital gains at a person’s marginal income tax rate and increasing the threshold at which the 10.5 per cent tax rate applies will create a bias against saving and investment in favour of spending, making us all poorer over time.

“The last thing New Zealand needs is a more progressive and more complicated tax system.

“According to Treasury, the top five per cent of adults already pay a third of all income tax, while the bottom 20 per cent pay nothing.

“This tax about the politics of envy. The Government will soon realise that we can have an envy tax, or our country’s success can be the envy of the world, but we can’t have both.

“If the Government wants a more equal society, it should back those New Zealanders that struggle – for example by building the best education system in the world – rather than dragging down those who achieve and succeed.”