A valuation day approach to measuring capital gains will ensure that thousands fewer jobs are created, says ACT Leader David Seymour.

Caniwi Capital chief executive Troy Bowker wrote this morning that the Tax Working Group’s preferred approach will cost firms billions in compliance costs – about $10,000 each and $4.5 billion in total each year. That’s more than New Zealand’s entire law and order budget.

“Even the Tax Working Group’s interim report says it will ‘impose a significant cost on many taxpayers’.

“A valuation day approach means that all assets are to be valued as at a given day, a near impossibility.

“At some point the Government will need to wake up and realise that clogging the economy with new red tape and taxes is not a credible path to prosperity.

“Each additional dollar spent on complying with bureaucracy is a dollar that won’t be spent on creating new jobs. More taxes simply bog down the productive sector.

“This is yet another reason for the Government to drop the CGT idea.

“The Tax Working Group has also said that a CGT will reduce the supply of rental housing and increase rents. A CGT will therefore be paid for by poorer New Zealanders in the form of higher rents. The taxpayer will also be forced to shell out even more in accommodation supplements.

“New Zealand is a laggard on productivity and, in the long term, only productivity matters when it comes to increasing wages. New Zealand’s 450,000 SMEs are the backbone of our economy. A new tax will do nothing to help them thrive.”