I have never experienced such an angry response from Nelsonians to a Government proposal as I have over the past week to Labour’s Capital Gains Tax (CGT). People from all walks of life have been shocked to find in the detail how unfair this new tax would be.
There are 50,000 people in Nelson and Tasman in Kiwisaver. These savings are invested by fund managers in shares. Labour’s new CGT applies annually to any increase in the value of these shares, eroding the returns to Kiwisavers. An earner on the average wage contributing the minimum 2% into Kiwisaver over their working life will be $64,000 worse off at retirement from this new tax. The cost is much more if you earn or contribute more. There is no point in Government encouraging people into schemes like Kiwisaver if the Government is then going to raid those funds with new taxes.
Homeowners have also been surprised to find they can be hit with CGT despite Government assurances that the family home will be exempt. The new tax can apply if a household has flatmates, boarders, or has been used as an AirBnB. It also applies if the house is used as an office, for a business, or is a lifestyle block.
There are over 2,000 Nelson and Tasman households that have a boarder or a flatmate. These homeowners use this extra income to help pay the mortgage, rates and insurance bills. I have had distraught calls in the last week from a sole parent who has a boarder, a widow who takes in foreign students and a young couple who have flatmates. How can Labour say it is fair that these kiwi battlers pay the CGT on their home but those living in multi-million dollar mansions do not?
Lifestyle block owners have also been in touch questioning why they are being targeted. The CGT applies to any block of land over 0.45ha, even if it is the family home. There are over 1,000 in Nelson and Tasman. These owners feel aggrieved that their home property is subject to the CGT but not those with much more valuable home properties in towns or cities.
The greatest concern about the CGT has come from Nelson’s 4,000 small businesses. Labour has no grasp of the hard work and risk involved or any appreciation of the 20,000 jobs they provide locally. Not every business is successful. It is unfair that if a small business is sold at a profit, tax must be paid, but if there is a loss, there is no refund. The Government is playing heads we win, tails you lose. Nor is it fair that Maori land and iwi businesses are to be exempt.
Labour’s CGT discourages saving and enterprise. It punishes people who work hard and take risks to get ahead. It increases the tax burden on our region by $130 million a year and will make us all poorer. Nelson does not need this unfair new tax.