The Herald reports:
Business New Zealand chief executive and Tax Working Group member Kirk Hope says the proposed capital gains tax could cost the economy billions of dollars in compliance costs, administration and lost productivity gains.
Business NZ yesterday released a report that estimates the “economic drag” over the first five years of the proposed CGT regime at between $2.75 billion and $6.81b.
Hope — one of three Tax Working Group members who did not back the capital gains tax proposal — says it is the first serious estimate of costs associated with the proposal.
That’s a huge cost, even if at the lower end of the range.
Compliance includes Valuation Day costs, included in TWG calculations, which the Business NZ report estimates to be worth $800m.
“Based on evidence from Australia, CGT compliance costs could be as high as 16 per cent of tax revenue, we have assumed 10 per cent on the basis that NZ’s CGT is less complex,” Hope said.
Business NZ had not included valuation costs for private businesses as they were not included in TWG calculations, he said.
They could potentially take the real cost of the CGT even higher.
So a conservative estimate.