April 23, 2019 Print

The complex elements of tax systems differ in every country, but in New Zealand, the tax system is known for being simple and predictable. Unfortunately, this system was almost undermined as a result of a capital gains tax proposal initiated by the Tax Working Group, a government advisory body. New Zealand Taxpayers Union (NZTU), an Atlas Network partner, immediately launched a major campaign against the proposed capital gains tax at the beginning of April. The “AxeThisTax” campaign successfully stopped the proposed tax, and Prime Minister Jacinda Ardern vowed that no capital gains tax would happen under her leadership.

Taxpayers’ Union Executive Director Jordan Williams explained, “The capital gains tax proposed by Dr. Cullen and the Tax Working Group would be the least fair and most punitive in the world, and would apply to small businesses, farms, shares, and property.”

New Zealand’s favorable tax environment ranks as the second highest competitive tax system in the world, due to a lack of capital gains, inheritance, and payroll taxes. The country’s top personal tax rates come in at 33 percent, while companies and corporations are taxed a flat rate of 28 percent.

Following the announcement of the Tax Working Group’s proposal in February 2019, NZTU swung into action with a study on the negative consequences of the proposal.  

Inflating the Cost of Tax showed that the new policy would “unfairly tax people with assets for inflation, impose billions of dollars of compliance costs on half a million small businesses, lead to higher rents for over a million tenants, unfairly advantage foreign owners of shares and disadvantage 800,000 New Zealand investing in local companies” and much more. Small businesses would have to go overseas, younger people would be shut out of the property market, and real tax rates could double that of the current thirty-three percent rate once they are adjusted for inflation.

NZTU took several measures to educate citizens on the scope of this proposed capital gains tax, including newspaper advertisements, a widespread digital campaign, and a digital messaging system that allowed taxpayers to email decisionmakers directly. More than 5,000 New Zealanders used a tool on NZTU’s campaign website to bombard Ardern and Deputy Prime Minister Winston Peters with messages about how the tax would affect them.

On April 17, Ardern announced that the tax would not be levied on taxpayers—and New Zealanders celebrated.  

“Taxpayers across the country will be breathing a massive sigh of relief at this total back down,” said Williams. “Small business owners, lifestyle block owners, first-home buyers with flatmates, and other New Zealand taxpayers will be breathing a sigh of relief."