'Farmers are relieved': Rural groups welcome CGT decision

The decision not to proceed with a capital gains tax (CGY) has been welcomed by farming groups, who say there would have been wide-ranging ramifications for the sector if it had gone ahead.

The Government has ruled out introducing a CGT, with Prime Minister Jacinda Ardern saying the coalition Government could not reach a consensus.

Federated Farmers said the decision was the right call.

"It's clear the coalition partners have listened to widespread concerns that a capital gains tax has too many downsides, including massive administration costs and the potential to put the handbrake on the progress of small and medium businesses vital to our economy," said Federated Farmers economics spokesperson Andrew Hoggard.

Andrew Hoggard said the decision was the right call.
Andrew Hoggard said the decision was the right call. Photo credit: Newshub

"The Prime Minister spoke about new measures to tackle land banking and land speculation, an approach that has a much better chance of tackling our housing affordability issues than a CGT," said Hoggard.

He said Federated Farmers was also pleased the Government is committing to looking at the compliance cost reduction ideas mentioned in the Tax Working Group's report.

"There were a number of these that are worth looking at, including increasing various thresholds (e.g., for provisional tax) and simplifying depreciation and Fringe Benefit Tax, and removing resident withholding tax on close company-related party interest and dividend payments."

Meanwhile a group representing dairy farmers is also happy with the decision.

DairyNZ chief executive Tim Mackle said farmers will be relieved.

"They work extremely hard alongside other New Zealanders to build a strong future for their families, while contributing to the economy and communities," he said.

He said there would have been wide-ranging ramifications for farmers if a capital gains tax had been introduced. 

Farmers will be relieved, says Tim Mackle.
Farmers will be relieved, says Tim Mackle.

"There have been strong concerns for the sector since the Tax Working Group's report came out in February, as it described a system that looked likely to have significant implications for farmers across a broad range of areas from business asset valuations, administrative costs, succession planning and retirement schemes," said Mackle.

DairyNZ is also very pleased with the announcement that there will be no water or fertiliser tax.

"Farmers are already working throughout the country on continuously improving environmental sustainability on farms," Mackle said.

"Initiatives include more than 27,000 kilometres of fenced-off and measured waterways, putting in bridges or culverts at regular stock crossing points, and introducing farm environment plans  among just a few of the activities."

DairyNZ said at the time that the Tax Working Group's report came out that any changes to the tax system should better support the productive sector.  

"We are very pleased to have been listened to with the announcement."

Newshub.

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