Federated Farmers claims a CGT is a “mangy dog” that will add unacceptably high costs and complexity.
Feds vice-president and commerce spokesperson Andrew Hoggard says a CGT would make New Zealand’s well-regarded tax system more complex.
He says a CGT would create a “feeding frenzy” for valuers and tax advisors, which would be just the start of compliance headaches for farmers.
Though he says one small consolation for farmers is the Tax Working Group’s recommendation to apply rollover relief.
This would mean that if a farm is sold to family successors, there would be no CGT to pay at that time.
“However, the potential tax liability would accumulate and kick if the farm property was ever sold out of that family’s ownership,” he says.
Despite Federated Farmers opposition to CGT, Mahurangi farmers’ views are more mixed.
Ray Hollis, part-owner of Gracefarm, near Wellsford, says if a CGT could be shown to improve the productive use of land, rather than the speculative use of land, then it might be a good thing.
“I see too much speculative ‘land banking’, which I don’t think is good for the country or the industry,” he says.
Mr Hollis says a major problem with farming in New Zealand is the high price of land, which is fuelled by the expectation of capital growth.
This, in turn, means farmers run up huge debts in order to purchase land. High debt servicing costs mean less money can be invested in making a farm productive, and a farm becomes less profitable.
But Tapora dairy farmer Earle Wright says a CGT would be the final nail in the coffin for the rural sector.
He says it would mean there would be no incentive for farmers to work hard and improve the value of their property.
“I’ve spent most of my 45 years paying debt off. You get yourself into a comfortable position and then you get hammered for all the work you do. Why would you do it?” he says.
Kaipara Flats sheep and beef farmer Steve Dill also resents the prospect of a CGT.
“We’re already paying a fertilizer tax, an emissions tax, a clean river tax and now they propose a capital gains tax. We do feel we are getting a bit bullied at the moment to be quite honest with you,” he says.
National and Labour politicians clash on Capital Gains Tax