June 20, 2023
Capital flight makes wealth tax risky
A member of the 2018 tax working group which recommended a capital gains tax says the Greens’ proposed wealth tax is risky and possibly stupid.
University of Auckland university law professor Craig Elliffe says Treasury’s long term forecast is a tax on capital will be needed to pay for the needs of New Zealand’s aging population, but that has been resisted for political reasons.
While capital gains taxes are common around the world, only three OECD countries have any form of wealth tax.
He can see the country’s wealthiest citizens structuring their affairs so they become residents of other countries for tax purposes.
“It’s a feature of wealth taxes that they don’t collect as much revenue as you would think, that they are expensive and that most importantly that capital flight – they are phenomenally risky and unless a lot of countries around the world rapidly introduce wealth taxes then it would be an incredibly brave and possibly stupid solution to the problem. It’s a very real problem but it’s in my view not the right solution,” Professor Elliffe says.