Many claims have been made recently that a capital gains tax is dead in the water because the public is firmly against it. This is not so, however. While the tax is not wildly popular, there is a strong support base for it.
The precise level of support is not easy to gauge, as none of the published polls – as far as I’m aware – precisely surveys people on the Tax Working Group’s proposal, which is for a capital gains tax excluding the family home.
Last year, a UMR poll commissioned by the CTU found that nearly 2/3 of the public – 63% – support a tax on “the sale of rental or investment properties”, if the family home is excluded. But this is narrower than the working group proposal, which would also cover the sales of businesses and so on.
In the first half of March this year, Horizon surveyed people about whether they support “a capital gains tax”. 44% did, and 35% did not. But this poll did not make clear that the family home would be excluded, which tends to significantly affect people’s views.
My own guess is that support for the working group proposal would be somewhere in the middle of these two results, in the region of 50-55%. In addition, most surveys show a large number of neutral or undecided respondents, who are presumably open to persuasion. Potential support, then, would seem to be quite high.
But that’s only a guess – and unpublished polling may show something different. Because many people still have a negative view of the Labour Party, polling on “Labour’s capital gains tax” as opposed to “a capital gains tax” might, for instance, throw up different results.
On a historical point, it’s interesting to note that a poll in 2014 found 41% support for the capital gains tax that Labour was then proposing in opposition. This also suggests a reasonably solid base of support, albeit Labour was at the time suggesting a tax levied at 15% rather than progressively.
Finally, I don’t lend much weight to the poll recently commissioned by Business New Zealand, which claims that 65% of people do not think a capital gains tax should be “a priority”. What constitutes “a priority” is hopelessly vague; the claimed result strikes me – and others – as misleading, and not much use as a guide to public sentiment.
The bottom line, as far as we can tell, is that there is solid support among – at the very least – a plurality of New Zealanders (that is, the largest group of citizens), and potentially a majority, for a capital gains tax excluding the family home.
Note: I’m very happy to update this post with further data, if supplied.