A capital gains tax would be a 'raid on regional New Zealand', National Party tells farmers

"A raid on regional New Zealand" - that's how the National Party is describing the proposed Capital Gains Tax to anxious farmers.

Your playlist will load after this ad

The Opposition says it’s crunched the numbers and farmers would be in for a hammering if such a tax is implemented. Source: 1 NEWS

In Otago today, farmers met with National's agriculture spokesperson Nathan Guy who warned a suite of new taxes could be on the way.

"Tens of thousands of farmers up and down the country are outraged by this [Tax Working Group] report," Mr Guy told 1 NEWS. 

"It's a raid on regional New Zealand."

Federated Farmers Otago President Simon Davies said people don't get in to farming for the annual return.

"To some extent it's to set up your financial security by having a pot of gold at the end when you sell the farm."

"Having worked my way up to where I'm at having traded a few properties and working hard and making short term sacrifices it would be very disappointing to find that the government then takes a third of it when I sell it."

South Otago sheep farmer Simon McAtamney told 1 NEWS that for as long as his farm stayed in family hands any future Capital Gains Tax wouldn't affect him.

At the same time he said, "should I wish to retire or for other farmers who wish to sell up and move on, it could certainly have a big impact in the future".

National calculates that the average sheep and beef, or dairy farmer - could have a $600,000 bill to pay if they sold their farm 10 years after a 33 per cent CGT is introduced.

That assumes the property went up in value by more than $1.8 million over that period.

And economist Cameron Bagrie, said that raises issues of fairness.

"If the farm's going to go up - as they've put up $1.8 million over the next 10 years - that's $180k a year - that's more than double the average family income and that's untapped money so there's a big strong fairness argument that people should be paying tax on that capital gains," Mr Bagrie said. 

"Of course the flipside to that is if I have a look at the typical value of a farm - say up around 6 to 7 million dollars - why should they be paying capital gains tax if someone has a 6 to 7 million dollar Remuera mansion is not?"

But the Government is urging the public to treat National's figures with caution.

"Look I wouldn't trust any figures that the National Party put together if you take a look at what we've had to tidy up after 9 years of their government I wouldn't trust any figures that the National Party use," the Agriculture Minister Damien O'Connor said.

"The Government's taking its time to consider the report and consider feedback and we'll be listening to everyone on it - but not the National Party."

If a Capital Gains Tax is introduced it wouldn't take effect until 2021 and would only apply to gains from that point onwards.