Ross still against gains tax

Press, 9 December 1989, Page 4

Ross still against gains tax

’ By

OLIVER RIDDELL

in Wellington

A capital-gains tax is still opposed by the man who chaired the Ross Committee on Taxation in 1967, Sir Lewis Ross. He said yesterday he still maintained that his committee’s decision to reject a capital-gains-tax proposal had been the right one. The distinction between realised and unrealised gains and the formidable problem of valuation and administration it would involve meant the taxation of unrealised capital gains could not seriously be considered, he said. Sir Lewis said the Ross Committee had also identified administrattive problems and difficulties of definition that would rise from taxation of realised capital

gains. It had recognised that a capital-gains tax would be a low-revenue source of taxation that would vary from year to year. It had been noted in 1967 that a rise in capital values in a period of inflation represented gains that were to some extent illusory and not real, he said. In the present economic environment, saving, investment and risk-taking were more desirable than ever and ought not be discouraged by the introduction of a capital-gains tax. “The public is already suffering acute indigestion from tax legislation,” Sir Lewis said. If the Government introduced capitalgains tax, it would not only be politically unwise but also economically harmful.