This paper discusses the designing of a capital gains tax for New Zealand. The essential question is not why such a system is needed but what type of system should be implemented. The paper ignores the political discussion of whether such a tax is necessary and concentrates on design and implementation issues. Drawing from other tax jurisdictions, chiefly the United Kingdom and Australia, this article discusses the merits of tapering relief; indexation (now frozen in Australia); specific exemptions (e.g. owner occupied property); and of re-defining capital assets into discrete categories which may be treated differently. The aim of the study is to open up the issue of capital gains for informed discussion: how such a tax should be administered, and the possibilities and likely difficulties involved in implementing such a tax.
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