Survey: Wealth tax would make one in five business people consider migrating

Wednesday, 21 October 2020

The wealth tax was so unpopular with business people, some would consider going overseas, a survey suggests.

One in five high earners in a new business survey would consider going overseas if the Government allowed a wealth tax.

The survey by accounting and business advisory firm Baker Tilly Staples Rodway was taken one week before the election, offering a snapshot of more than 600 of its clients.

It showed that while businesses were fairly balanced on the merits of most tax moves, they were ''resoundingly'' against the Green's idea of a 1 per cent wealth tax for those worth more than a million dollars.

Seventy-two per cent disagreed with it, and 22 per cent said they would consider moving overseas if it was introduced.

Respondents were surprisingly neutral on National’s tax cuts proposal.

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''I think that just demonstrates the dislike our survey respondents had to that tax,'' the firm's national chairman David Searle said.

David Searle says many businesses were not fazed by higher debt or individual tax, but did not like the idea of extra holidays or sick leave.

Unlike a tax on capital gains, which occurred on a transaction, Searle said the wealth tax would tax the wealthy every year on their money, whether or not it generated any cashflow. ''Clearly our client base felt that was unfair.''

Respondents also gave their views on other tax promises, mounting Government debt, border re-openings and their own situations.

Labour's pledge to add a new public holiday, Matariki, and five more sick days was not well received. Three quarters disagreed with the plans, and nearly half (48 per cent) strongly disagreed, Searle said.

''I think they just see it as another drop in productivity for businesses that are already under distress and when we look into the future, the economy is very uncertain into next year and beyond New Zealand and the world and that's another burden that businesses have got to bear.''

But National's tax cut plan was also not as wildly popular as the party might have hoped.

''I was little surprised that people were relatively neutral on the tax response,'' Searle said.

''Often when we go to a business audience, they're not overly keen on [a] tax increase, and also it was interesting to see that only 53 per cent were in favour of the potential tax cuts, whereas 41 per cent were against.''

Businesses were, however, relatively relaxed about the level of Government debt that was looming.

While half (51 per cent) would rather government debt were reduced, another 40 per cent were comfortable about the debt, which is projected to rise from around 30 to above 50 per cent of GDP by 2024.

''I think it's just the realisation that the country and the world have got some issues to deal with moving forward and there's just different viewpoints on how we're going to stimulate [the economy] and reduce debt,'' Searle said.

''Some people think you should spend to get out of it and some people think you should be repaying debt.''

Labour’s proposal to raise the top individual tax rate to 39 per cent divided respondents, with 54 per cent opposed and 44 per cent in favour.

Raising the top rate reintroduced differential tax rates between companies, trusts and high earning individuals, Searle said.

However, in the current Covid-created debt climate, ''44 per cent of people didn't see that as a negative thing.''

On border restrictions, nearly 64 per cent of businesses wanted the borders relaxed within the next 12 months to allow tourists, students and migrant workers - but safely, Searle added.

Asked to rank how they though the Government should prioritise its spending, infrastructure came top of the list, followed by technology and innovation, healthcare, skills and apprenticeship, and housing.

Targeted business incentives were sixth, perhaps because most people understood there had to be an end to government support, Searle said.

Businesses appeared fairly balanced about their own outlooks, with 40 anticipating the election result would make their operating environment worse and an almost equal number, 38 per cent, expecting no change.