Proposed Tax Reform And Its Possible Impact on NZ Capital Markets
Brian Gaynor is an Executive Director of Milford Asset Management, Head of Investments, and Chairman of Milford’s Investment Forum and its Private Equity Investment Committee.
Brian’s career includes roles as a Partner and Head of Research at stockbrokers Jarden & Co. (which later became First NZ Capital), and a member of the New Zealand Stock Exchange. He has also been a board member of a number of listed and public owned entities, including the Guardians of the New Zealand Superannuation Fund. He is also one of the original founders of Milford Asset Management and was Portfolio Manager of the sector-leading Milford Active Growth Funds (both Unit Trust and KiwiSaver) from their establishment in 2007 until April 2017.
A highly-regarded company analyst and economic commentator with over 40 years’ experience in New Zealand's capital markets, Brian is well-known for his frequent radio and television appearances, and his weekly column in the NZ Herald over the past three decades.
The proposed tax reforms recommended by the Tax Working Group (TWG), if implemented in their current entirety, would likely have a significant impact on the flow of capital in New Zealand and a detrimental effect on the country's capital markets, and potentially unintended negative consequences for the majority of taxpayers and the wider economy.
Whilst many New Zealanders might be broadly supportive of taxing the capital gains enjoyed by property speculators, a tiny proportion of the population and some not even NZ residents; it is doubtful many would agree to punitive taxes on the owners of small and medium sized enterprises (SMEs) which employ the majority of New Zealand taxpayers, or the average kiwi's post-tax retirement savings in KiwiSavers, managed funds or share portfolios. Nor would the majority be in favour of a regime that disincentivises investment by New Zealanders in NZ companies on the domestic exchange, whilst favouring investment in foreign companies instead, and which simultaneously encourages yet more ownership of NZ companies by foreign investors.
Although the current proposals are just that, and Government is a long way from confirming which of the recommendations, if any, it might implement after the next general election, Brian will look at some elements of the proposals which appear to not have the intended effect of bringing “fairness” to the tax system, and which might have significant detrimental impacts on the country’s small businesses, large publicly owned companies, and housing and capital markets, and how that might impact the wider New Zealand economy.