Chris Wales has advised the governments of Britain, Ukraine and Slovakia and held top jobs at PwC, Goldman Sachs and Arthur Andersen.

A tax expert appointed as an adviser by former British prime minister Tony Blair expects New Zealand's Tax Working Group will recommend a broad-based capital gains tax, only for Prime Minister Jacinda Ardern to reject the idea.

Former PWC global tax and governance leader Christopher Wales served as former British chancellor Gordon Brown's principal adviser on tax after being appointed by Blair to a six-strong team of economic advisers to the British Treasury.

A capital gains tax would probably mean fewer houses and higher house prices, he said.

Wales said he was not suggesting the Tax Working Group chaired by Sir Michael Cullen had been set up to fail, but believed not seeing-through what might be its main policy recommendation would be a good political outcome for the Government.

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Wales sits on the board of Oxford University's Centre for Business Taxation – which he was responsible for establishing – and is visiting Wellington to research a paper he will present at the university in September.

It made sense for the Government to set up the Tax Working Group to buy breathing space, create a "safe environment" to explore tax policies, and to test the public's appetite for change, Wales said.

It might be a good thing to introduce a capital gains tax on some assets such as shares and – in principle – capital gains on investment properties should probably be taxed, he said.

But people needed to be "quite clear in their thinking" about how any change in a capital gains tax would affect housing supply, he said.

"I think if you introduce it there will almost inevitably be a reduction in the amount of future investment in residential real estate for investment purposes.

"Because it will constrain future supply what it might do is add to price pressure so you might see prices going up a little bit more."

Wales said he believed there was a supply issue with housing in New Zealand and he would be more concerned about making that worse by taxing capital gains on housing, than he would be about the money such a tax would raise.

"If I was the prime minister I would want Sir Michael Cullen to recommend a broadly-based capital gains tax. I would also almost certainly not be intending to introduce a capital gains tax," he said.

"This is quite significant politically; Sir Michael Cullen recommends a broad capital gains tax. The prime minister says 'no'. That is quite a good political strategy."

ROSA WOODS/STUFF Jacinda Ardern could benefit by rejecting the likely findings of its own working group, Chris Wales believes.

Wales said he was aware his perspective might seem "a little bit cynical".

"I could be completely wrong. [But] if I was in her position, that is how I would be thinking about this issue."

A spokeswoman for Ardern said she had no comment.

Wales said the Government would still want to do something about equality if the deliberations played out as he was speculating, but could do that "10 times more easily" through the benefits system and by adjusting existing tax rates.

He imagined that if the working group did recommend a broad capital gains tax, a lot of the subsequent commentary would be negative.

Ardern might say she had listened and end the process by saying she had come to the conclusion New Zealand did not need major tax reform, he said.

The working group has invited submissions from the public on the future of the tax system by the end of April.

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