Gunning for the “rich pricks” through tax changes brings the risk of an electoral recoil

The   highly anticipated Tax Working Group’s final report,   to  be unveiled on Thursday,   is  expected   to propose   a  broad-based capital gains tax, possibly  along   with an inheritance  tax.   Policy wonks and commentators typically say  the devil   will be   in the  detail   (particularly  the exemptions, if  any).

Both the Labour Party and the Green Party have supported a capital gains tax  and  few doubted – when the   Ardern   government  named Sir Michael  Cullen  as  head of the  Tax  Working  Group –  he  would  lead the charge  in favour of    extending   whatever    forms   of   taxing  capital gains   (the  brightline test)  apply  at present  into  a  much more broadly based  framework.

Cullen  has been a  staunch believer   that  the  “rich pricks”  don’t  pay their  fair  share of  tax  and  he’s  an  enthusiast    for  rebalancing  the tax  structure.

The  Ardern government,  buoyed  by   its  current  high  polling,  may be  emboldened    to  accept the  Cullen Group’s   report, even if   there is  a strong  minority report  opposing  the plan.

Ardern  and her colleagues  have insisted   any  move  on a  broad-based  CGT    would  not  come into   effect   until  after the  2020 election.   The   question  is whether   they   can  ‘sell’   the concept  to  NZ  First,  whose leader,  Winston Peters,  has in the past  been  vocal in  his  opposition to a  broad-based  Capital  Gains Tax.  And if  Peters  swallows  it,  doesn’t it present a  stick    which  National  can use to devastating  effect  in the election campaign?

Cullen said earlier, when commenting on opinions surrounding a capital gains tax, that he was “actually quite perplexed”.

The majority of the population favour some form of capital income taxation but it is not necessarily clear you can win an election on that basis.What people oppose motivates them more than what they support. That is why all American politics is now negative.

But there  could be a  cunning  plan  in the  collective mind of  Labour ministers.

Labour   has  said  the  plan should be   “revenue- neutral”.  This implies    whatever    new revenue  flows  from it  will  be  applied to  revision  in the   overall tax  structure.  It   would certainly  be   easier to  sell it  on the hustings  if  it  were  combined with  tax   cuts  across the  middle  and low ranges of the income structure.             .

But  if  it  is  made  more politically   palatable   in  that   way,   can it  still be    successfully  presented   to   the  NZ   public?    Many   New  Zealanders   who  vote  Labour  won’t be happy  if  their   beach  bach or their hard-won  savings  become subject to  a CGT.

And  of  course  there is  another hard issue  at the root of  a  CGT being applied.    Will  it  be  just another   barrier  in  the way  of   New Zealanders  accumulating   capital   for  investment  in  the  productive activity  which the country so badly  needs?

3 thoughts on “Gunning for the “rich pricks” through tax changes brings the risk of an electoral recoil

  1. Cullen must be a “rich prick” himself? Decades in Parliament with a generous taxpayer-funded salary, gold-plated taxpayer-funded Parliamentary superannuation scheme, air travel perks and revenue from his position on government appointed board and committees. He was also head of NZ Post. What a hypocrite this man is!

    Liked by 1 person

    1. Cullen was also vocal and supportive of Clark when she removed knighthoods. When JK tossed Labour out Cullen was first leech in the lineup to grovel and take one . . . hypocrite!

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.