The Minister of Finance’s tax promise has not been broken (really?) if nobody but him promised it, the PM is saying

Let’s see.  The government is denying it has broken a promise with the housing package it announced today while the Corrections Minister is apologising for the bad treatment of women – some say it was torture – in the prisons for which he is responsible while his colleague, Nanaia Mahuta, is rebuking China for its human rights performance. In other announcements,

  • The Government has extended support to the aviation sector until the end of October to help keep the country connected with its trade partners and maintain international passenger services;
  • Maori Development Minister Willie Jackson paid tribute to Annie Aranui, describing her as “a servant to the people” whose “selfless dedication to Tairāwhiti and the Hawke’s Bay community will be sorely missed”;
  • Arts and Culture Minister posted a speech she delivered at an NZ Opera  performance of  Ihitai ‘Avei’a – Star Navigator, which explores Pacific navigation and the coming together of Polynesian and European peoples.

The big news of the day was the Government’s housing package to support first-home buyers. Continue reading “The Minister of Finance’s tax promise has not been broken (really?) if nobody but him promised it, the PM is saying”

No, we don’t expect perfection from the Govt – but a considerable advance would be welcome

Prime Minister Jacinda Ardern, back  in   January, told the Labour caucus 2019 would be a year of “delivery” for the government.

Ardern then said 2018 had been a year where the government had set up the “infrastructure” for serious change and pumped money into health and education. 2019, by contrast, would be more focused on delivery.

And, yes,   she has  delivered:  a  huge backdown  on  a capital  gains tax.

And yes, a  stunning  failure  on its  Kiwibuild  programme.

Yet  commentators  see the CGT outcome  as  something of  a  political coup. Continue reading “No, we don’t expect perfection from the Govt – but a considerable advance would be welcome”

The capital gains tax is scrapped – but revenue raisers are looking for other ways to skin us

Cabinet,  we  are  told,  has  signed off  on  the  budget,  to be  presented   next  month. This  year  the focus  is to be   on  “well-being”.

It’s a phrase  that  captures  the  style  of  the  Prime  Minister   Jacinda  Ardern.  If  the  budget  delivers,  it  will  reinforce  public perceptions  of  Labour’s  leadership whose  ratings  have  shot up  in  the  wake of the Christchurch  mosque  massacre.

But  will the  budget  be  “transformative”?

NZ’s  economy  under Labour over the past  six months  has shown  increasing   signs of   slowing.

Recent indicators  of a weakening economy include rising job-seeker numbers, stalled job growth, a rising cost of living, lower economic growth forecasts by all major banks, weakening business confidence,  and the Reserve Bank  signalling a cut in interest rates  to stimulate economic activity. Continue reading “The capital gains tax is scrapped – but revenue raisers are looking for other ways to skin us”

Queue here to register your thoughts on a capital gains tax – but not if the queue gets too big

Labour  ministers’  enthusiasm   for a  capital   gains  tax   appears to  be waning  by the day.  Even the PM,  Jacinda  Ardern, no longer  seems to be talking  up  the need to  make the  tax system  “fairer”  by  bringing in  a  comprehensive   CGT.

Revenue  Minister  Stuart   Nash   went so far  as to  say  this  week   “there is  nothing to  consult  on”.

Here  is what he told  Parliament  on Thursday:

Nash: When I said I’m not consulting on a capital gains tax, I’m also not consulting on the 19 measures that the Tax Working Group considers would reduce compliance cost to small to medium enterprises.

Gerry Brownlee: Why not”?

NASH: Because—can I say this again—there have been absolutely no decisions made on this, so why would I formally consult when there’s absolutely nothing to consult on?” Continue reading “Queue here to register your thoughts on a capital gains tax – but not if the queue gets too big”

Capital gains tax: hear what Peters (as PM) has to say about something NZ First opposes

Anticipating the release of the Tax Working Group’s report, Point of Order on Tuesday said the  question  of a capital gains tax being endorsed by the government is whether   the concept can be sold to  NZ  First.  Its leader,  Winston Peters,  in the past  has been  vocal in  his  opposition to a  broad-based  capital  gains tax.

Early yesterday, a few hours ahead of the report’s release, the NZ Herald echoed our thinking.

Whatever Sir Michael Cullen recommends in his final Tax Working Group report today may be off the table if Labour can’t get New Zealand First and Winston Peters’ support for it.

Peters has made it clear in the past he is not a fan of a capital gains tax.

Just before the 2017 election, he told TVNZ’s Q&A that a capital gains tax was “off the table.”

“The two factors are – it doesn’t work and the second thing is there is no fairness if you haven’t got capital losses as well.” Continue reading “Capital gains tax: hear what Peters (as PM) has to say about something NZ First opposes”

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

The taxing issue of capital gains – and the prospect of hostility on the hustings

Reports  from  working groups undertaking  reviews  for the government   are  thudding  on  to   ministerial  desks – and several of them already are  stimulating the kind of backlash which  any  government  intent on protecting  its poll ratings  could  find  disturbing. 

In implementing their recommendations,  the  Ardern  coalition could write itself into  NZ’s  political  history as  reformist  as  the first  Labour   government  led by  Michael  Joseph Savage.  Then again, if  it  did have that ambition, it might nosedive as  rapidly  over the political cliff as   the David Lange   government did in  the late  1980s.

The education changes proposed  by the  Bali Haque-led review are stirring fury  among  principals and  trustees.  The reforms to  industrial  law  from the Jim Bolger-led panel, expected to give fresh powers to  trade unions in  wage bargaining, are  likely to  despatch  any good will the business community has entertained towards the Ardern  administration. 

But the one issue  which  will test  the nerve of   even the boldest in the Ardern   coalition  is  the  capital gains  tax  which the working  group chaired  by Sir Michael  Cullen  was set up  to  formulate.

No matter how it is framed by Sir Michael, one of the cleverest politicians  in  NZ’s  modern history, “expect to  see the debate go  nuclear”,  as  Liam  Dann in the  NZ  Herald  put it.    

Continue reading “The taxing issue of capital gains – and the prospect of hostility on the hustings”

The taxing task of making a capital idea less toxic to voters

The Labour-led  Government   wants  a   capital  gains tax — why else   would  it have a  Tax Working Group spending  months studying  how to  frame  it?

The problem for Finance Minister  Grant Robertson is  that it could be politically  toxic,  as   David Cunliffe  found when he  campaigned on it.  So  he’s  now  seeking a  final  recommendation  from the  TWG  which makes  taxing  capital gains politically  acceptable — at least to a majority of voters.

It will take all  the political  cunning  of the old master,  Sir Michael Cullen, to come up  with the  answer Robertson needs. Continue reading “The taxing task of making a capital idea less toxic to voters”

Capital gains: the taxing task of balancing economic and political considerations

 So  will  Sir Michael Cullen’s  Tax Working Group in its interim report due out soon  propose  the government  implements  a  capital gains tax?

When  the  TWG  was set up most people  believed  its main purpose  was to  design  a  broad-based capital  gains  tax,   not  just to capture  a new source of revenue  but  to  make the tax system  fairer and reduce  inequalities.

But a report in Stuff   this week  speculated the  TWG has  stopped short of recommending a broad-based capital gains tax. Continue reading “Capital gains: the taxing task of balancing economic and political considerations”