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”
So how is the debate on a comprehensive capital gains tax going?
Not well, some would say, particularly if you have to pay more than a $1000 a day for a PR snow job.
Questioned in Parliament why the government is paying Sir Michael Cullen more than $1000 a day of taxpayer funds to engage in political debate for four months after the Tax Working Group has been disbanded, including two months after the government will have announced its own position, Finance Minister Grant Robertson explained the contract had been extended “because it’s necessary to respond to all of the misrepresentation and lies about the report”. Continue reading “Sir Michael is being paid well while he takes his tax report for a spin”
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”
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”
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 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”
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”
In all the concerns afflicting New Zealand business, none is more powerful than uncertainty generated by the “reviews” by assorted panels and working groups set up by the government.
PM Jacinda Ardern, in her speech to Auckland business leaders, spoke of how NZ needs to transition from growth dominated by population increase and housing speculation, to build an economy genuinely productive, sustainable and inclusive.
“First we want to grow and share more fairly New Zealand’s prosperity”.
So if NZ is no longer to rely on factors which (according to Labour’s analysis) achieved some economic growth during the years of the National government, where will the “genuinely productive” new elements spring from? Continue reading “Here’s hoping the advice on prosperity gels with the advice on fairness”