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”

Sir Michael is being paid well while he takes his tax report for a spin

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”

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”

Here’s hoping the advice on prosperity gels with the advice on fairness

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”