A Labour capital tax would be National's gain

by Jane Patterson / 31 January, 2019
Simon Bridges. Photo: RNZ / Rebekah Parsons-King

Simon Bridges. Photo: RNZ / Rebekah Parsons-King

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Power Play - National knows Labour and the coalition government are vulnerable on tax which is why Simon Bridges has gone straight for the Achilles with his new tax plan.

Rather than income tax cuts, Mr Bridges is proposing gradual tax relief every three years to help keep pace with the increasing cost of living.

But the underlying message is the government is keeping too much of your hard-earned dollars, and there's more pain to come.

We've heard this song before from National - way back in 2005. Then it was National's newly minted finance spokesperson John Key under leader Don Brash.

Don Brash's infamous Iwi vs Kiwi billboard.

After nearly a decade of solid economic management, then Finance Minister Michael Cullen found himself under pressure to free up the billions he had stored away for a rainy day and put some back into New Zealanders' pockets.

The strategy was the same: Tell people they deserved more and the government was being stingy by withholding financial relief.

Alongside the inflammatory Iwi/Kiwi billboard campaigns were dancing puppets of Helen Clark and Mr Cullen with rictus grins clutching at dollar bills.

National of course narrowly lost that election but tax cuts were firmly back on the political agenda and remained so for the next election in 2008 when National would take power.

Simon Bridges has revived the narrative but given this is a new government he's talking about the taxes it has imposed in its first year, and more to come down the line.

Well into the 2017 campaign Prime Minister Jacinda Ardern realised the danger of her Capital Gains Tax (CGT) policy and swiftly shifted gears to minimise that damage.

She had initially not ruled out a CGT in a first term if proposed by the Tax Working Group but had to abandon that and promise any new CGT would only be after another election campaign.

The Tax Working Group is poised to deliver its final report to Finance Minister Grant Robertson and while a straight CGT at a set rate has already been ruled out, options for taxing gains on capital through other means are still on the table.

None of that will matter to National though, they'll slap the name of a Capital Gains Tax on any change made because they know that's anathema to their base.

Through the threshold adjustment changes they're also appealing to middle income earners signalling they understand the pressures on an average Kiwi household.

Labour of course won't take this lying down.

In a role reversal that's understandable but one that still feels slightly odd, Mr Robertson is questioning the opposition's number (fiscal hole anyone?) and demanding to know how National would afford the $650 million price tag.

The coalition will run a hard line about National wanting to give tax cuts to its rich mates while having starved public services of vital money over several years while failing to act on the housing crisis.

But having already backed off any further regional fuel taxes, Ms Ardern will have to plot a careful course before committing to any form of taxing capital, with National ready to exploit any opportunity to drive its message home.

This article was first published on Radio NZ.


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