Labour under the gun to release details of where its tax working group may go

Grant Robertson, left, and Steven Joyce have been facing off over their tax and spending plans.

Grant Robertson, left, and Steven Joyce have been facing off over their tax and spending plans.

OPINION: Labour's handling of its tax working group (TWG) has been so ham-fisted – and is now so veiled in myth and misdirection – that a clear statement of its scope has become Jacinda Ardern's most pressing campaign issue.

Whether or not Tuesday's Newshub-Reid Research poll reflected the impact of National's unremitting attack on the topic is a moot point.

But there is no doubt it is starting to bite, as much as Labour rails against National's tactics as "desperate" and "lying".

There is a pressing need for Labour leader Jacinda Ardern to release the terms of reference of her tax working group.

There is a pressing need for Labour leader Jacinda Ardern to release the terms of reference of her tax working group.

* Voters punish uncertainty, and Jacinda Ardern's left enough of it for National's attacks to work
* Jacinda-effect checked and reversed as National jumps into big lead
* National still top with small businesses, but Ardern factor shifts votes towards Labour
* Memo to (tactical) voters: There are three main trains running towards election night

Ardern has hinted that some clarification might come soon.

And finance spokesman Grant Robertson on Wednesday did not rule out releasing the TWG's terms of reference.

"That's open to us to do . . . We will respond as we need to."

The tax attack is the second leg of Finance Minister Steven Joyce's assault on Labour's economic credibility – a "tax and spend" double-header.

His spending play – the $11.7 billion fiscal hole only he and selected colleagues could see – came to a sticky and friendless end among the experts. Whether it had an impact on voters may be a different issue.

But even without that – and thanks to Labour's poor handling of the issue – he and Bill English's questioning of Labour's TWG exercise is still having a potent effect. He has hit the nail on the head by saying Labour clearly wants to introduce a capital gains tax but doesn't want to say so. All of its messaging defends the need for a tax that "balances" the treatment of assets and income.

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The National hits are given added heft by the penumbra of taxes, levies and costs already confirmed by Labour: A small levy on bottled and irrigation water (which could hit heavy irrigators hard), giving local government the option of a regional fuel tax, changes for property investors (which interestingly National does not labour), a foreign tourists' levy and bringing agriculture into the emissions trading scheme.

But Ardern brought the problem on herself in two ways.

The first was the move to ditch Andrew Little's policy to put any changes as a result of the TWG to the 2020 election for a mandate. Under Little's timetable voters could safely punt their concerns into the next decade.

At the same time she has radically narrowed the working group's scope, yet has done so on the hoof and without any clarity around its final terms of reference.

Over the weeks since she took the reins, reporters – and more recently National – have run a succession of options up the flagpole for her either to salute or renounce.

It has been like fiscal whack-a-mole. Every time one gets squashed another pops up in its place.

So in rough chronological order she has ruled out:

* Capital gains tax on the family home.

* Tax on unrealised capital gains.

* Personal tax increases (although National's April 1, 2018 cuts would be reversed).

* Company tax changes.

* GST.

* Land tax on the family home (including the farm homestead) and the land under and around it.

* Inheritance tax.

Which leaves still "in":

* A land tax with exemptions above.

* A capital gains tax of unspecified range, but with the exemptions above.

* An examination of National's "bright line test", that automatically triggers capital gains on investment properties sold within two years of purchase, and Labour's planned extension to 5 years – or some other mix or mechanism.

But that leaves a raft of other questions for National to fill the remainder of the campaign, unless Ardern shuts them down.

What about excise on tobacco, alcohol and petrol?

Robertson's response is that a working group looking at the balance of taxes on assets and incomes is hardly likely to go there.

But beyond that – and you hear it in the streets and taxis – how wide would a capital gains tax go? To shares? KiwiSaver funds? The family bach?

There are some hints of where Ardern could go in Labour's 2014 policy – the one Little dumped on becoming leader.

Back then it promised to set the capital gains rate at 15 per cent of realised gains, but it would not be backdated and would be net of costs.

As well as the family home, personal assets, collectables, small business assets sold for retirement up to a maximum of $250,000, and payouts from retirement savings schemes, including KiwiSaver, would be exempt.

Capital gains on inheritance would have been rolled over to the heirs, but would not be payable until the gain on the asset was realised.

The family bach would have been exempt while in family hands, but taxed if it was sold. Inherited property would have a grace period where the sale of the house would not be liable.

But Robertson is clear the 2014 policy is not being adopted or revived.

What he and Ardern desperately need is a clear and public statement about what's in and what's out of the TWG's ambit and its terms of reference.

More importantly, the public deserve it.

As much as Ardern claims her approach is one of transparency – compared to National's 2010 move to lift GST without warning – it is leaving too much doubt.

 - Stuff


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