Tax study shows Government out of touch with voters' concerns

STUFF
Revenue Minister David Parker has said he will introduce a bill which would set out principles of fairness in the tax system.

Janet Wilson is a freelance journalist until recently working in PR, including a stint with the National Party. She contributes a column weekly.

OPINION: In a bizarre show of bravura Government attention focused this week on a favoured topic – tax. Specifically, who’s paying too much and who’s paying not enough. It’s a brave Government who, having introduced a Capital Gains Tax as a key policy platform only to rescind it in the face of public opposition, returns to the fray once more. Brave or deranged, who knows?

The topic had new life breathed into it last week after Revenue Minister David Parker gave a speech outlining research he’d commissioned which would investigate the wealth of High Wealth Individuals – or to put it less delicately in former finance minister Michael Cullen’s words, “rich pricks”.

While emphasising that this information was not being used to formulate tax policy, Parker framed up the issue as one of fairness. Treasury estimates that 42% of High Wealth Individuals pay less than 10% of their total income in tax is neatly illustrative of unfairness and meant Parker could start the debate by defining what the problem is.

Revenue Minister David Parker gave a speech outlining research he’d commissioned which would investigate the wealth of High Wealth Individuals.
ROBERT KITCHIN/Stuff
Revenue Minister David Parker gave a speech outlining research he’d commissioned which would investigate the wealth of High Wealth Individuals.

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This set the scene this week for theprime minister to face a skirmish of questions on whether Labour would bring in a wealth tax after the next election. The results had her tap-dancing on the head of a pin, standing by all her statements even though they appeared to be contradictory.

In only speaking about the Government’s current tax policy, it raised questions on a previous promise Ardern made during the 2020 election that she wouldn’t introduce a wealth tax while she was prime minister. Getting dragged into doth protesting too much might have been a concession to her party’s left-wing; a fillip for those patiently waiting for the long-promised transformation.

It was also laughably ironic given that the Government has been at the helm of the greatest transfer of wealth from the poor to the rich in a generation during this pandemic.

Prime Minister Jacinda Ardern says she has no plans to introduce a wealth tax this term.
ROBERT KITCHIN/Stuff
Prime Minister Jacinda Ardern says she has no plans to introduce a wealth tax this term.

Despite the unequivocally equivocal denials, why get dragged into the rabbit hole of a tax debate in the first place? Unless, of course, you’re flying the flag up the poll so your focus groups can see if the idea has wings. Or the more cynical may believe that it’s this Government’s way of quietly neutralising the issue – the most small ‘c’ conservative in memory.

If the prime minister and Parker are to be believed and the research does inform a new law, the Tax Principles Bill, that includes principles to assess future tax changes against, Opposition parties will be rubbing their hands with glee at the prospect. They will have 18 months before the election to speculate about tax bracket creep and scare-mongering about how the Government wants to take more of your hard-earned dollars for their pet projects.

It was also evidence that the Government is out-of-step with its voters’ cost of living concerns, happy to push on relentlessly with its reform agenda while the rest of us struggle to put gas in the tank and grub on the table.

If any issue demands the rescheduling of political agendas, it’s inflation leaping to 30-year highs. Public dissatisfaction for the Government’s apparent lack of concern about how their hip pockets are being squeezed was reflected this week in the Newshub-Reid Research poll where Labour took a 6.1% hit while National crested the 40s with a 9.2% rise.

With 18 months left before voters grumpily truck off to the polls this result could change but it was concerning that when voters were asked if the Government had done enough to address the cost-of-living crisis, a thumping 77% said no, 15.2% said yes and 7.2% didn’t know.

What’s more, just 26.6% of Labour voters believe the Government has done enough to address the crisis with 60.1% saying it hasn’t.

Labour will have to move decisively if it wants to arrest the decline even further. It’s showing no sign of doing so; in a pre-Budget speech this week Grant Robertson increased the debt ceiling to 30% of GDP and reiterated its Budget priorities remained health and climate change.

Janet Wilson: “With a low bar to meet before money was doled out, the [wage] subsidy [scheme] was corporate welfarism at its worst.”
John Cowpland/Stuff
Janet Wilson: “With a low bar to meet before money was doled out, the [wage] subsidy [scheme] was corporate welfarism at its worst.”

And while the Government won’t let the word pass their lips, there’s another ‘c’ word lurking in the background of the wealth debate; class. Hidden behind egalitarian talk of fairness lies the politics of envy and its cousin the tall poppy syndrome.

And while it’s only fair for the wealthiest to pay the same as every other Kiwi, this Government has already said, “Yeah, nah” to another form of wealth tax – a capital gains tax. Introducing another wealth tax now and being ambiguous about their intent in the process, only sows further seeds of distrust between voters and Labour. Voters who look set to get no relief from their hip-pocket pain when the Budget rolls around in less than two weeks.

It’s Democracy 101; governments that don’t listen to the needs of their electorate, who don’t deal effectively with the inflation spiral and rising costs fall foul of voters and are, usually, kicked out.

Fair or not.