It was hardly a dream debut for Labour’s long-awaited, much-argued-over tax package for Aotearoa New Zealand.

What was meant to be a carefully choreographed reveal of a capital gains tax (CGT) later this week instead arrived early — leaked to RNZ over the long weekend and hastily confirmed by Chris Hipkins this morning.

In his media conference at Parliament, Labour’s leader downplayed the premature release, saying the details had been circulated widely and could have come from anywhere.

He delivered a stern warning to any leaker, but also said he was not interested in pursuing any sort of investigation.

That is sensible. History shows such hunts usually end badly. Just ask National about Jami-Lee Ross.

Still, the leak will be of some concern to Hipkins.

The party’s internal debate over whether to pursue a wealth tax or CGT has been long and bruising, with strong feelings on both sides.

RNZ understands the caucus vote for a CGT plan was near unanimous – but not quite. And the party’s ruling council and policy council were more divided again.

Hipkins needs those proponents of a wealth tax to now fall in behind the selected proposal.

Unity will be crucial if Labour is to sell yet another version of a policy it has repeatedly failed to convince voters to support.

Containing the risk
Labour knows the political peril of talking tax. It’s been burned before — in 2011, 2014, and 2017.

This time, the party has chosen the smallest possible target: a cautious CGT applying only to property sales, excluding the family home and farms.

The rate would be set at 28 percent, in line with company tax, and would apply to profits made after 1 July 2027.

National disputes the description of “narrow” but compared to the other options on offer, it meets the definition. This does not cover shares, KiwiSaver, inheritances, or personal assets, like classic cars or artwork.

In many respects, it’s little more than an expanded bright-line test — closely resembling the minority view of the 2019 Tax Working Group.

The strategy is clear: keep it simple and sellable.

Labour believes a modest CGT will be more palatable to the public than the more novel and ambitious wealth tax. Capital gains taxes are familiar overseas and no longer as frightening a concept as they once were.

Definition complications
But even the narrowest design can have complications. For example, look to the definition of “family home”.

Labour is using the definition used currently by the brightline test which requires a person to be currently living in that house “most of the time”.

It means that a person who owns just one house, but lives in a rental property elsewhere, would still be taxed if they sold that property.

Keeping the scope tight also limits revenue.

Labour’s own policy paper concedes the returns will be “small relative to GDP and total tax revenue” – roughly $700 million a year.

And almost all of that will go straight into Labour’s accompanying health policy.

The sweetener: A ‘Medicard’ for GP visits
In a bid to soften any political blow, Labour has paired the tax with a tangible benefit — a “Medicard” giving every New Zealander three free GP visits a year.

By tying its CGT to the health system, Labour hopes to frame it not so much as punishment for property owners, but more as a pragmatic way to fund something people actually want.

It’s no mistake that the policy touches the two issues named most important by voters in polling: the cost-of-living and healthcare.

Labour has also intentionally made the entitlement universal to ensure the widest possible appeal — even if critics argue the money would be better targeted to those most in need.

Speaking of the critics, government MPs were practically salivating today, having eagerly awaited this announcement as a potential turning point in the polls.

Labour’s rise in popularity has come despite having little in the way of a policy platform and the coalition hopes the tide will turn as voters look more sceptically at the alternative.

Finance Minister Nicola Willis branded the proposal a “terrible idea”, warning it would hit small businesses that own property.

‘Tall-poppy politics’
Act’s David Seymour called it divisive “tall-poppy politics”, while New Zealand First declared the rollout “a trainwreck”.

NZ First’s post on social media included a noteworthy kicker, describing the CGT as merely “a foot in the door” for the Greens and Te Pāti Māori.

Hipkins today tried to shut down that attack, claiming that Labour’s tax plan would be the next government’s tax plan.

But he received no assistance from his purported partners, with the Greens insisting they would not be relinquishing their advocacy for a wealth tax.

Expect more heat on that front as the election approaches.

RNZ’s latest Reid Research poll shows the task ahead for Labour: 43 percent in support of a CGT, 36 percent opposed, and 22 percent undecided.

That’s not exactly a decisive mandate – but it’s not dismal either.

After months of indecision, Labour is finally in the policy game.

This may not be how it had hoped to roll out its flagship policy, but the real test will be how well it can sell it over the coming months.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

Cabinet Minister David Parker recently told The Spinoff he’s reading The Triumph of Injustice – how the wealthy avoid paying tax and how to fix it, by Berkeley economists Gabriel Zucman and Emmanuel Saez.

The book complains that leftwing politicians throughout the world have forsaken their historic duty to innovate on taxation and force wealthy vested interests to pay their fair share. The authors say governments of both left and right have capitulated unnecessarily to the interests of the wealthy in setting policies on tax and spending.

Parker shares this ethos and it’s undoubtedly a big part of his decision to revolt against his leader.

First, Parker ignored constitutional conventions and spoke out against the Prime Minister’s decision last month to rule out implementing any capital gains or wealth taxes. And last week he resigned as Minister of Revenue, saying it was “untenable” for him to continue in the role given Hipkins’ stance on tax.

Clearly, Parker is highly aggrieved at Hipkins’ decision to rule out a substantially more progressive taxation regime, especially when there is such strong public openness to it.

In May, a Newshub survey showed 53 per cent of voters wanted a wealth tax implemented. And last week, a 1News poll showed 52 per cent supported a capital gains tax on rental property.

Parker has become the progressive voice of Labour
Parker has thrown a real spanner in the works for Chris Hipkins at a crucial time in Labour’s re-election campaign. Such dissent from a Cabinet Minister is highly unusual.

It’s also refreshing that it’s over a matter of principle and policy, rather than personality, performance, or ambition.

There will be some Labour MPs and supporters annoyed with Parker for adding to Labour’s woes, especially when the government is already looking chaotic. He’s essentially declared a “vote of no confidence” in his own party’s tax policy.

This is not the staunch loyalty and unity that Labour has come to expect over the last decade, whereby policy differences are suppressed or kept in-house.

But even though Parker was being criticised last week by commentators for throwing a “tantrum” in resigning his Revenue portfolio, this charge won’t really stick, as he just doesn’t have that reputation.

His protest is one of principle, not wounded pride or vanity, and it’s one that will be shared within the wider party.

In taking such a strong stance on progressive taxation, and so openly opposing Hipkins as being too cautious and conservative, Parker has become something of a beacon for those in Labour and the wider political left who are discontented over this government’s failure to deliver on traditional Labour concerns.

Is there a future for Parker in Labour?
Parker’s outspokenness may be a sign that he’s had enough, and is looking to leave politics before long. Being on the party list means he can opt out of Parliament at any time.

After the election, he may decide it’s time to retire, especially if Labour loses power. In fact, Parker has long been rumoured to be considering his retirement from politics, so it might just be that the time has finally come.

A private decision to leave might explain why Parker has decided to put up and not just shut up, and publicly distance himself from Labour’s decisions on tax for the sake of his reputation.

It’s also possible that Parker has chosen to try to pressure Labour towards a more progressive position on taxation, and this is the start of a bigger campaign. If so, he would be playing the long game.

Parker is now established as the most progressive voice in Labour, which could see him move up the caucus ladder when Hipkins eventually moves on — especially if Labour is defeated at the election in October.

And Hipkins might have inadvertently invited opponents to want to replace him with a more progressive politician when he made his “captain’s call” to rule out any sort of real tax reform for as long as he holds the role.

Given that they had an absolute majority in the last three years they can’t blame anyone else. And should they lose the election, the analysis from within Labour will certainly be that they were too centrist and didn’t do enough.

Parker would be a strong contender for the leadership sometime in the next term of Parliament. That is if he wants it and hasn’t simply had enough. There are signs that he would be keen — he ran for the top job in 2014, with Nanaia Mahuta as a running mate, but lost out to David Cunliffe.

Last week he reiterated that he was up for a fight, explaining his decision to stand down as Minister for Revenue, saying, “I’m an agent for change — for progressive change.

“I’ve been that way all of my political life and I’ve still got lots of energy as shown by the scraps that I’ve got into in the last couple of weeks on transport.”

Of course, when the time comes to replace Hipkins, the party will face the temptation to look for a younger and “fresher” leader. Until very recently, the likes of Kiri Allan and Michael Wood were seen as the future, but those options have disappeared.

And the party might do well looking to someone with more proven experience.

Parker could fit that bill — he’s been in Parliament for 21 years and served in the Helen Clark administration as Attorney-General and Minister of Transport. He is seen as an incredibly solid, reliable politician, with a very deep-thinking policy mind.

By contrast, the rest of the cabinet often seems anti-intellectual and bereft of any ideas or deep thinking, which means that they are too often captured by whatever new agendas the government departments have pushed on them.

Arguably that’s why the blunt approaches of centralisation and co-governance have so easily become the dominant parts of Labour’s two terms in power.

Labour needs Parker’s progressive intellectual politics
Regardless of whether Parker ever gets near the leadership again, it’s clear he has much to offer in pushing the party in a more progressive direction. Certainly, Labour could benefit from a proper policy reset and revival — which Hipkins hasn’t been able to achieve.

The new leader managed to throw lots of old policy on the bonfire, and he successfully re-branded Labour as being more about sausages and “bread and butter” issues, but Hipkins hasn’t yet been able to reinject any substantial positive new policies or ethos.

Parker’s dissent this week indicates that frustration from progressives in Labour is growing, and there are some very significant policy differences going on in the ruling party of government.

For the health of the party, and for the good of the wider political left, hopefully Parker will continue to be a maverick, positioning himself as an advocate of boldness and progressive change.

Parker recently selected Thomas Piketty’s Capital in the Twenty-First Century as the book “Everyone should read”. He explained that “As a politician who believes in social mobility and egalitarian outcomes, this book inspired me to seek the revenue portfolio”.

That Parker has now had to give away that portfolio says something unfortunate about the party and government he is part of. And if the last week also signals that Parker is on his way out of politics, that too would be a shame.

After all, in a time when parliamentary politics is about scandal, and the government has lost so many ministers over issues of personal behaviour, it would be sad to lose a minister who is passionate about delivering policies to fix the problems of wealthy vested interests and inequality.

Dr Bryce Edwards is a political scientist and an independent analyst with The Democracy Project. He writes a regular column titled Political Roundup in Evening Report.

Article by AsiaPacificReport.nz

Any attempt to review or change Fiji’s existing taxation system will be done with proper consideration of all reports and recommendations on the issue, says Fiji’s finance minister.

Professor Biman Prasad, who is also co-deputy Prime Minister, said that any decision to make such changes lay solely with the government.

“We are obviously going to look at all the reports, all the recommendations, but at the end of the day, it’s government that will decide what is the best course of action,” he said.

“We want to balance our revenue, our expenditure — but also our support and continue assistance to those who are most vulnerable, those who may be living in poverty, those who have low income.

“This is a government which had started already on a good footing.”

He said they were committed towards assisting the people, as they had done through the back-to-school assistance and extension of the bus fare subsidy.

“This government is firmly focused on looking after our people, but also making sure that we improve our health infrastructure, health services and that is what has come out of this [National Economic Summit].

“We are confident that despite all the big challenges that we have, the government is firmly focused on taking this country forward.”

Shayal Devi is a Fiji Times reporter. Republished with permission.

Article by AsiaPacificReport.nz