You would think that Labour had ample opportunity to talk about tax with two consecutive terms in government and a tax working group (led by former Labour finance minister Sir Michael Cullen) resulting in a costly 132-page final report - whose recommendations were then rejected by the Jacinda Adern led government.
Even the next prime minister, Chris Hipkins, rejected the possibility of introducing a capital gains tax (CGT), raising the eligibility age for the the pension, a wealth tax, and other tax proposals favoured by his finance minister.
Now Chris wants to have a conversation about it. All this 'talking' only serves to make Labour look undecided on tax.
Remaining relevent in opposition is tricky, so conversations around tax are a good headline grabber. This however, maintains Labour as the party who would rather tax & spend. Taxation and other rule changes often result in complexities & avoidance, and government interference leads to unintended consquences. If Labour hasn't learnt lessons from its last stint, it needs a change in leadership and fresh vision.
And this ignores the real issue - productivity. The more productive we are, the higher the tax take. Wealth creation as opposed to taxation. The overall structure of the tax system should be constantly reviewed, but you can't tax your way to a wealthier country. More incentives to work and increase our productivity should be our focus. Alot of the cost blow-outs that are often talked about are the result of overly complicated rules, which only increase the cost of getting stuff done.
It would be wonderful to have cross-party agreement on big issues such as taxation, infrastructure, energy etc - but the reality is this is highly unlikely, given our political system, three-year election cycles, and vastly different views held by the minor parties, who often hold the balance of power. So we're stuck with a lack of certainty, talk, and more talk.
More incentives to work & increasing productivity - that's the way to get ahead and pay for what we need.
Comments