The policy wasn’t a huge surprise. At their election campaign launch a few weeks ago they made it clear their tax reform policy would have a focus on redistributing wealth. So the proposal for a new wealth tax, an increase in income tax for those earning over $200,000, and a tax free threshold for income up to $30,000 are all expected.
They’ve clearly decided to go all out. So also plan to raise the corporate tax rate from 28% to 33%, as well as new taxes for foreign companies.
They call the policy radical and transformative and representative of their values - but there’s plenty of debate as to whether these policies will encourage or hinder productivity.
It’s easy to take a radical approach when you’re a minor party. When it comes to the compromises required for coalition negotiations it’s important to have something to lose.
Te Pāti Māori’s tax reform policy comes after the Green Party recently released their plan to pursue a wealth tax and universal income guarantee.
The person this creates a headache for is the Prime Minister - who recently made a Captain’s Call pledging no new capital gains our wealth tax as long as he’s Prime Minister.
It makes for an interesting potential coalition negotiation doesn’t it. And it means the Labour party needs to be very clear about their tax policy, which is expected to be announcing imminently. Obviously voters would like the labour party to be transparent about what they would be prepared to consider from coalition partners when it comes to tax reform, but they’ll see no upside in having that discussion before the election.
Hipkins’ announcement on capital gains and wealth taxes was pure politicking, and accepted by his cabinet even if they didn’t entirely agree. Which is becoming a theme.
National’s finance spokesperson Nicola Willis has pipped the government’s tax policy announcement by doing it herself. She confidently claims Hipkins’ plans to announce the removal of GST from fruit and vegetables, even after his Finance Minister ruled out the idea earlier in the year.
It’s a difficult idea to put in place, and it will be hard to know if we’re saving 15% on our fruit or veggies without more supermarket regulation, but with the heightened cost of a weekly shop it could be a popular move.
Hipkins’ is making the big calls and he now has the tough job of assuring party faithful they’re living by their values, while also appealing to a wide demographic feeling the pinch of a cost of living crisis.
Something tells me, he may need more than just a fruity rehashed idea from 2011 to get the job done.
Francesca is a well known film reviewer, writes for NZ Herald's Timeout magazine, and contributes to Jack Tame's Newstalk show. This article was first published HERE