Ele Ludemann: Labour hasn’t learned

Labour has found another tax it likes:

When Labour holds its next party conference at the end of the year, tax policy is likely to be near the top of its agenda.

Finance spokesperson Barbara Edmonds sent a strong signal in March that a comprehensive capital gains tax may be back on its table, questioning the fairness of the current tax system.

But some within the party are also understood to be eyeing the merits of Ireland’s Capital Acquisitions Tax, which is a souped-up version of an inheritance tax. . .

Labour tells us they’ve been listening but they haven’t learned that if more tax is the answer they’ve asked the wrong question.

Nor have they learned that taxing more to spend more played a large part in their election loss.

I’m not opposed to a capital gains tax in principle, but it would have to be in partnership with a reduction in other taxes.

I am opposed to the CAT, which is an inheritance tax by another name. Whatever it’s called, it can undermine the viability of businesses which are asset rich but cash poor.

This is especially the case for farming operations which often have high capital values but relatively low profits.

If succession hasn’t been carefully planned without a CAT, it can force the sale of farms if the one or ones running the business can’t afford to buy out other beneficiaries. A CAT would increase the risk of that.

This can happen with other businesses too, risking business failure which doesn’t just hit the owner or owners but their staff and creditors.

Labour has proved time and time again that it is far better at taking tax than spending it wisely.

If it wants to be taken seriously as a government in waiting it must show it has learned that more spending isn’t necessarily better spending and that more tax, whether though increased rates or new taxes, is not the road to success for the party or the country.

Labour’s musing on a CAT coincides with a call from nearly 20 former heads of government for a new global deal to tax the world’s ultra-rich individuals.

Among them are Prime Minister of New Zealand Helen Clark, former President of Chile Michelle Bachelet, former Prime Minister of Sweden Stefan Löfven, former Prime Minister of Australia Julia Gilliard, former Prime Minister of France Dominique de Villepin and former President of Spain José Luis Rodríguez Zapatero.

If only they would put their efforts into policies that increase wealth rather than trying to redistribute it. That would help the poor get more rather than their recipe which is an attempt to ensure the wealthy keep less.

Ele Ludemann is a North Otago farmer and journalist, who blogs HERE - where this article was sourced.