Gareth Morgan has unveiled The Opportunities Party (TOP) tax policy.
Morgan obviously wants to present himself and his party as serious and competent on major policies but a new small party is extremely unlikely to succeed in introducing major tax reform.
Small partner parties in coalition arrangements have to date been allowed small policy gains, but TOP doesn’t even want to be in a coalition, they say they want to operate from the cross benches.
TOP does not seek to be the government, we seek to substantially influence the policies the government of the day implements.
Our electoral ambition is to have a sufficiently significant share of seats to get our policy priorities implemented. We envisage a cross-bench position as the most effective means to that end.
TOP takes a long term, evidence based view. Our policies aim to make most New Zealanders better off in the long term.
Our country needs to make hard choices, but in the short term people are afraid of change. The current bunch of politicians are mostly focussed on the short term goal of getting re-elected, so they avoid the tough decisions. Half the time they propose policies that won’t even achieve what they say they will.
Opposition parties propose policies that rarely get anywhere. They hope to get into Government so they can implement then.
A new party on the cross benches is likely to struggle to be listened to on major policies.
The Opportunities Party tax reform page is quite vague and waffly unless you are prepared to drill down into it. It’s introduction:
The current tax regime favours owners of capital and unjustly burdens wage earners. This is not only inequitable, it results in poor utilisation of capital and lower than necessary income and employment.
Nowhere is this more obvious than in the property sector, where speculators and home-owners benefit while those that are renting are punished. It is unfair, pushes up house prices and drives even greater inequality. Ultimately, it is in everyone’s interest that we address the loophole in the tax regime.
So TOP is looking at capital gains tax on property.
Our proposed reform will not collect even one additional dollar in tax – we want to change what is taxed, not the amount of tax collected. Any increase in revenue will be used to reduce income tax rates.
This is confusing. I presume they meant that if tax revenue increases they will then reduce rates so it doesn’t increase any more. Will they give back any additional tax dollars?
Under the reform we propose, around 80% of the public will be better off, the 20% that aren’t can well “afford” it.
Trying to appeal to the majority.
The current system encourages borrowing and speculating on land values. This comes at the expense of investment in our productive businesses, which are held back by a lack of investment.
In the middle of the waffle is probably the key point:
All productive assets – and that includes the house that provides you with your accommodation each year – are or can produce income each and every year. All income should be taxed, whether it is in cash or in kind. By only taxing the cash income from assets, Establishment parties have hurt many people, and in effect given a handout to property owners.
A capital gains tax on all property, including the family home. This would be simpler than CGTs with exclusions, but it would annoy a LOT of voters.
Not only will plugging this leak in the tax regime make tax fairer and boost economic growth it will over time improve housing affordability, by erasing the reason for property speculation.
There is not one single reason for property speculation. Various types of capital gains taxes are used around the world and they don’t stop property inflation.
Plugging the hole in our tax regime will be done gradually to ensure house prices remain stable while incomes grow.
A blanket CGT with gradually increasing rates?
We acknowledge this is a cultural change and some people will struggle to separate their own self-interest from the matter of what’s fair and reasonable.
In other words, many voters will hate it. Not just property owners – if the cost of property ownership goes up then the cost of renting will have to also go up. And if rental property ownership as an investment is discouraged through tax then there will be less rental properties available, pushing up rents even more.
However we believe that a well-informed public is astutely rational.
I doubt they will be well informed by this.
While the property-owning group is a big one, the implications of an ever-rising property to income ratio is that future generations will struggle to rent let alone own, businesses will be starved of the investment capital they need to grow and create jobs, our reliance on foreign debt will keep rising and inequality will get worse.
If anyone has read this far and feels well informed and is supportive of this tax reform please say so.
National has resisted comprehensive capital gains tax, and Labour has also backed off them. A small new party is unlikely to change their minds.
And if you want to be better informed you can download the full policy document (PDF).