Tax reform and capital gains tax still unresolved

According to media claims the Cabinet has received copies of the Tax Working Group recommendations, but it could take some time to find out what they are going to decide to run with. – or what the are allowed to run with by Winston Peters.

Group chairman Michael Cullen has suggested that tax changes could be decided in Parliament this term ready to come into effect in April 2021 providing Labour gets a mandate in next year’s election. But Grant Robertson has warned that it could take some time to work through the recommendations with Labour’s partner parties in Government.

Audrey Young (in Major challenges for ‘exasperated’ Ardern):

Robertson played Robin to her Batman at the post-Cabinet presser, initially fronting on the Government response to the insurance industry inquiry.

The subject quickly changed to the final report of the Tax Working Group and its promised capital gains tax which is due to be handed to the Government this week.

Robertson patiently continued his mission to change the language over the tax by calling it a “capital income tax” rather than a “capital gains tax” — an attempt to equate it to all other income.

Ardern became impatient when questions turned to the undisputed veto that NZ First will have on any capital gains tax — the Greens have been unequivocal supporters and NZ First longstanding opponents.

Apparently a capital gains tax is just like every other issue the Government debates, and requires the agreement of all three parties.

Not just apparently. Tax reform is far from a done deal. It is a Labour only promise, but with no public agreement with either NZ First or the Greens.

Stuff:  Decision on capital gains tax will take a wee while, Grant Robertson warns

There will be no quick decision from the Government on whether to implement a capital gains tax, Finance Minister Grant Robertson has signalled – noting Labour would have to work that through with its coalition partners.

The Tax Working Group (TWG) chaired by Sir Michael Cullen is understood to have completed its report for the Government, with a “clear majority” favouring subjecting capital gains from the sale of property, shares and businesses to income tax.

But Robertson told RNZ the Government would need to take its time to read the TWG’s report “work through the details of it and work out what package we can agree to as a coalition government”.

Remarkably the Labour-NZ First coalition agreement did not mention the Tax Working Group, nor CGT, and neither did Labour-Green Confidence & Supply Agreement, so the recommendations of the TWG and what Labour would like to do will all need to be negotiated with Winston Peters and NZ First, as well as with the Greens. This alone is likely to take time.

Inland Revenue said on Tuesday morning that the report had not yet been delivered to the Government, and no date has been set for it to be made public, but sources said the report was being read in the Beehive.

Robertson said he expected to get the report by the end of the week but he and Prime Minister Jacinda Ardern did not rule out a coalition partner vetoing any legislation.

“There is a wee ways to go before the final decisions about this report will be made,” Robertson said.

“As we do with all these reports, we will take a look at it and put it out with a few interim comments from us,” he said.

So it could be some time even before the report is made public. Labour want to work out how to try to sell it before they advertise it.

Cullen said in December that he believed Parliament would have time to pass legislation paving the way for any proposed tax changes before the election, so those changes could take effect from April 2021.

Theoretically Parliament may have time, but Labour won’t want to take any tax changes to Parliament without agreement from NZ First, and the Greens.

Politik: And now the hard part; getting Winston to agree to a capital gains tax

Prime Minister Jacinda Ardern confirmed yesterday that iot was still the government’s intention to bring forward legislation for any tax changes before the end of its current twerm though those changes would not come into effect until after the enxt election.

But whether it will propose a capital gains tax will now depend on whether it can persuade NZ First to agree.

Ardern and Finance Minister Grant Robertson were coy yesterday on whether they thought they could win that derbate.

Meanwhile NZ First Leader, Winston Peters, is not saying much beyond repeating his 2017 assertion that we already had a capital gains tax.

“What i tried to point out then was that we had a cpaital ghaimn tax and that we had had one for a long time,” he told POLITIK last night.

“Now the question is are you talking about broadening it.

“The position of New Zealand First is that we will wait for the report, we will evaluate it and then we will give our view.”

Tax reform has already limited by Labour in their terms of reference for the TWG. They will presumably also want any changes to fit within their wellbeing agenda.

It will only happen if it also fits with the electoral wellbeing of Winston Peters and NZ First

Leave a comment

21 Comments

  1. man.u

     /  30th January 2019

    Why get NZF and Greens approval now if it won’t get implemented till next year when all agreements will get renegotiated. I’m interested in their proposal and so they should come out with their best policy and let public decide whether we like/hate it.

    Reply
    • Blazer

       /  30th January 2019

      what tax do the public…’like’?

      Reply
      • man.u

         /  30th January 2019

        Tax that’s fair. If, for example, income tax was reduced do you think the public would like that.

        Reply
        • Blazer

           /  30th January 2019

          I don’t believe the public like income tax at all.

          If the tax on very high earners was raised I think the public would like…that!

          Reply
          • High Flying Duck

             /  30th January 2019

            And there’s the answer to your question Blazer – the only tax people like is one that affects ‘other people’ and not themselves.

            Reply
            • Blazer

               /  30th January 2019

              too true…tax the feathers off High Flying…Ducks!😁

            • Duker

               /  30th January 2019

              look at the resistance IRD is getting to move ( small) employers to pay their tax they deduct from employers EVERY PAYDAY.
              Rather than when it suits…many get into arrears which is financial suicide.

            • High Flying Duck

               /  30th January 2019

              Duker, IRD are only getting returns to be filed every payday.
              Actual payments are still 20th of the following month, so no change.
              It’s a dogs breakfast and only being done for statistical purposes.

  2. Duker

     /  30th January 2019

    The TWG terms of reference would have had to been agreed by NZ First in the beginning, it wouldnt have been a labour only effort

    members are more than the usual labour friends

    Professor Craig Elliffe, University of Auckland
    Joanne Hodge, former tax partner at Bell Gully
    Kirk Hope, Chief Executive of Business New Zealand
    Nick Malarao, senior partner at Meredith Connell
    Geof Nightingale, partner at PwC New Zealand
    Robin Oliver, former Deputy Commissioner at Inland Revenue
    Hinerangi Raumati, Chair of Parininihi ki Waitotara Inc
    Michelle Redington, Head of Group Taxation and Insurance at Air New Zealand
    Bill Rosenberg, Economist and Director of Policy at the Council of Trade Unions
    Marjan Van Den Belt, Assistant Vice Chancellor (Sustainability) at Victoria University of Wellington

    if anything , the tax avoidance industry seems well represented by big firms

    Reply
    • Duker

       /  30th January 2019

      Plus Cullen as Chairman

      Reply
    • High Flying Duck

       /  30th January 2019

      Good to see small business being so well represented there, isn’t it?

      Reply
      • Duker

         /  30th January 2019

        Didnt ‘they’ turn down the opportunity ?
        if a spokesman for a small business group did join, would probably find a horses head in their bed.

        Reply
  3. Blazer

     /  30th January 2019

    worth a look…

    Reply
    • Kitty Catkin

       /  30th January 2019

      I only know one billionaire. He earned it all himself with brains and ability; he’s from a middle-class family who weren’t rich by any means. He’s a very nice man and very generous, and doesn’t put on side; I didn’t realise that his name wasn’t spelt as I imagined and that he was, in fact,____________ _______. It was a real surprise to discover that I’d been entertaining that person and not someone with an Irish name that sounds the same.

      People who assume that all rich people are greedy are showing their envy.

      Reply
    • Pink David

       /  30th January 2019

      He’s not a very good historian.

      Reply
  4. Gezza

     /  30th January 2019

    Group chairman Michael Cullen has suggested that tax changes could be decided in Parliament this term ready to come into effect in April 2021 providing Labour gets a mandate in next year’s election. But Grant Robertson has warned that it could take some time to work through the recommendations with Labour’s partner parties in Government.

    Grant is the brains of the Labour Parliamentary team. Jacinda is their front woman. Grant knows he needs to test the waters thoroughly before deciding whether to make promises about tax changes straight after the election. If the seas look rough or uncertain it’s better to not scare the horses, dissemble about it, & wait to introduce any changes the swing voters may not like in year two of their second term.

    Reply
    • Blazer

       /  30th January 2019

      Wrong…David Parker is the …brains.
      Robertson is Labours Joyce…quick thinker,eloquent,trouble shooter.

      Reply
      • Gezza

         /  30th January 2019

        I don’t think David Parker is particularly brainy. Just because wears specs & looks a bit geeky doesn’t make him an intellectual, you know.

        Reply
    • Duker

       /  30th January 2019

      English and Joyce were the brains of national – Key was the front man.
      before the election in 2008 – he just spoke gibberish on financial issues. I remember a story where he was interviewed by a serious print journalist, and English it was mentioned, sat in the background as a chaperone.
      Joyce more recently mentioned how sometimes he would get a surprise calls from Key ‘ over ‘something he had just said’

      Back a bit further I doubt Bolger and Shipley were thought of as ‘the brains’ of their governments.
      Bridges certainly isnt the brains behind the current national party….. thats their problem, it isnt Adams or Bennett either or Woodhouse ..or Mitchell…

      Reply
      • High Flying Duck

         /  30th January 2019

        If only National had a Twyford or a Curran to bolster their intellectual stocks eh?
        Or a Kelvin Davis to light up the chamber with soaring rhetoric? Or a Lees Galloway to make the tough calls with unerring precision?
        But alas…

        Reply
  5. Alan Wilkinson

     /  30th January 2019

    This is a smart move by Bridges – tackling the high tax parties head on:
    https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12198604

    Reply

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