Ardern: “the effect of any (tax) changes will not occur until after the next election”

Suggestions that the Government may raise fuel excise taxes to pay for things like rail, public transport, and cycleways and walkways, has raised questions about commitments made by Labour during last year’s election campaign on certainty over possible tax changes.

NZH (14 September 2017): Labour tidies up tax policy, will delay new changes until 2020

Labour has decided to delay any implementation of changes from its tax working group until after the 2020 election in a bid to stop any further political damage from its tax policy.

Finance spokesman Grant Robertson’s announcement…

…is a reversal of the previous position of leader Jacinda Ardern.

“We will involve the public at every stage of the Working Group, as well as Cabinet and Parliament’s consideration of any changes that arise from it.

“We know it is important to get this right, so we will balance the need for certainty and urgency by ensuring that any potential changes will not come into effect until the 2021 tax year.

“This gives multiple opportunities for public input, and a general election before any new tax would come into effect.

“To avoid any doubt, no one will be affected by any tax changes arising from the outcomes of the Working Group until 2021.

“There will be no new taxes or levies introduced in our first term of government beyond those we have already announced.”

Ardern said…

… it was her “captain’s call” to back down from introducing new taxes in a first term of a Labour Government because it was clear the public were concerned.

“I have been driving our campaign and I have taken political risks but I’ve done that because I feel so strongly around the urgency there is around tackling the housing crisis. But I needed to also balance that against certainty for voters.”

Ardern:

“This is about making sure that we are providing certainty to voters, but also there is still real urgency around tackling the housing crisis. So yes I will continue to undertake this work in government, but we have balanced that against the need for people to be certain when they vote around exactly what they will be doing.”

“We will still act on what comes from the Working Group, and that may be legislation or it may not. We’ll still act on the findings of the Working Group, we’ll go through a big process with both the public and in Parliament…

…but the effect of any changes will not occur until after the next election.”

Katie Bradford: “If you essentially delay taxes now, will you be able to afford your promises?”

Ardern:

“I want to make really clear, our fiscal plan was never built around any potential revenue down the track from a tax working group, because we had not settled on what we would do in the future. So there is no requirement for any revenue off the back of that tax working group.

“Everything that we have announced in public is already able to be fully funded from the re-prioritisation that we have set out, and it’s all in our fiscal plan.

“I believe I can do the work, get it ready to go, and still provide voters a chance to vote on it before it’s implemented.”

This was in part referring to tax related to housing (Capital Gains tax), and to recommendations coming out of the Tax Working Group.

But Ardern went on to refer to Labour’s whole Fiscal Plan, and to “”everything that we have announced in public”, so i think that voters would consider it disingenuous if Ardern now claims that tax changes like fuel tax done outside the Tax Working Group don’t apply.

Ardern already sounded disingenuous yesterday saying the an increase in fuel ‘excise’ was not a tax increase – see Ardern: fuel increase not a tax, it’s an excise.

Previous Governments have increased taxes after promising not to – the National led Government increased GST after saying they wouldn’t. But that was a measure taken in reaction to a serious Global Financial Crisis they were landed with, and was more or less balanced by decreases in income tax rates.

I’m sure there are more examples going back further, but regardless of what past politicians have twisted and changed, that doesn’t give Ardern or the current Government a free pass for going back on their word.

Similar to ‘it’s not a tax, it’s an excise’, perhaps Ardern thinks it wasn’t a promise, it was an exercise in campaign rhetoric.

Or perhaps she will make another ‘captain’s call’ and defer any changes to tax, including fuel tax, until after the 2020 election.

However she could have an out in the fine print:

“Alcohol, Petrol and Tobacco Levies – will be adjusted as per normal government practice and as set out in Budget documents.” – http://www.labour.org.nz/tax

Will people be happy with that and paying more for their petrol to finance Auckland transport?

And – Labour’s Fiscal Plan, which Ardern clearly referred to, makes no mention of increasing fuel tax, and does not specify or mention at all the fuel levy in their costings.

Ardern: fuel increase not a tax, it’s an excise

When asked about it being a proposed 10% increase in fuel prices, Ardern is on RNZ trying to avoid saying it is a tax, she says it’s an excise.

This sort of playing with semantics is high risk for Ardern.

Especially when they made claims like this during the election campaign: Labour – no new taxes in first term

Labour won’t implement any tax changes until after the 2020 election, finance spokesman Grant Robertson has announced.

“To avoid any doubt, no one will be affected by any tax changes arising from the outcomes of the Working Group until 2021,” Mr Robertson said at Parliament on Thursday morning

“There will be no new taxes or levies introduced in our first term of Government beyond those we have already announced.”

Robertson made it clear there would be no new taxes or levies – but didn’t mention excise increases, so he’s off the hook there. Maybe.

Oxford dictionary: excise

[mass noun, usually as modifier] A tax levied on certain goods and commodities produced or sold within a country and on licences granted for certain activities.

Labour are still ok on this, it won’t be a new excise (tax), it would just be an increase in an existing one.