Ardern argues in defence of more complicated taxes

Some people (including me) hoped that a decent review of New Zealand’s tax (and welfare) system would lead to simplifications. Complexities add to costs, and they tend to lead to distortions and unfairness – rich people are generally more successful at finding ways around complex tax law.

Jacinda Ardern keeps pushing more ‘fairness’ as a primary reason for tax reform, and she did this again in Parliament yesterday, but she also appeared to concede that this justified a more complicated tax system.

David Seymour: Is it possible that a proposed capital gains tax could be revenue-neutral?

Rt Hon JACINDA ARDERN: That is certainly the request that we made of the Tax Working Group. It was to consider options around making the package revenue-neutral.

That sounds lie a very fuzzy lack of commitment to ‘revenue-neutral’ tax changes.

David Seymour: Why would a Government request advice that would make a tax system more complicated, to get the same amount of revenue?

Rt Hon JACINDA ARDERN: Two points: firstly, to make the tax system fairer—which seems like a pretty good reason to members on this side of the House—and secondly, almost every member of the OECD manages to deal with what is being asserted to be complicated; why can’t we?

Ardern didn’t dispute “a Government request advice that would make a tax system more complicated” – in fact she justified it  “to make the tax system fairer”.

The more complicated it is the greater the chance of unfair anomalies and loopholes.

On fairness and unequal pay for equal work:


David Clark on fairness

An interesting column by David Clark after returning from his Eisenhower Fellowship exchange trip to the United States. He compares freedom and fairness values here and in the US.

Fairness the hallmark of our country

Dunedin North MP David Clark considers the balance between fairness and freedom.

If you believe New Zealand’s egalitarian dream is dead, I want to argue that belief in its underlying principle of fairness is the single most important determinant of our country’s future.

He concludes:

If we wish to become a more prosperous nation, we need to strengthen our reputation for fairness, not undermine it. A growing gap between rich and poor makes New Zealand a less attractive destination for talent.

To make New Zealand a more attractive place for talent to live, to ensure we continue to have a privileged place at the table in trade negotiations, and because it fits with our national identity, our country needs to adopt policies that create a rising tide that really raises all of the boats, not just a privileged few.

Having a break away from his Labour colleagues seems to have helped Clark take wider less political view, although his ideological leanings still show. The “privileged few” is a very loaded statement, and those who have earned their wealth through hard work will argue against being labelled privileged.

Fairness is important, but it isn’t simple. Something that seems fair to one person may not be fair on another.

Where the ‘fairness’ argument seems to be most contentious in New Zealand is how fair is it to take money off some people and give it to others? A decent society must have this to a degree – but the the degree is highly debatable.

As important as the balance between freedom and fairness is how fair enforced ‘fairness’ or income equalisation is.

Some will claim the right promote freedom and the left promote fairness, but it’s not that simple.

Many will claim it is unfair to take too much of their earned income (via tax) and give it to people who aren’t earning.