Shaw sort of talks tough on tax and other coalition demands

Following a ‘pledge’ by Grant Robertson that tax-wise Labour “we will only implement the changes that Labour is campaigning on” next term – see Labour’s underwhelming tax policy – Green leader James Shaw sort of talked tough, saying Greens would consider not forming a coalition if they didn’t get what they wanted.

Shaw said that a wealth tax would be ‘a top priority’ when asked if it would be a bottom line.

Stuff: Labour rules out Green Party’s wealth tax in any Government it forms

The Labour Party has ruled out implementing the Green Party’s wealth tax.

Finance Minister Grant Robertson said no new taxes or other changes to income tax would be introduced in the term.

He was asked if that included proposals from possible coalition partners, such as the Green Party who are campaigning on a substantial wealth tax on millionaires.

“This is Labour’s tax policy. We are committing to not implementing anything other than this if we are in Government,” Robertson said.

He was asked again if this meant he was ruling out giving some ground to the Green Party in possible coalition talks.

“What I’m saying is that this is the policy that Labour is campaigning on, and we will only implement the changes that Labour is campaigning on,” Robertson said.

Polling consistently over 50% Labour can probably afford to talk as if they will be in a position to do what they like next term, which is nowhere near enough on tax, certainly not transformational or reforming.

But Greens are desperate for votes to get them over the threshold to keep them in Parliament, and need to move support from Labour to do that, so are trying something they have done little of before, talking tough.

ODT/NZH: Greens prepared to play hard ball on forming next Government

The Greens are prepared to forego a coalition or confidence and supply arrangement and sit on the crossbenches if post-election talks do not go their way.

Co-leader James Shaw made the comments on Thursday, saying the only post-election deal that was off the table completely was one which would give National power.

However, he said if the Greens held the balance of power it was “always a possibility” that it would walk away from negotiations with Labour if they could not get the gains they wanted.

If there was no coalition or confidence and supply agreement, that would force a minority Labour government to seek the Greens’ support for legislation on a case-by-case basis.

He wouldn’t say what the Greens’ bottom lines in those talks were, but said a wealth tax was a “top priority”.

First the Greens have to get enough votes to get back into Parliament. They also need to hope that Labour don’t get enough votes to have a one party majority (which would enable them to do as they please).

And they also have to learn to do tough negotiations, something they seem unfamiliar with. Within the Green Party they make decisions by consensus, which is quite a different skill to doing inter-party coalition negotiations.

Time will tell whether they get enough votes, and if the do whether they can walk the tough talk.

Shaw also made other indications of demands.

He would also be pushing for co-leader Marama Davidson to be a minister and suggested a Green MP hold the agriculture portfolio.

If Greens are in coalition then Davidson should be one of their ministers, bu this is a different approach to this term when they chose for Davidson to lead from outside Government.

I’d be very surprised if Labour gave Greens the agriculture portfolio.

Shaw said a new Labour-led government would need to be in partnership with the Greens for it to be truly transformational.

“I think, in the next Parliament if Labour and the Greens are able to form a government together, then you will see a truly progressive government for New Zealand.”

The Greens need to push this line to take votes from Labour, but it provides ammunition to opponents, who will say that their are risks with a Labour+Green government getting radical, but there’s been no sign of Labour going anywhere near radical. Instead they look very centrist conservative.

If the Greens were in a position to negotiate a post-election deal, Shaw said it would be up to the party’s members to give any deal the nod.

It makes tough negotiations difficult if the negotiators have to refer to party members to confirm and deals.

Shaw:

“If you look at the policies we have released so far … those give you an indication of where we want to be able to play a role in government.”

He went on to specifically name-check its wealth tax policy as well as its minimum income scheme, clean energy and its upcoming agriculture policy.

Asked if the Greens wealth tax plan was a “bottom line,” Shaw said that it was a “top priority”.

Labour have made it clear it is not an option at all for them.

Greens have some tough times ahead. First they have to make it back into Parliament. Then if they do they have to hope Labour don’t have a majority. They will also hope NZ First are out of the reckoning in coalition negotiations.

If they are in a position to negotiate they then have to see if tough talk can become tough negotiations.

One risk for the Greens with Shaw’s stance – if Labour get enough votes to give them a majority on their own they can do what they like with tax policy, and can hardly roll over on it for the Greens.

If this happens the Greens have virtually ruled themselves out of being included in Government if Labour offers that option.

Green reaction to Labour’s tax policy

Labour announced their tax policy yesterday that will barely change anything – see Labour’s underwhelming tax policy.

One of the strongest critics was the Green Party.

From RNZ Labour pledges to raise tax on earnings over $180k

Greens co-leader James Shaw says Labour’s policy does not address “the growing wealth gap and inequality in Aotearoa”, or help pay for the Covid response.

“The Greens believe we should ask those who are benefiting the most to chip in a bit of what they’ve gained to help the people who need support during this crisis.

“We know that a huge accelerator of this inequality is our broken tax system that taxes people who earn but not people who own,” Shaw says .

Greens emailed Labour’s announcement is not enough:

Earlier today, the Labour Party announced their proposal to introduce a new top tax rate. Fixing the way we tax here in Aotearoa is long overdue, but this isn’t the way to do it. Labour is proposing patchwork solutions when visionary change is needed.

Too many of us are struggling to put a roof over our heads, food on the table, or pay rising rents and bills. Tinkering around the edges of an already broken system isn’t enough to address the growing wealth gap and inequality — and it puts us at risk of the gap growing even further. 

We know a huge accelerator of inequality in Aotearoa is a broken system that taxes people who earn, but not people who own. Unless we fix this, the lucky few will continue to amass wealth without paying their fair share while the rest of us struggle to get by. 

It doesn’t have to be this way.

Earlier this year we announced our Poverty Action Plan: a whole new approach to tax that makes sure the wealthy pay their fair share so everyone has what they need, when they need it. 

A small 1% tax on the wealth of millionaires means big change for the rest of us. It’s a simple and fair way to even the playing field and unlock the resources all of us need to thrive and participate fully in our communities. 

By rewriting the tax rules, we’re going beyond the old, broken system and guaranteeing that everyone who needs it, no matter what, has a minimum income they can rely on. Support shouldn’t be conditional and our plan isn’t either. That means support for students and people out of work, extra help if you’re sick or disabled, and simple payments for families so all kids can thrive.

When we announced our plan, Labour was dismissive and said that it relied on “heroic” assumptions. It’s not enough for us to settle for broken systems — a compassionate system is possible and we’re the only ones with the vision and the plan to make it a reality. This is why the Greens need to be at the table in the next Government. 

We are at a crossroads. We can hit reimagine Aotearoa exactly how we want it. Now, more than ever, we know how much we can achieve when we work together — this is our chance to create change that benefits all of us.

But again Labour has been dismissive of Green tax policy. Grant Robertson:

Robertson is promising no other increases or new taxes, but was asked whether that would stand if Labour needed to negotiate post election for support, with a party like the Greens, that has a more aggressive tax policy.

“This is the policy that Labour is campaigning on and we will only implement the changes that are in this policy,” he said.

So he has effectively told the Greens to get stuffed.

With Labour polling at over 50% he can probably be arrogant.

And with Greens polling mostly close to the 5% threshold and 3.2% in the latest (UMR) poll they may have little or no say in the next Government.

Labour’s underwhelming tax policy

Grant Robertson announced Labour’s tax policy yesterday, not Jacinda Ardern. There’s not much to it, and it was criticised from the left and the right.

So what are the changes? Is Labour putting up taxes?

Our balanced plan protects vital services like education and health and keeps a lid on debt. 

Our three tax policies are:

– A new top income tax rate of 39% – only affecting income over $180,000 

– A freeze on fuel tax increases and no new taxes for the entire term

 – Closing tax loopholes to make multinational corporations pay their fair share 

Just the 2% highest earners will pay more tax – this means MPs (excluding party leaders and ministers) will avoid the higher tax.

The pledge not to increase any other tax in their next term actually means that with bracket creep middle income earners will continue to be taxed at a slightly higher overall tax rate with every increase in their income. This has been happening since the last lower bracket adjustment about ten years ago.

Governments have been promising to ‘close loopholes’ used by multinational corporations for many years, with little changing.

The projected increase in tax take will be only about half a billion dollars a year, which won’t come close to paying back the many billions of dollars borrowed to address the Covid Pandemic.

There appears to be nothing new to try to address property assets – Labour’s announcement mentioned only what they have already done, which seems to have done nothing to reduce property inflation.

They continue to promote ‘fairness’ – “We’re improving the fairness of our tax system to make sure everyone is paying their fair share”. Fairness is in the eye of the payer – most people think it’s fair for others to pay more tax, not them.

National and ACT and others tending right criticised the higher tax bracket.

Goldsmith, Seymour slam higher tax rates

Labour’s opponents say more tax is not the answer to the economic challenges facing New Zealand.

“No country’s ever taxed its way out of recession,” National’s Paul Goldsmith says.

“And this is classic Labour Party policy, spend more, tax more.”

“And there’s a very big question as to how much actual revenue will be gained because this will be great for tax planners and accountants to work their way around.”

Goldsmith also warned this is “just the beginning”.

ACT leader David Seymour said the new rate announced by Labour would raise little revenue and describes it as “divisive populism”.

“Jacinda Ardern likes to say we’re all in this together, but Labour is picking on a small group of New Zealanders to fund the Covid-19 recovery.

“Labour is telling young New Zealanders ‘if you study hard, get good grades, get a good job, save money, and invest wisely, we’ll tax you harder’ – that’s the wrong message,” Seymour says.

One valid criticism was that the Trust tax rate was not being increased so would be 11% lower than the highest bracket. This is likely to increase the use of trusts to try to avoid tax.

The top bracket will also increase to significantly more than the business tax rate, which will also encourage ‘management’ of income and assets to try to reduce tax.

Greens were amongst the strongest critics – see Green reaction to Labour’s tax policy.

But on current polling Greens and NZ First look like struggling to make the threshold and may not be in the next Government.

The latest UMR poll (25 Aug – 2 Sep 2020):

  • Labour 53%
  • National 29%
  • ACT 6.2%
  • NZ First 3.9%
  • Greens 3.2%

It’s looking like Labour may be able to govern alone, or at least with a majority. And they are acting like they believe that will happen.

Robertson is promising no other increases or new taxes, but was asked whether that would stand if Labour needed to negotiate post election for support, with a party like the Greens, that has a more aggressive tax policy.

“This is the policy that Labour is campaigning on and we will only implement the changes that are in this policy,” he said.

That could be seen as confidence or arrogance.

TOP tax policy

The Gareth Morgan Opportunities Party is promoting tax reform as one of their policies. They say it will be a fairer tax system – but the 20% of tax payers who will pay more may not agree.


The Opportunities Party tax reform

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.

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.

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.

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.

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.

At TOP, we acknowledge that all productive assets generate income (either in cash or kind) and by deeming that they produce
a minimum level of assessable income, such capital will be deployed in the most efficient manner. This is critical for maximising jobs and incomes. Those that already declare at least that level of income will be unaffected. Those that don’t, will pay more.

Plugging the hole in our tax regime will be done gradually to ensure house prices remain stable while incomes grow. 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.  However we believe that a well-informed public is astutely rational. 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.

That is unacceptable to fair and rational-minded New Zealanders. Given only 20% of New Zealanders would bear the burden of this change – and we are the most able to afford it – it’s a small cost to improve the lives of many.

Full policy document

Five Reasons the Elderly Should Not Fear TOP’s Tax Reform Package