A ten and twenty dollar note rests on a table with a two-dollar coin on top of it.
Opinion

Rachel Smalley: Capital gains flip-flop is why we don't trust politicians

David Parker, the Revenue Minister, has given special powers to the commissioner of the IRD to look at the tax history of wealthy individuals. He's trying to gauge if, or how, they're paying tax. 

Are they paying a smaller percentage of tax in comparison to those less wealthy than them? He's been working on this little project for over a year. 

The goal, presumably, is to see how Labour can tax some of that wealth or income that it's not currently taxing. 

What I'm curious to understand is how Parker plans to make the tax system fair. That's all you should ever be trying to achieve with a tax system - it needs to be fair. 

Now, if fairness is the goal, well the horse has bolted somewhat under the leadership of Jacinda Ardern. 

You will remember, Labour campaigned on a capital gains tax for many, many years and once they were in power, they dropped it. They couldn't reach an agreement with New Zealand First – so plans for a capital gains tax were canned in 2019. 

But, here’s the thing, why did Jacinda Ardern categorically then rule it out under her leadership? You'll remember John Key did the same with the retirement age and said it would never be increased under his leadership. Well, Ardern has done the same with the capital gains tax and says it will never be introduced as long as she is Prime Minister.

That's a shocker. That has always floored me. A capital gains tax is a fundamental tool in the 'tax tool belt' of the left. Ardern threw all of it out the window, and now David Parker is looking at ways to tax the wealthy when a capital gains tax would have solved his issue. 

Parker says there is inequality in New Zealand. Of that, there is no doubt. However, what I question is, does focusing on the super-wealthy and finding ways to tax them address inequality?

That's the question for me, because I don't think it does. If you want to address inequality, you have to look at wage inequality, you have to help lift the salaries of those who are scraping by because as we know, the cost of living and purchasing power is one of the foundation factors that fuels inequality. If you want to find a way to tax someone's sharemarket portfolio, knock yourself out. However, that won't help those living in poverty. That tax take won't trickle through to them. Not in a million years. It will be sucked into the vortex of Labour's multi-billion-dollar spend and debt cycle. It won't do anything to address inequality. 

Also, what has never sat well with me is Labour's sneering dislike of anyone who has been successful. Peter Beck from Rocket Lab. Rod Drury who created Xero. Peter Jackson, the film director. Jan Cameron who founded Kathmandu. 

Labour seems to take this position of 'get them' - tax them all. Get their money, with little understanding or acceptance of how wealth also contributes to and enables our economy. It drives it. It employs people. It creates industry. It contributes to GDP.  It employs people. That seems to pass labour by. 

And also, think about how those with wealth contribute to this country. 

They help to fund St John Ambulances. It’s the same with Starship Hospital. How is it that we can’t fund some of the life-saving, important infrastructure at a children’s hospital? We have to rely on wealthy, successful New Zealanders to provide that facility for our children.

I one hundred percent believe in a fair tax system but the cynic in me also shakes its head at a government that campaigned for so long on a capital gains tax, since 2011, then dumped it once in power. 

This people, is why we don't trust politicians. Stand by your words. Stand by your policies. Honour the promises you made when you were voted into power.