The rebuttal of capital gains tax by the Ardern government buries at last a very bad idea, but at the same time it leaves a gaping great hole in our income tax regime that both punishes tenants and stymies business investment, productivity, economic growth and overall incomes.
As she has said herself, it’s her political expediency that has prevented Ms Ardern from acting. She feels the electorate might kick her government out so she has sacrificed her soul for that purpose.
None of this would have been necessary if Labour had paid heed to best practice policy in the first place. In other words if they had accepted that the tax loophole favours owner occupiers of residential property at the expense of everyone else – tenants and businesses. By exempting the home from any consideration by those charged with closing the loophole, the Ardern government ensured the TWG could only come forward with incoherent advice that was second rate at best. And to add to this doomed project she then had the audacity to appoint a politician rather than a tax expert to chair the group. That arrogant incompetence was rewarded by a splinter group in the TWG disagreeing with the Cullen advice. What a circus.
So here we are back to Square One. Labour have made complete dicks of themselves by thumping their chests about getting the tax regime fair as well as efficient and have failed on all counts. They were bound to fail because the process they followed was politically biased and the terms of reference handed to the group utterly compromised its ability to produce best practice policy advice. Only fools would have volunteered to serve on such a charade.
This is the “pig” I referred to back in 2017 – a political party that is so bereft of principle that it refuses to pursue best practice policy rather than political expediency. As a result it dishes up policy options that are the worst of all worlds and ensures New Zealand does not realise its potential – either in economic or equity terms. These types of mediocre, journeyman regimes will always produce policy that is inadequate and fails to deliver the transformational change that will halt New Zealand’s slide down the OECD ladder. National is just as capable of doing the same.
I have admiration for Jacinda Arden on some issues – there are times she achieves where few others would or could. But on economic wellbeing her government is a disaster. Her government, prioritising their own careers, just condemned those of us who are not homeowners to a harder life. Pathetic.
Gareth Morgan is a New Zealand economist and commentator on public policy who in previous lives has been in business as an economic consultant, funds manager, and professional company director. He is also a motorcycle adventurer and philanthropist.