It’s a phrase one never thought to hear again, except perhaps from some quick-witted grandmother on the sidelines watching a seethe of diminutive and enthusiastically muddy young rugby players.
One minute ACT leader David Seymour was arguing the case for taking up the whole of next year’s Parliamentary select committee processes on his doomed Treaty bill.
It would, he argued, cost nothing, since they would be sitting anyway. Next minute, and even more speciously, he was outlining a trickle-down consultation process that would go through enough filters for it to escape the notice of “the great unwashed”. Whoever they may be.
In far more nuanced news over recent weeks, ANZ’s chief executive Antonia Watson told RNZ’s Guyon Espiner the time had arrived for a capital gains tax (and got a swerve from Prime Minister Christopher Luxon for it) and the Inland Revenue Department (IRD) announced it is consulting on the future of the tax system as part of its next long-term insights briefing to inform coalition ministers of revenue and finance.
Its consultation document says it will consider the pros and cons of taxes on payroll including social security contributions, land, real property, wealth, inheritances or estates, turnover and transactions, and differences from existing bases.
Officials said New Zealand was unusual among OECD countries for not having a general tax on income from capital gains and that New Zealand’s income tax base was broad but the lack of a capital gains tax was a clear gap.
Labour is also looking at its tax policy and is considering capital gains, wealth or capital income taxes.
The consensus seems to be that capital gains tax (CGT) would be a simple way to apply tax. “People talk about the complexity of a CGT but I don’t buy that,” tax expert Terry Baucher told RNZ. “Before 1949, land tax, gift duties and estate duties were four percent or five percent of the country’s tax take.”
NZIER chief economist Christina Leung said a broad-based CGT would be sensible if it was administratively simple.
Wealth and inequality expert and author Max Rashbrooke, interviewed for the same story, said New Zealand clings to a view of itself as an egalitarian nation. “We tell ourselves that inequality and class division in the United Kingdom and America doesn’t apply here and wealth has historically been mostly hidden from view.
We even lack the language for talking about it, he says.
“In America, there’s a discourse about plutocrats, in Britain people are very used to talking about the nobility and classes. In New Zealand, we just don’t have that tradition.
“We used to be an egalitarian country even though we’re not anymore – our distribution of income and wealth is more or less indistinguishable from Britain’s.”
New Zealand’s wealthiest five percent of households own about 37 percent of all its wealth, according to Stats NZ, he said. “They own a third of all the productive capital in the country and it’s not something we think about often. A small number of people have a huge level of control over the economy.”
He said tinkering with capital markets, investment signals and wealth taxes will redistribute income, but it will not necessarily redistribute wealth.
“As well as having policies for generating wealth as a country, you also have to have policies for distributing it,” he says.
“I would have things like a kid’s KiwiSaver scheme so that every child is having wealth built behind them right from birth, so they enter adulthood with some kind of stake behind them that they can convert long term into housing or retirement income or entrepreneurship.”
I came across the Seymour interview while looking up the segment in Jack Tame’s Sunday’s Q&A with economist Ganesh Nana.
Nana was concerned about a “fixation” on public spending when government debt was a “relatively small proportion” of overall national debt.
“I am saddened that the Treasury continue to focus on the fiscal debt. Where is the connection to the external debt if they’re serious about economic structural deficit? That’s the big one,” said Nana.
“There is that challenge, and it’s close to my heart as an economist, to actually get out that understanding of productivity as well as economics, because for too long economics has been seen as owned by business, and that’s been to the detriment of business.
“We’ve always talked about growth as more. I want growth to be better, so I actually want to have better food that is distributed across all of New Zealand rather than just more food which we have to export.
“This a shame on our country and in particular on the economics discipline because, as economists, we should be able to solve that,” he said.”
• Liz Waters
