NZ Politics Daily: 6 July (liberation)

Labour’s likely capital gains tax (TVNZ: Property investors face capital gains tax under Labour) looks set to be the main point of difference between the two main parties at the election. That reporters like Duncan Garner (Labour tightlipped over capital gains tax) describe it as a ‘bold and courageous move’ may owe more to Labour’s previously timid approach on economics and just how far to the right mainstream economic debate has swung in New Zealand. Nearly all commentators acknowledge that capital gains taxes are mainstream in most western economies. As the Dim-Post points out (Political suicide?) there are many more voters affected by Kiwisaver cuts than by a tax on investment properties. Bold or not, it could be an effective strike at National’s economic policy: ‘Now it looks like they finally get it. National wants to finance the rebuilding of Christchurch via asset sales; Labour via a tax on property speculation. This isn’t a hard argument to make’.

For a truly bold view Rob Carr (Implosion a good thing) picks up John Key’s assertion that a capital gains or land tax would cause a property price ‘implosion’ and argues it would actually be a good outcome. Such a view has been strongly resisted by property investors, bankers and real estate agents who all prospered within the housing bubble but Labour’s policy shows the political centre is catching up with what most voters figured out a while ago – the years of debt fuelled spending and speculation are over.

However, Labour’s proposed CGT appears to be a relatively mild version. It seems to be the sort of ‘CGT you have when you don’t really want a CGT’ – because it exempts the so-called family home. This might be seen as a major flaw in the proposal. CGTs can be very complex – and that’s the big downside of them – they lead to tax avoidance and creative accounting. So by including a major exemption like the family home, you open up a huge potential loophole, and it’s one that can greatly reduce the effectiveness of the tax because it can be extremely difficult to define a ‘family home’ in a watertight way. If Labour truly wanted to be bold, not only would it not allow exemptions to its CGT – as in most western countries – but it would also propose a land tax and a financial transactions tax.

Meanwhile the big infrastructure bills in Christchurch and Auckland must be paid (Andrea Vance: Infrastructure blueprint ‘step to privatisation’ & TV3: Resilience a focus of new infrastructure spending) so it appears Labour will tell voters that they have to decide between National’s slash and sell approach and Labour’s speculator surcharge.

Some politics are very much business as usual with Labour and National voting together to further increase the SIS powers of surveillance (SIS given stronger powers). And also, as usual, the Greens, led by soon to be retired spokesperson Keith Locke, were the only party to oppose it.

The news that ex-MP David Garrett will not face prosecution (Belinda McCammon: Ex-MP David Garrett cleared of perjury) will be cold comfort for Act. First Garrett and then leader Rodney Hide were sacrificed to revive dismal poll ratings – 10+% was the target after Brash’s ‘make me your leader or I will destroy you’ coup. The latest polls (David Farrar, Stuff: Where the latest polls point) show Act at 2.5% and only 3 MPs. There has been plenty of pain for no gain to date.

Note: Today’s NZ Politics Daily is being distributed early, as I’m off to Wellington today to present a public lecture entitled ‘A Hollow Democracy? Why New Zealand elections are increasingly meaningless to voters’ tonight at 6pm, at the James Cook Hotel and tomorrow night in Auckland, 6pm, at 385 Queen St. Consequently there will be no NZPD tomorrow. [Continue reading below for a full list of the highlights of NZ Politics Daily]

Below are the internet links to all the NZ politics material from the last 24 hours that are either informative, insightful, interesting or influential. This list and the links are taken from a fuller document, NZ Politics Daily, which is emailed out, Monday to Friday, to various researchers, academics, journalists, MPs and so forth. The document is purely for research purposes only, and if you would like to be on the subscription list, please email: bryce.edwards@otago.ac.nz

Labour’s capital gains tax

TVNZ: Property investors face capital gains tax under Labour

Duncan Garner (TV3): Labour tightlipped over capital gains tax

NZPA: Labour set to reveal tax policy

Alex Tarrant (interest.co.nz): Labour leader Goff says tax policies to pay for spending plans will be released in next few weeks

Vernon Small (Stuff): Capital gains tax in Labour’s sights

Adam Bennett (NZH): New property tax will hit tenants, says investor lobby

John Hartevelt (Stuff): Labour’s big policy pay

RNZ: Labour to campaign on capital gains tax

The Dim-Post: Political suicide?

Rob Carr (Political Dumpground): Implosion a good thing

No Right Turn: A capital gains tax?