John MacDonald: Will they, won't they? Labour's capital gains tax decision

I reckon former Labour Party leader David Cunliffe might have just done the best sell job on a capital gains tax that any politician in New Zealand —or anyone for that matter— has ever managed to do. 

It might have something to do with the fact that taxes —of any sort— get people rather fired up, and a lot of people are anti-capital gains tax. In my experience, even people who say they’re on the left side politically hate the idea of paying more tax than they are already. 

But I’ll tell you what, I reckon they’ll be feeling differently after comments from David Cunliffe. 

He was talking on Newstalk ZB this morning ahead of the Labour Party's annual conference this weekend where one of the big things on the agenda is a vote on whether the party will go further with the development of a capital gains tax policy and potentially a wealth tax policy.  

And he painted a picture of a capital gains tax scenario that I think would be far more palatable to most people than how capital gains has been discussed before. Which is allowing to offset a capital gains tax against other income taxes.  

“I think it’s very possible to, over time, use it to offset income tax. So you know, your teachers, doctors, your farmers can take less growth of or a cut in income tax in exchange for realised capital gains —usually excluding the family home— being brought in at some sort of rate. Just broadens the tax base, and we can give offsets elsewhere.” 

Now that in my opinion would do far more favours for most wage and salary owners than some of the tax changes the current Government has introduced.  

Of course, whenever you start talking about tax, reality is more complex than the theory. And even I’m starting to wonder how this scenario David Cunliffe talked about this morning would practically work. 

But, theoretically, I think people would be less against a capital gains tax if they knew they could offset it against their wage or salary. 

The argument for a capital gains tax has always been that it is unfair that we treat different types of income differently. So it's a no-brainer that we do something about it. 

David Cunliffe reckons most voters feel the same. What about you? 

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Episode Transcript

Speaker 1 (00:06):
You're listening to the Canterbury Morning's Podcast with John McDonald
from News Talk ZB.

Speaker 2 (00:13):
I reckon former Labor Party leader David Carliff. I reckon
he might have just done the best cell job on
a capital gains tax that any politician in New Zealand,
or or actually anyone for that manner, the best cell
job anyone has ever done on a capital gains tax. Now,

(00:33):
that might have something to do with the fact that
taxes of any sort get people really fired up, and
people have been a lot of people are anti capital
gains tax. My experience is that even people who say
they're on the left side of things politically, even they
hate the idea of paying more tax than they are ready.

(00:53):
But I tell you what I reckon, they will be
feeling differently after comments by David Cunliff Todana. The reason
he was talking about this with Mike this morning is
it was just after sixth thirty this morning. The reason
he was doing it is that the Labor Parties having
its annual conference in christ Church this weekend and one
of the big things on the agenda is a vote

(01:15):
on whether the party will go further with the development
of a capital gains tax policy potentially a wealth tax
policy as well, but David Cannliff not so fast on that.
And so it was just after six point thirty this
morning David Carneliff was talking to Mike and he painted
the picture of a capital gains tax scenario that I
think would be far more palatable to most people than

(01:40):
how it's been discussed or presented before.

Speaker 1 (01:43):
Now.

Speaker 2 (01:44):
Now this might have been intentional on his part, who knows,
or it might have just been his response to the
questions that Mike was asking, particularly questions in relation to
the idea of whether a capital gains tax could be
offset in any way. This is the game changer, I
reckon and changing public opinion. And here's what he said
about that, which, as I say, I think is the

(02:06):
best sell job on a capital gains tax anyone has
ever done. Have a listen to this.

Speaker 3 (02:11):
I think it's very possible to over time use it
offsets and income tax. So you know, your teach us, doctors,
your farm and your farmers can take less growth of
or a cut in income tax in exchange for realized
capital gains usually excluding the family home being brought in
at some sort of rightious bordance tax basely can give

(02:31):
offsets elsewhere.

Speaker 2 (02:32):
Now that in my opinion, in my opinion, would do
far more favors for most wage and salary owners. And
so the tax changes the current government has introduced, now
you might have done better out of those changes than
most people have ended up about twenty dollars better off
each week. But if you're an average Joe, it would
be a far better deal if you were able to
pay less tax on your work income on the basis

(02:56):
that this is offset with a capital gains tax payment.
That's my belief. And of course, whenever you start talking
about tax reality is more complex than the theory, and
and even now I'm trying to resist the temptation, but
even now I'm starting to question how the scenario David
to Come have talked about would practically work. But let's
not get too bold down that. But theoretically, I reckon

(03:19):
people would be less anti capital gains tax if they
knew that they would have more money in their pocket
from their income, that they would pay less income tax
on their wages and salaries. You see, the argument for
a capital gains tax has always been that it's unfair
that we treat different types of income differently. You know,
you go to work, you get paid, and your tax

(03:39):
on that income. But if you buy a property, for example,
and you sell it you make income from that, you're
not taxed. So it's a no brainer as far as
I'm concerned that we do something to get rid of
that inequity. And David Knelif obviously thinks the same. But
get this, he also thinks most voters would feel the
same too.

Speaker 3 (03:59):
Here he is again, so it's unlikely it'd be a
net vote, and most middle grave national voters I know
would also support a CGT. Not so a wealth tax.
I mean a wealth tax has got a retrospective element
sometimes because it goes to accumulated wealth, and high wealth
individuals might vote with their feet. So I think that's
a much riskier proposition. I think labors should be moderate

(04:21):
here and just do a sensible, relatively low rate, broad
based CGT.

Speaker 2 (04:27):
Now you might say on David kum If he would
say that because he's in favor of capital gains tax,
and you might say that I'm agreeing with him, because yeah,
I'm in favor of a capital gains tax as well.

Speaker 1 (04:39):
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