MICHAEL BASSETT: LABOUR’S SMART ALECKY CGT

At first sight, Labour’s Capital Gains Tax looks like the CGT you have when you don’t have one. So many exemptions, so slow to appear, such a fuss and bother setting up the taxation mechanism, and producing so little revenue, you wonder why bother at all.

But the current Labour Party has reverted to its ancient roots. Bashing landlords was a favourite pastime before the party was even founded. Soon after the outbreak of World War One, the then Reform-Liberal coalition government introduced rent controls that were very popular, until landlords decided to sell their rental properties and many renters became homeless. Labour’s CGT threatens to do the same to landlords, but no one in our ancient modern Labour Party knows any New Zealand history, or seems to care about what works and what doesn’t.

The real purpose of Labour’s CGT is to establish the taxing mechanism, so that over time a Labour government can chip away at their promised exemptions as pressure from troglodytes on their back benches yearn for more and more spending money. At Labour’s heart lies a misplaced belief that governments, rather than individual effort, can produce the perfect society. “Government good, individualism bad”, is the ancient Labour back bencher’s mantra. My bet is that it won’t be long before Labour reintroduces death duties finally abolished by Jim Bolger’s ministry. And if a family owns a second property, say in Wellington, where for instance, many MPs live part of each week, then it will be hit by the CGT. And of course, the family beach bach will be clobbered right from the start. What happens to companies that own chunks of land for retirement villages? Every Labour budget will be watched carefully to see which of Hipkins’ promises of exemptions are disposed of, or altered in ways that will deliver more government revenue. All this while obvious sources of additional revenue like raising the age of entitlement for national super are passed by. And additional sales of government assets will never be considered by ancient Labour because publicly-owned service industries are treated as our birthright. Labour will add to the huge muddle of priorities that currently underpin so much of what central government does.

The weakness in Labour thinking can be seen in the proposed beneficiaries of the extra revenue-raising. The money won’t be put into reducing the huge additional debt that the Ardern-Hipkins governments ran up between 2017 and 2023 that financed the employment of on average 2,500 extra public servants each year. Instead, the extra revenue will be spent on three GP visits for everyone per year. It’s a very carelessly-thought-through nostrum. Why do those who can afford to purchase private health insurance get three freebees? They already pay almost nothing to see their GP at the point of using the service. And with GPs currently battling a shortage of numbers, how will any increase in the number of patients improve access to healthcare for anyone?

The Taxpayers’ Union, which for the most part does a splendid job of exposing government mismanagement, set out to check around GP clinics. It discovered that many couldn’t offer an appointment for four weeks. So, free taxpayer-funded visits doesn’t add up to more than a “cheap political gimmick”. Surely it would be better to increase the number of GPs first? Remember the millions allocated to mental health (and other services) by the Ardern-Hipkins government. No improvement to services ensued, just more bureaucrats in the ministry.

So, we are back to where we started. What is the purpose of a new tax like Labour’s Capital Gains Tax if the declared purpose for it is a non-starter? The answer has to be that Labour has other much more sinister intentions. I suspect Chris Hipkins and his devilish elves will give us lots more clues before the election as they ramp up their spending promises.

It would be wonderful if, for a change, Labour could produce a few ideas with the potential to rein in the deficit, and assist with knocking off the huge extra debt run up by Grant Robertson during his spendthrift years at Treasury between 2017 and 2023. And if they insist on sticking to health as in need of a boost, devising policies that really are likely to improve access to quality care.