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

Canterbury Mornings with John MacDonald

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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