Not even a sunset clause that looked to repeal a tax increase after a period carried favour with respondents. In fact, most (circa 60 per cent) would not soften their view on tax increases even if they were minor across the board and then also limited to an explicit period.
Juxtaposing this, is that there is still high demand for Covid-19 related Government spending, including a material take up of business-related Covid-19 relief like the various wage subsidy schemes.
The clear implication being that businesses show a resounding preference for growing the economy over raising tax settings, as part of any Government economic response. But unfortunately for the Government, confidence around the Government's ability to grow the economy and get control of the Government debt levels remains low at circa 16 per cent.
On the "left" and on the "right"
Consistent with this general sentiment, Labour's tax plan (that includes oscillating back to a 39 per cent personal income tax rate but on incomes over $180,000) is only finding favour with the minority of respondents (circa 37 per cent), noting that respondents also specifically rejected (circa 76 per cent) the wealth tax measures proposed by the Green Party in June 2020 (with only circa 8 per cent supportive of those measures and the balance either unsure or showing some support but only if the proposed measures were considerably softened).
Green's co leader James Shaw wouldn't say what the Greens' bottom lines in any coalition talks were; but said a "wealth tax" was a "top priority". In the same interview he stated that if the Greens held the balance of power it was "always a possibility" that they would walk away from negotiations with Labour if they could not get the gains they wanted; fuelling the "stalking horse" sentiment raised by National.
Most respondents (circa 74 per cent) also believe that New Zealand First materially moderated the tax outcomes that would otherwise be applied by a Labour-Green coalition Government; which polling suggests is an unlikely possibility going forward.
By contrast, National's proposed helicopter tax relief (through broadening all existing tax brackets with a sunset clause and expanding the immediate deductibility of certain assets), has found majority support (circa 68 per cent) and livened up the tax debate.
Is capital gains tax back on the radar?
Unsurprisingly no. By a vote of nearly two to one, respondents are not interested in revisiting the capital gains debate, accepting that the view is less extreme if any capital gains tax was at a significantly reduced rate.
It also remains a bridge too far for the Government Labour majority; who initially took their misstep campaigning on a capital gains tax under Phil Goff's leadership in 2011 and continued to push the unpopular measure under both David Shearer and David Cunliffe's leaderships. They then revived the debate through the Tax Working Group under the current Government but couldn't garner popular support even for the limited regime proposed by the minority of that group, and thereby also lost the support of its coalition partner when it approached the finish line.
A rocky tax path ahead
The Government's safest step would have been to leave well enough alone; which Labour couldn't get themselves to, preferring to increase the highest personal tax rate at a threshold that doesn't impact the vast majority.
What's proposed is therefore more symbolic than substantive. Not taxing the "rich" but rather people with incomes that are not able to be diverted into lower tax structures. The effect is more redistributive in nature than revenue gathering, impacting those who already bear the highest tax burden; with the taxation of capital and wealth being too hard (for now?).
Juxtaposing this, National has upped the ante by helicoptering in temporary tax relief across the board (to stimulate the economy) while also promising a material reduction in net core crown debt.
Tax therefore promises to be a very complicated and emotive topic, that will either be centre stage this election or not far from it.
The bet being placed by Labour is that it's worth waking up a few of the sleeping dogs, that are no doubt viewed as unfriendly, leaving the taxation of capital and wealth in the too hard basket.
National on the other hand is betting on offering a path to nirvana — lower taxes and crown debt, while still enhancing services, in part through curbing what they view as wasteful spending and suspending Super Fund contributions.
Game on.
● Thomas Pippos is chief executive of Deloitte New Zealand.
