Fran O'Sullivan: Come clean on tax? Let's do that

While Jacinda Ardern says she is 'being transparent', Labour has had plenty of time to develop its tax policy. Photo / Jason Oxenham

Jacinda Ardern has the momentum at the 2017 election, but she should stop the charade and issue a detailed capital gains tax policy.

Ardern has been leading Labour since the 1st of August. She argues that she needs more time to have a "fresh look" at thorny tax issues.

But the Labour Party - of which she has been a leading light - has been in Opposition for nearly nine years.

That's plenty of time to get the detail together. That fact that it hasn't done so suggests incompetence, or a lack of courage when it comes to selling fundamental tax reform.

Ardern should not shy away from making the case for the imposition of a capital gains tax (and other wealth and asset taxes) as part of structural reform.

Let's face it, Labour has had a fully fledged capital gains tax as part of its policy arsenal at previous elections in 2011 and 2014.

The party has never made any secret of the fact that it will set up a Tax Working Group to study this if it wins the September 23 election.

Shadow Finance Minister Grant Robertson said, in May 2016, that the group would be empowered to develop ways to correct imbalances between the productive and speculative parts of the economy. "While we want a comprehensive review, there will be some interim steps that we will announce before the election to ensure that we have the revenue to address pressing issues, particularly in health, education and housing," Robertson was reported as saying.

"I think it is only fair to go to the next election with some sense of the direction of our tax policy. We want the tax working group to do the detailed work but I think it is only fair for New Zealanders that they see the path we are on."

There is also plenty of support within the business community to address this gaping hole in New Zealand's tax regime.

But all we hear from Ardern is the mantra that she is "being transparent" with the public by saying Labour will put capital gains taxes on the working group's agenda to give a "direction of travel". This is disingenuous.

Particularly as Ardern has indicated that instead of seeking an electoral mandate on September 23 for new capital gains taxes, Labour will simply seek the working group's advice and then (in all probability) introduce the taxes in its first term in Government.

She has stipulated that Labour will ring-fence family homes from the new regimes. But what about businesses and farms which are integral to New Zealand's productive sector?

In Labour's 2014 election policy, the first $250,000 of gains would have been tax-free if the seller was aged over 55 and had personally owned the business for more than 15 years. Then a 15 per cent tax would apply on the capital gain from sales.

Is that still the case? Or does Labour intend more swingeing reforms?

Capital gains taxes are complex. They can be blunt instruments.

But the National Government introduced a quasi capital gains tax when it brought in a bright-line test for residential property sales to curb speculation. Labour has said it will extend that test from two to five years.

The public understood the rationale for National's move. There was no pushback.

Robertson has also said Labour will fund its new economic policies through cancelling National's planned 2018 tax cuts and achieving higher tax revenue from multinationals and property speculators. In the past, he has favoured addressing bracket creep when it comes to moving the thresholds at which personal incomes taxes cut in.

That has been left as a possibility in coalition negotiations, where in all likelihood the party will talk with New Zealand First, which has put forward some useful tax cuts in the company space.

Then there are the water levies and tourist levies (still to be announced).

Again, how hard is it for Labour to introduce some certainty for farmers by spelling out the size of the water levy?

Farmers have been told Labour is proposing a levy of 1 or 2 cents for each 1000l of water that farmers use.

But the party will consult with farmers on the exact size of the levy once in office.

Farmers deserve some certainty - 2c on 1000l would be twice the cost of a levy of 1c per 1000l.

Would it not make more sense for Labour to put the levy at 1c per 1000l and reassess its effect at a later date?

Fundamentally, this "trust us" approach is insulting.

Labour is the party which has driven fundamental reform in the past. It is better than this.