Wealth tax call a high-risk strategy

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

Chris Hipkins showed once again how focused he is on trying to stay in government when he followed the lead of Sir John Key and Dame Jacinda Ardern in ruling out a policy, that he knows has merit, any time under his leadership.

In this case it is wealth and capital gains taxes (the latter also being one of Ardern’s  “not on my watch” calls) that are off the table — and as in previous examples, it’s about winning votes in the all-important centre ground.

The parties to his left whose support would be needed to form that third-term Labour government were furious.

The Greens said there was a very real possibility they would refuse to join a coalition with Labour if they didn’t put a wealth tax back on the table, and Te Pāti Māori said Hipkins had effectively ended coalition discussions before they had even met.

That didn’t phase the Prime Minister, who said the nature of MMP democracy was that minor parties needed support from a majority of Parliament in order to advance their policies.

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A portion of Labour’s own left-wing, progressive erstwhile supporters will turn that advice on its head and move their  votes to the Green Party, to have any chance of the tax reform they and many commentators agree would rebalance our tax system, making it fairer and helping to address inequality and poverty.

But if Hipkins’ captain’s call prompts enough voters to stick with Labour rather than voting National, it could make the difference come October.

Things will need to start going a lot better for the party, though, as a string of ministerial scandals and tough economic conditions hurting households have shown up in a fall in support for Labour in two recent political polls.

A poll out on Tuesday by Labour’s own pollster Talbot Mills had the party dropping five points to 31 percent, and National (on 36 percent)and Act having the numbers to form a government. The next day a Taxpayers’ Union-Curia poll also had Labour on 31 percent, a two-point drop from Curia’s last poll a month earlier; National was down three points to 33 percent and the overall result would have been a hung parliament.

A Newshub Reid Research poll from two months ago is also instructive here — it  showed that 53 percent of voters want a wealth tax implemented, while 34.7 percent opposed it.

Focus groups appear to have shown Labour that campaigning for a wealth tax would have been a risk for its re-election. Hipkins’ move to squash that carries risks of its own as he disappoints such a large part of Labour’s base, the very people he will be needing to help  promote the party in the lead-up to October’s election.