Editorial: Capital gains tax is not a contest of self-interest

Prime minister Jacinda Ardern. Photo / Doug Sherring

Editorial

COMMENT: The debate on capital gains tax has a long way to go but one issue should be dispelled from the beginning. Nobody's point of view should be written off as self-interest simply for the fact they own, or do not own, assets that may be taxed. This applies particularly to members of Parliament.

We reported yesterday the numbers of MPs in each party who own investment property, the asset most likely to be taxed. We did this because disclosure is healthy. It is better that decision makers' personal interests are publicly known than be the subject of conjecture and suspicion.

So everyone should now know that three-quarters of the National caucus and two-thirds of the Labour caucus have an interest in investment properties, as do two-thirds of NZ First. Only one Green MP has property in addition to their own home and Act's sole MP has none.

Self-interest, of course, cuts two ways. If those with property have an interest in opposing the tax, those without property have an interest in supporting it, especially if it lightens the load on wages and salaries as it should.

One reason to discount personal interest in this debate is that if a capital gains tax is adopted, there will be plenty of time for investors to sell the assets tax-free if they wish.

Prime minister Jacinda Ardern. Photo / Doug Sherring

The Government has indicated that if it adopts any of the suggestions of its Tax Working Group, it will not come into force unless the Government — or at least Labour and the Greens — return to power at the election due in the latter part of next year. The earliest the tax could come into force would be early 2021 and chances are it would be later than that once the industry has been given time for consultation on the practical details.

But the better reason to ignore accusations of personal interest is that our politics is better than that. The vast majority of our MPs over the years have entered politics with a driving sense of the national interest and that sense is deepened as parliamentary work exposes them to the complexities of policy decisions and the consequences. This is not a corrupt democracy and nobody should listen to cynics who are not well acquainted with it.

Most people's opinions are not solely motivated by self-interest. If they were, we would not be seeing opinion polls with a majority opposed to capital gains tax. Most people cannot afford investment property or even so much as a holiday bach, a fact the National Party leader overlooked when he called a capital gains an attack on the "Kiwi way of life".

Those without investment property who oppose that tax, are doing so from an objective sense of what is "fair". They sympathise with those who have worked hard to build up a business, often drawing little income from it when times were tough, and feel it is only fair they should receive its full value when they sell it.

The Tax Working Group has taken a different view of what is fair, arguing that wealth should be taxed equally regardless of how it is accumulated. That is the debate, it is more important than personal interest.