PM Jacinda Ardern has faced a flurry of questioning on the likelihood of Labour introducing a wealth tax, so NZ Herald Business Editor at Large Liam Dann explains what this could mean for Kiwis. Video / Mark Mitchell / NZ Herald
Opinion by Thomas Coughlan
Thomas Coughlan, Political Editor at the New Zealand Herald, loves applying a political lens to people's stories and explaining the way things like transport and finance touch our lives.
He leaves Parliament, and Labour’s caucus, with a long and impressive record – unusually, he might have etched his most significant legacy into the statute books relatively early in his career: the Emissions Trading Scheme, which he ushered into law in 2008.
But it’s taxation, rather than the environment, that has people talking about Parker’s legacy.
The debate over the ETS is settled (in fact, it’s been embraced by Parker’s political opponents as the main tool to address climate change). The debate on taxation is settling too, at least on the Labour side of things, but not on Parker’s preferred tax policy, his white whale: the wealth tax.
It’s that unfinished business that will exercise the jaws of Labour members on the rubber chicken circuit of regional party conferences that begin this month and go to June.
Labour is still humming and hawing over whether to include a capital gains or a wealth tax in its 2026 election manifesto.
A remit at last year’s party conference has asked the party’s policy council to do work on both taxes, initiating a torturous and bureaucratic process that likely result in one of them being included in Labour’s 2026 election policy.
There will be movement before then, however, with leader Chris Hipkins promising to announce a tax policy “this year”. It’s that decision that has members scrambling to ensure their preferred tax doesn’t go down without a fight.
Some members, feeling the obvious momentum Hipkins and the leadership have built up around a CGT, are keen to push back at regional conferences.
When Jacinda Ardern was Prime Minister, Labour began work on a wealth tax. Photo / Mark Mitchell
The party has a lot of feelings on the issue. Some of the few members of caucus who knew a wealth tax was being developed in January 2023 wish they had secured Hipkins’ support for it as a condition of backing him for the leadership. Who knows, if both camps dug their heels in, Michael Wood or perhaps even Grant Robertson might have been Prime Minister.
Which brings us to 2025. With Hipkins’ support clearly behind a CGT and Parker bowing out of Parliament, even the wealth tax’s most ardent supporters concede it’s probably game over this time round.
As former party president Nigel Haworth wrote on his Facebook page soon after the 2024 conference, “unless the Labour Party shows real purpose, a drift into a catch-up capital gains tax seems the most likely outcome”.
“Delay and conservatism go hand-in-hand,” he said.
But supporters of the wealth tax aren’t giving in without a fight.
In 2024, a group of Labour members began the “Win the Wealth Tax” campaign, which was designed to persuade other members to back the policy. The group was deliberately founded without the backing or knowledge of Parker to avoid the types of divisive factionalism that tore Labour apart during the 2010s.
This means the group will survive long after Parker departs from Parliament.
It organised a standing-room only event at the Labour conference in Christchurch last year, and not long ago organised another event in Auckland, called “Beyond the Wealth Tax”, a title that could be interpreted to mean the group realises the chances of getting such a tax into Labour’s 2026 manifesto could be low.
Its members might better belong in the Green Party, who have twice campaigned on a wealth tax and are likely to again. But members of the group believe Labour is the only party with a shot at getting the tax over the line in government and, for that reason, it’s keeping the red flag flying.
In an interview with the website System Change, which bills itself as an ecosocialist campaign group, Justine Sachs, who is part of the Win the Wealth Tax campaign, also said sticking with Labour was part of maintaining the party’s connection with “the organised working class, as well as working-class people”.
Haworth, who recently attended the Beyond the Wealth Tax meeting in Auckland and blogged about it to The Standard website, sees things similarly and believes a wealth tax is about renewing Labour’s bonds with its working-class roots.
He compared Labour’s contemporary reformers to the Franciscan order that tried to return the church to its historic mission of tending to the poor. (An ironic twist to this story is that supposed CGT-backer Barbara Edmonds’ confirmation name is taken from St Francis of Assisi, the founder of the Franciscan order – a fact that rose to the surface last month on the death of the first Pope to take Francis’ name.) Who are Labour’s Franciscans?
Nigel Haworth has been outspoken in his support of a wealth tax. Photo / Greg Bowker
Labour’s 2025 regional conferences kickoff this month and go to June. Members of the wealth tax campaign will be at the conferences pushing for the tax, despite the fact a remit passed last year that kicked the issue to the policy council and makes their effort redundant in practical terms.
But with the party hierarchy appearing to put its finger on the scale in favour of the CGT, reformers want to let the leadership know they’re watching – and they want something bold.
If the party isn’t careful, the issue risks being seen as a referendum on the health of Labour’s internal democracy. There’s already a bit of unease at whether the leadership exerted influence on union leadership to kibosh a remit for a full-throated endorsement of the wealth tax at last year’s conference. There’s also a sense the policy council might be swinging behind Hipkins for political reasons, straying beyond its remit to fairly examine both taxes.
The political balancing act is exemplified by the position of CTU economist Craig Renney, who was elected to the policy council in 2023. He was thought by some to be supportive of a wealth tax (perhaps because he appeared on a panel with Parker and Haworth discussing the works of French economist and noted wealth tax backer Thomas Piketty). He’s now believed to be more supportive of a CGT.
If the CGT backers do genuinely favour one over a wealth tax, they have to arrive at that position authentically and transparently. Any other path may lead all sides of the argument back to the civil war of the 2010s.
Money, money, money
The challenge for the CGT is that it doesn’t raise very much money, at least if you go for the traditional kind (the party could resurrect one of the ideas of the Michael Cullen Tax Working Group, the deemed return method, which looks more like a wealth tax and can raise more money faster).
The Cullen group’s modelling would suggest an ordinary CGT would raise about $3.2 billion over the next Parliament – raising less in three years than the 2023 wealth tax would raise in one. CGTs do end up raising a lot of money, but only after about a decade – a Government that implements one effectively writes a cheque to its successor.
Labour needs an urgent answer to this tax problem, not just to balm internal pressure but to project a credible alternative government.
The fiscal plan it was elected on in 2017 included generous increases to public services funded mainly by reducing the size of the surplus and paying debt down more slowly (as well as a couple of tax tweaks). There was plenty of spending, but very little to attack in the way of taxing or allegedly “irresponsible” borrowing, two of the most common pitfalls as far as Labour tax plans go.
Those days are gone. The 2017 fiscal plan is a relic of a very different fiscal environment.
In 2026, Labour will need extra revenue, and a lot of it if it wants to reverse the cuts it has spent this term decrying as unsustainable and immoral. A wee bit of poking and prodding at the debt track simply won’t cut it.
Anything less than a plan funded by Labour’s own cuts, reprioritisations and realisable revenue risks falling apart by the same four words that destroyed their first attempt at a basic CGT, the four words that should be etched into the cerebellum of whoever draws up their 2026 fiscal plan, “show me the money”.
Thomas Coughlan is the NZ Herald political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the Press Gallery since 2018.
