The tax policy Labour members will vote on this weekend

Labour leader Chris Hipkins will lead the conference. Photo / Mark Mitchell

Labour Party members will vote on whether to formally endorse continuing work on a capital gains or wealth tax at their party conference in Christchurch this weekend.

The party has been debating tax policy since losing the election last year, as part of a broader debate on all policy leading into its annual conference.

At Labour regional conferences this year, members put up more than 600 individual proposals (previously called remits), of which the Herald understands about one in 10 were tax-related. The relatively large number of proposals is a reflection of the fact Labour is in Opposition, when the number of proposals tends to increase.

Those proposals then go through a complicated internal process in which they are refined and consolidated into 10 proposals that will be debated on the floor of the national conference.

The 10 each have a different subject, with policy on things like climate change also up for debate.

There is speculation that the wording of the tax policy proposal is that the party will take forward work on a capital gains (CGT) or wealth tax, but stop future work on other forms of tax.

Members will debate this proposal on the floor of the conference and have the opportunity to debate and vote on amendments to it. If passed, it would allow the party to continue work on a CGT or a wealth tax, which might be incorporated into the party’s policy platform at its next conference in 2025.

Former Revenue Minister David Parker (right) has advocated for a wealth tax in the past. Photo / Dean Purcell

The policy platform is different to what the party actually campaigns on at an election. The party’s election manifesto is decided by Labour’s policy council, caucus and governing council. It cannot be inconsistent with the policy platform, but nor must it include all the policies members have voted through.

There is a quiet tension in the party ahead of the vote. Labour members would not speak to the Herald on the record about it, for fear of being seen to sway the vote one way or another.

The wording of the remit is significant in that it kills off what some in Labour see as unhelpful speculation about things like land taxes or inheritance taxes, which tend to poll poorly, by officially stopping work on taxes other than a CGT or a wealth tax.

There is a chance that members, potentially favouring a wealth tax, may look to further refine the remit through amendments. As the Herald has previously reported, there is widespread anxiety among the membership at the way Leader Chris Hipkins ruled out a CGT and wealth tax ahead of the 2023 campaign.

There was even a debate about whether the rule-out was permitted under Labour Party rules (it was). Members may choose to direct some of that frustration into amending the proposal to be much more specific and direct, in order to ensure Labour has little choice but to run on a CGT or wealth tax next election.

Already, the party’s policy platform has several sections which would appear to push the party in the direction of a CGT, yet it has not been a part of Labour’s election manifesto since 2014.

A 2019 copy of the platform includes the pledge that “Labour supports a tax system that promotes an economy based on productive enterprise rather than speculation, that ensures greater fairness and looks closely at targeting untaxed wealth in the wider economy”.

It also promises that as “a priority”, “Labour will act to ensure that housing market speculation does not create financial instability and drive property prices out of the reach of ordinary New Zealanders. We will implement a fair tax system in which damaging property speculation is discouraged through a mix of tax policy and targeted buyer restrictions”.

Both would appear to nudge Labour towards a CGT policy, which Labour very much did not campaign on in 2020, following Dame Jacinda Ardern’s decision to rule out a CGT for as long as she was leader. When it became the Government, however, Labour extended the bright-line test and banned interest deductions for residential landlords, which would also appear to be consistent with those sections of the policy platform.

What appears to be brewing in Christchurch is an effort to ensure that a more progressive tax policy doesn’t just make it into the policy platform, but into the party manifesto. There is an anxiety that senior members in the party, those who skew to the centre politically, might find some way to quietly kill a progressive tax policy by running it through a long-winded party bureaucratic process.

There is also anxiety among supporters of the wealth tax proposal that it is being put up alongside the CGT to encourage members to pick the CGT as a compromise option.

All eyes are on Hipkins, Labour’s finance spokeswoman Barbara Edmonds and revenue spokeswoman Deborah Russell to see whether they decide to break for one policy or another, or sit out the discussion in order that they may preserve their neutrality.

Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.