On Sunday, The Standard reported:
With less than 18 months to go to the election, Labour doesn’t yet have a tax policy. The Greens do. Tax policy done badly will almost certainly stop Labour and the Greens changing this government. But they have to deal with it.
Labour leader Chris Hipkins said in March this year that too much investment was going into property rather than “productive businesses that create jobs,” but didn’t elaborate further.
When asked directly if the party would be campaigning on a capital gains tax, Hipkins said: “We’ll campaign on tax reform … now, the exact nature of that, it’s not just a simple issue of this one tax or that one tax.”
Hipkins’ election 2023 position was that “I’m confirming today that under a government I lead there will be no wealth or capital gains tax after the election. End of story.”
The Taxpayers’ Union’s push for rate caps taps into a genuine concern: spiralling costs for homeowners, particularly pensioners, who feel squeezed by rising local government charges will be looking for relief. This resonates because it speaks to fairness, an idea the left should champion more often. However, rate caps, although they will be resonating, are a blunt instrument, potentially starving councils of the revenue needed to maintain ageing infrastructure or invest in climate-resilient systems. Labour and the Greens must counter with a bold, unified vision that balances rates and tax relief with the funding required for councils and government agencies to deliver essential services. The detail should be in-depth, but selling it should be simple and to the point.
A return to a 10% GST rate, for instance, could ease the cost-of-living burden on families, putting more money back into the pockets of those who need it most. Likewise, making the first $10,000 of income tax-free would directly support low-waged workers and beneficiaries, shielding them from a regressive tax system. Such measures would not only provide relief but also kick start the economy. Higher wages and increased benefits for low-income earners are not just moral imperatives; they’re economic necessities. People on tight budgets spend what they have on things like groceries, bills, and local services, directly stimulating demand.
A wealth tax must be implemented in such a way that doesn't give rise to criticism such as claims that it's an envy tax. The fear of capital flight, for instance, where wealthy individuals relocate to avoid taxes, has often been exaggerated in debates over wealth taxes targeting the ultra-rich. Evidence from countries like Norway, Spain, and Switzerland, suggests minimal capital flight after wealth taxes have been undertaken. In Norway, a 2022 wealth tax increase to 1.1% on net wealth exceeding NZ$3.2 million (NOK 20 million) prompted initial claims of significant departures, with estimates suggesting 30–82 high-net-worth individuals (0.01%–0.03% of Norway’s millionaire population of 236,000) left. However, updated analyses indicates the scale of Norway's capital flight was badly overstated.
Spain’s 2011 wealth tax, reintroduced in 2022 as a “solidarity” tax on net assets above NZ$5 million (€3 million), affects the richest 0.5% of households and has seen increased revenue with negligible flight. Switzerland’s long-standing wealth tax, ranging from 0.13% to 0.94% on net assets above NZ$170,000 (SFr 100,000), impacts a broader 10%–15% of the population due to lower thresholds but has not driven significant capital flight, with its appeal sustained by low overall tax burdens and no capital gains tax on movable assets.
France’s pre-2017 wealth tax (ISF) saw around 370 departures in 2003 (0.02% of its wealthy population), dropping to 163 by 2018 (0.01%) after reforms, indicating limited flight. These cases show that well-designed wealth taxes, with high thresholds and robust enforcement, can limit flight risks while raising revenue, countering narratives that taxing the rich inevitably drives them away.
The top 1% of NZ owns 25% of the wealth. The top 10% owns 70% of the wealth. The bottom *half* of the country owns less than 2% of the wealth. David Seymour sees no problem with this. pic.twitter.com/YEEpAaSbrN
— antihobbes (@antihobbes) May 2, 2022
The challenge is to craft a tax system that funds ambitious social and infrastructure investments without stifling growth. Councils need capital to address ageing water networks and urban development, while government agencies require resources for healthcare, education, and climate initiatives. Current tax settings, if maintained or reduced strategically, can provide this capital, but only if allocation and redistribution is undertaken wisely. Labour and the Greens must resist the urge to impose new taxes that could be seen as punitive, especially by voters wary of the government overreach we've often seen from previous administrations.
A united front is essential to sell this vision. Infighting or divergent policies risk diluting the message and handing ammunition to opponents who thrive on division. The left’s tax reform must be bold yet pragmatic, offering tangible relief while safeguarding the revenue needed for a resilient future. Reducing GST or introducing a tax-free threshold would signal a commitment to fairness, while careful stewardship of existing revenue can ensure councils and agencies aren’t left short. The left wing must sell a long term vision for the future of New Zealand capturing the public's imagination in a way that the mainstream media cannot ignore.
By uniting behind a voter-friendly platform that prioritises low-income earners, protects small businesses, and counters the Coalition of Chaos and Taxpayer Union’s narrow narrative, Labour and the Greens can reclaim the high ground on the economic debate. The alternative, fragmentation sound bites that the MSM intentionally ignore, will only embolden those seeking to dismantle the progressive direction needed to increase everybodies quality of life. The time for clarity and unity is now.
