Barry Soper: PM in state of shock at Capital Gains Tax reaction

Author
Barry Soper,
Section
Opinion,
Publish Date
Tuesday, 26 February 2019, 6:27AM
Prime Minister Jacinda Ardern. Photo / File.
Prime Minister Jacinda Ardern. Photo / File.

COMMENT:

If you thought the Government (well more correctly the Labour Party) is hell-bent on committing political suicide you'd be wrong.

The Beehive is reeling and sitting in the top office of the ever diminishing building Jacinda Ardern's in a state of shock at the reaction to the Taxation Working Group's report.

Ardern will be regretting ever making the "captain's call" during the last election campaign with her insistence there'll be a capital gains tax in the first term of her Government. There was almost a mutiny, with her lieutenant Grant Robertson taking charge by reining in the political novice and getting taxation off the political agenda for the time being.

Tax had been talked about so much they decided to hand it over to the Tax Working Group, led by Sir Michael Cullen, who knew better than to ever suggest a capital gains tax, correctly appreciating the political danger of it.

Ardern must have been having a nap during the two campaigns Labour fought and lost because of it.

Now she's wide awake to the political damage it's doing to Labour, spending the first six minutes of her post-Cabinet press conference yesterday giving us a lesson on how to report it accurately.

Ardern was at pains to ensure the students understood her lecture. The debate should be about a fairer and more balanced taxation system and is most certainly not an attack on the Kiwi way of life as some have claimed.

And besides, have a look across the ditch, she implored and see how few Aussies pay a capital gains tax.

To ensure we knew what she was banging on about she reminded us that she grew up in Morrinsville, in a small town rural community. All of her jobs were mostly with small businesses and she knows the debate going on in rural New Zealand and their views will be heard, she insisted.

In her setpiece lecture she told us small business and farming are crucial to the economy and she wanted to be clear, she said referring to her notes on the lectern, that the effects on them will be at the top of her mind when the options are assessed.

As the lesson was drawing to a close she told us the bleedingly obvious: that the tax would be paid only when a capital gain is realised, or when an asset gets sold, so there won't be an ongoing impost.

Until you've sold your next asset that is - and the capital gain on any asset won't be assessed until after the law takes effect, most likely in April 2021. So the nest egg you've realised up until then won't attract the captain's call.

By and large, Ardern declared, the tax system was working well.

Yeah well if it ain't broke - don't fix it.

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